Investing can be extremely intimidating, from the serious newspaper articles detailing how millions will no longer be able to retire, to the angry man on television yelling about dividends, it's no wonder that so many of us are hesitant to take the leap into the money market. For many otherwise intelligent, confident people, the idea of risking hard-earned cash in a market they don't truly understand just doesn't make sense. But the truth is, you may have an advantage over Wall Street brokers when it comes to investing - your personal area of expertise.
In Pictures: World's Greatest Investors

Do as Buffett Does
You've probably heard of the legendary investor Warren Buffett, who is currently the third-richest man in the world, according to Forbes. What sets Buffett apart is how many people turn to him for investing advice - and one of his personal investing rules (right after "never lose money") is if you don't understand a business, don't buy it. (You may think the recent financial meltdown changed things, but don't be fooled: those unfussy sayings from the Oracle of Omaha still rule. Learn more in Rules That Warren Buffett Lives By.)

The flipside? If you understand a business, or a sector, you could have the upper hand when it comes to buying its stock. Your experience may not seem to be financially related, but with the ability to invest in everything from movies to weather, your knowledge might come in handy in the stock market.

A Niche for Everyone
No matter who you are, there is something you are interested in. And no matter what that is, you can translate that interest into valuable trading information. If you are a tech geek, you'll know if fragmenting Linux will help it to compete with Apple's (Nasdaq:AAPL) range of products. If you worked on the oil rigs in Alberta, you'll know which companies were efficient enough to have a shot at major growth over the next few years.

Are you a fitness buff or do you play a sport intensely if not competitively? You know what equipment, supplements and companies are behind athletes like yourself. Maybe your passion lies in video games; with Halo: Reach set for release this fall, now might be the time to get into Microsoft (Nasdaq:MSFT). (New ways to benefit from this industry have emerged over the last few years. The best part is, they're very profitable. Learn more in Play Video Games; Become A Millionaire.)

Perhaps you're a bookworm, someone who reads every New York Times best seller before it actually makes it to the list. If so, you might have caught Harry Potter as it was picked up to be turned into a movie, and invested in Warner Brothers' parent company, Time Warner (NYSE:TWX).

Don't just consider the companies benefiting directly from a new trend or product. The next big thing also affects secondary players in a given market in a trickle-down effect you can cash in on. Or, consider products you think will be a bust and either short the stock or invest in the rival. For example, if you think Google's (Nasdaq:GOOG) "iPad killer" just isn't going to cut it, you can invest to reflect that opinion.

The Bottom Line
Investing doesn't have to mean researching banks or investment firms – although it certainly can. By focusing your stock picks on companies and industries that interest you outside of your financial obligations, you will likely make more informed choices. Keep in mind that knowing an industry should not be an excuse to avoid doing any research into a specific company. Even if your insider knowledge gives you a leg up, every investor should hold themselves responsible for doing their due diligence. And who knows, you may even discover that investing can be fun! (For more, see How To Invest On A Shoestring Budget.)

Feeling uninformed? Check out the financial news highlights in Water Cooler Finance: Greece Is Burning And Buffett's Under Fire.

Related Articles
  1. Fundamental Analysis

    Will Health Care Continue to Drive IPOs in 2016?

    Learn why health care IPOs may be slowing in 2016, and how Obamacare, poor previous filings and economic factors are affecting the health care sector.
  2. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
  3. Investing

    3 Healthy Financial Habits for 2016

    ”Winning” investors don't just set it and forget it. They consistently take steps to adapt their investment plan in the face of changing markets.
  4. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  5. Investing Basics

    How liquid are Fidelity mutual funds?

    Review the liquidity features of mutual fund shares and an overview of Fidelity mutual funds. Most investors look for convenient access to their investments.
  6. Sectors

    3 Cyclical Industries To Exploit in 2016

    Learn about the three industries at the down end of their business cycles, and discover how these industries may improve in years to come.
  7. Retirement

    Smart Ways to Tap Your Retirement Portfolio

    A rundown of strategies, from what to liquidate first to how much to withdraw, along with their tax consquences.
  8. Stock Analysis

    If You Had Invested Right After Berkshire Hathaway's IPO (BRK.A)

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  9. Stock Analysis

    Is Now the Right Time to Buy Coty? (COTY)

    Find out whether fragrance and color cosmetics powerhouse Coty deserves a place in your portfolio. Will recent acquisitions help turn the company around?
  10. Mutual Funds & ETFs

    The ABCs of Mutual Fund Classes

    There are three main mutual fund classes, and each charges fees in a different way.
RELATED FAQS
  1. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
  2. What is the 'Rule of 72'?

    The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of ... Read Full Answer >>
  3. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Full Answer >>
  4. Does mutual fund manager tenure matter?

    Mutual fund investors have numerous items to consider when selecting a fund, including investment style, sector focus, operating ... Read Full Answer >>
  5. Why do financial advisors dislike target-date funds?

    Financial advisors dislike target-date funds because these funds tend to charge high fees and have limited histories. It ... Read Full Answer >>
  6. What licenses does a hedge fund manager need to have?

    A hedge fund manager does not necessarily need any specific license to operate a fund, but depending on the type of investments ... Read Full Answer >>
Hot Definitions
  1. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  2. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  4. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  5. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center