How to Educate Yourself Prior to Making an Investment

Investing is inherently risky. Despite what some say, there are no sure things, and even investment opportunities that look promising can turn out to be bad. There are, however, ways to mitigate the risk of incurring investment losses. Number one on the list is to educate yourself. Here are seven ways to do just that.

Reading is fundamental

There’s an entire library of books on investing and personal finance out there, and many, although not all, of them are excellent. Do your homework, find a few good ones, and read them cover to cover. A couple of suggestions to get you started: How to Buy Stocks by Louis Engel; Making the Most of Your Money by Jane Bryant Quinn; and my favorite, The Intelligent Investor by Benjamin Graham.

Watch and wait

Choose a few stocks you find interesting, ones you’re considering investing in. Then watch and wait. Check their stock prices daily. You can learn a lot if you give them some time and see how they perform.

Learn the lingo

Like any other profession, investing has a language all its own, and to succeed you need to learn the lingo. From the difference between stocks, bonds, and mutual funds, to terms like asset allocation, dividends, market capitalization, price to earnings ratio, target-date fund, and prospectus, you need to know the language to best understand how to invest and how to monitor your investments.

Speaking of prospectus…

A fund prospectus is a formal document that details any investment offerings to the public, including stocks, bonds, and mutual funds. Investors get to decide what risks they wish to take. However, companies that are raising money from the public must make full and fair disclosures to investors to ensure they are making an informed decision, oftentimes contained in the prospectus. Make a habit of reading the prospectus of the investments you’re considering. It may seem boring, but a prospectus is a gold mine of information which will be helpful in evaluating risk.

Go back to school

No, not really. But many community colleges, libraries, and community centers offer free or low-cost investment classes. For that matter, there are online courses that offer a lot of bang for the buck. Sign up.

Go surfing

The web, that is. There are many personal finance and investing strategy websites and podcasts which can be easily accessed. Like everything else on the web, take it with a grain of salt, but there’s some genuinely good advice out there, especially from regulators such as the Securities and Exchange Commission. Be a sponge, soak everything in, but always verify.

Start small

Investing can be fun, exciting, and of course lucrative. Many brokerage firms today allow you to “paper trade” by simulating trades to practice buying and selling without risking real money. When you feel like you’re ready to take the plunge with real money, start small, with funds you can afford to lose. The better you educate yourself, the better your chance of that not happening.

Our attorneys understand the risks associated with investing and are here to help you. If you have any questions, or feel you’ve been the victim of investment fraud, give us a call today.

Take the next steps to find out if you have a claim:

Step 1.

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Call and speak to one of our attorneys* for a no-cost consultation to discuss your situation, answer your questions, and help you determine the next steps. This call usually takes about 15 minutes, but we are happy to talk to you as long as you would like!

Step 2.

Quick Review of Your Paperwork

If we think you might have a case, we will need to review a few basic documents. If we determine you have a case, then you will have the option to hire us as your attorneys to pursue it.

Step 3.

Signed Attorney/Client Agreement

If you decide to hire us to pursue your case, we will have you sign an attorney-client agreement so we can begin the process of trying to recover your losses.*

*In the vast majority of cases, our agreement is contingent – meaning you won’t owe us any money unless we recover money for you.

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