What is the most efficient way to learn how to invest while working full-time?
I just turned 26 years old and am Canadian. I've saved up $30,000 of cash that's just been sitting within my back account for far too long. I have zero bad debt. Additionally, I have 30% of equity within my home which has gone up by 60% since my point of purchase.
There's a number of thoughts racing through my head, I need to make my money work for me! As such, I've begun looking into various styles of investing that resonate with me. Namely, educated stock-market type investments at a discount. But to be quite frank, I feel like I need to know more and learn more. I'm very hungry for knowledge.
Without taking any sit-in classes, what is the "proper" way of learning about the wonderful concept of stock market investments? I'd imagine a building block type learning curve. I'm just struggling to properly organize my learning. I'm taking two steps forward and one step back in a sense.
Learning how to invest successfully is a lifetime pursuit. Even seasoned investors have to continually learn what works and what doesn't, often through trial and error. Outside of the classroom, the best way to learn how to invest is to read. You say you're hungry for knowledge, so I suggest you begin with this list. While reading through those books, you should also use Investopedia's Stock Simulator. Finally, think about your network. Do you know anybody who invests? Maybe you know someone who owns property or who has been successful in the stock market. Meet with them and pick their brains. There might even be a group in your area for beginning investors.
Once you build up a solid base of knowledge, you'll start to feel confident in making your own investment decisions. Before you pull the trigger, though, it's probably a good idea to meet with an experienced financial advisor to discuss your ideas. If you want to work with an advisor, make sure you interview several candidates. You want to make sure that you and the advisor are a right match. You're young, and you have plenty of time to learn and invest. Don't stress yourself out about learning, though. Learning is one of the most enjoyable aspects of investing. Good luck!
You have a bunch of great and legitimate questions. Here's my advice:
Although I can give you some really great books to read, I don't think I hear that as your "problem". It seems like you are swimming (or drowning) in so much information, you just want to know where to start. I totally agree that "information-overload" is a consequence of the data age we live in.
1. Take the time to interview 3-5 financial advisors/planners in your area that you could work with based on what you are trying to accomplish (You could also choose a virtual planner as this is becoming more popular). You might google "financial advisor/planner specializing in [your profession or your need]."
2. Ask them for an engagement that is more "project-based" so that you can get the information you require to fulfill your needs, but you aren't in a long-term commitment unless that works for both of you.
In #1, make sure you ask the type of questions that will allow you to understand if they will be experts you want to consult with, since some "comprehensive" planners may have different specialties. I was just telling my wife it is odd that when we have medical problems, we turn to physicians, legal problems we turn to attorneys, but with finances we turn to ourselves. I think this is the mistake that is made most often, so I'd advise you to get a professional's opinion.
I hope that helps.
Audiobooks. Listen to audiobooks on your commute, at the gym, while you walk your dog, etc. This was a total game changer for me and I bet it will be for you too.
Start with these two:
'Money, Master the Game' by Tony Robbins
'A Random Walk Down Wall Street' by Burton Malkiel
Adam Harding, CFP
The best way to learn how to invest is to read a few good books about investment. I recommend these few books: 1) 'Investment Made Simple' by Mike Piper; 2) 'If You Can: How Millennials Can Get Rich Slowly' by William J Bernstein; 3) 'The Little Book of Common Sense Investing' by John Bogle.
Now, once you learn the basic knowledge of investment which is in fact quite simple, the harder part is controlling your behaviors. You can learn from Professor Terry Odean, many research papers about behavioral biases that cost investors much more money.
Considering you've paid off bad debt and saved a sizable amount, you're off to a great start. Before investing, you should consider maintaining an emergency fund. As a rule of thumb, many planners suggest 3x-6x your total monthly expenses in a liquid, insured savings account.
One of the key determinants of long-term financial success is consistently saving money and directing it into appreciating assets. Taxes can substantially eat into your earned income and investment return. Having a cohesive investment plan and tax strategy is paramount. I highly suggest learning about tax optimization as part of your investment education.
There are several great resources which can help expand your knowledge base. Personally, I'm a fan of Khan Academy, which provides free short video lectures on specific topic areas (not only finance). Investopedia also offers a wide variety of articles on portfolio creation. As you build your personal portfolio, you should be conscious of taxes, investment fees, and risk (maintaining a proper investment mix based on your goals). Hope this helps!
Chris Cyndecki, CFP®