Why & How To Start Investing?
Don’t Listen To Me, But Please, Hear Me Out: # 39
Shaheeda Abdul Kader, July 10 2021
Why & How To Start Investing?
I am feeling humbled that so many of you dear readers have found my blogs helpful. Many of you have asked if I could create a list of articles and the order in which to read them. I think that’s a brilliant idea.
So here it is. An Index of all my blogs and the order in which to read them if you are new to investing. I hope this serves as a learning guide for you on your new path of saving and investing to realize your financial freedom.
In this blog, I talk about the first principles of investing. I discuss the importance of budgeting and the importance of maintaining a safety net
Stories are great. I am lucky that my parents taught me to be smart about saving. This story shows you how you can make a prudent budget and still enjoy your life. The compounding impact of saving and investing is truly magical.
In this post I talk about:
- The importance of staying invested, i.e., Time In The Market
- Consistent and recurring investments, i.e., Dollar Cost Averaging
In this blog, I show you why passive investing in Index Funds or Index ETF’s is much better for the average investor than paying high fees to Mutual Fund Managers.
For decades now investors have been saying how China, India, or other nations are going to take over the USA. Warren Buffet always says not to bet against America. In this blog I prove his point with research on several markets and their performance 25 years gong back from 2020
Thanks to trading apps such as Robinhood, Etoro, etc, there is a new crop of Traders (not investors) who are aggressive and bold in their trading decisions. These younger traders have been dunking on my Guru, Warren Buffett because Buffett advocates a buy and hold strategy if you believe in the stock.
In this blog, I show you how you make much higher returns if you hold, a stock rather than if you keep buying low and selling high. Of course, it assumes you are brilliant at timing the market. Unfortunately, only corrupt US senators and government officials seem to know when to time the market.
This blog will walk you through some of the key acronyms, data and figures that you commonly see on a stock table and how to interpret them. I walk you through what is Market Cap, P/E ratio etc.
It is fun to buy a stock. However, as investors, we know we have limited resources. So, we should invest in a stock that will guarantee us best returns for least risk, right? In this blog, I use the sports sector as an example and show you how to compare stocks. You will see that the more you do such exercises, the better you will become at assessing the strength of a stock or company.
Most of us do not enjoy pouring over reams of pages with numbers. However, it is critical that we read and understand a company’s financial statements and trends before investing. I tried to make it easy for you to read an Income Statement. I have embedded a YouTube video if you prefer this. I also have follow up videos describing Sales Growth, COGS (Cost Of Goods Sold) Growth, and Income Growth.
I tried to make it easy for you to read a Balance Sheet here. I have embedded a YouTube video if you prefer this.
I tried to make it easy for you to read a Cash Flow Statement here.
You can skip this if you are not interested in Shari’a compliant investing. A lot of my readers requested this, so I researched the topic and wrote about it.
In this blog I discuss what a stock-split is and why they are good even though, technically, they do not change the market cap of a company. Bookmark Investopedia for all investment terms and definitions.
Now that you’re feeling comfortable reading stock tables and analyzing financial statements, it is time to take the plunge and start investing. But first you must choose a broker or an investment advisor. Make sure to ask these 10 questions at least before you choose a broker or trading platform. These questions could help you mitigate the risk of choosing the wrong one.
In this blog I compared some of the most popular online trading/investing apps and services. I compared various fees and ease of opening an account.
16. Death And Taxes
Since I recommend S&P 500 Index so much as well as other US stocks and funds, I have had many readers ask me about Taxes. Although I ma not an expert, I tried to find as much information as I could about Tax implications of investing in US based securities. You should consult with your local tax advisor as well.
If you start early, are patient and consistent, a lot of us can become millionaires. I have built a few tools to help yo figure out your plan. I discuss these in this blog. You can check out the YouTube explainer for two tools I have built for you. One is a Wealth Builder Tool and the Other is a Retirement Calculator.
I recommend 2 great books to help you really build wealth.
As we grow older, we may want to take less risk. Equity (Stocks) will always have higher potential for growth, whereas Bonds will yield lesser but more steady income.
I discuss Bonds, Bond Funds, Coupons, Yield To Maturity etc, in this blog.
From here on, I start looking at some interesting sectors and individual stocks. At the time of writing this blog, SNOWFLAKE, $SNOW had just filed their S1 statement with the SEC (Securities and Exchange Commission, USA), expressing their intent to file for an IPO (Initial Public Offering).
Cloud Computing, Cloud Storage, Cloud Security are all massive growth sectors. $SNOW was a heavily anticipated IPO. So, I read the S1 and compared $SNOW to other Cloud Rails service providers such as Amazon, Microsoft, Google etc., to help decide which to invest in.
AirBNB was another investor darling and highly anticipated IPO. I read the S1 for $ABNB. Here is my analysis.
There will always be some volatility in the markets. The trick is to not panic sell or panic buy. In this blog, I illustrate once again how compounding works. You can build wealth so long as you’re patient and consistent.
You must however be aware of external factors such as the economic and political stability of the country you reside in, the country you get your income from and the country you invest in.
China for example has implemented sudden and shocking regulatory breaks on some of the biggest tech companies in recent weeks. These companies have lost a lot of value in their market cap.
Exception proves the rule. While buy and hold strategy works well for good companies over the long term, it does not mean the one should be complacent.
Here, I share a story of one of my poor decisions in holding GE stock for too long.
Investing in dividend yielding stocks can be a good strategy if you want to generate income. You could use the dividends as income and remain invested in the market.
I review some high yield dividend stocks and compare that to S&P 500 index.
Cyber Security is a huge sector. Ransomware attacks are rising exponentially. So here is my review of existing stocks and why I picked one of them.
Guess what? I have a YouTube explainer as well.
SAAS or Software As A Service is also massive growth sector. I looked at a few of the exciting companies in this sector. Hope you find my analysis useful. Ask questions. Challenge me please. I want to grow from your questions.
After reading these blogs, I do hope you will become a savvier and smart investor than even me. Please share your questions and stock tips.
I usually blog about investing in the stock market. If you would like help on how to budget, save or invest more, please feel free to reach me, on Twitter @saq3 or LinkedIn @Shaheeda Abdul Kader, or leave a message at firstname.lastname@example.org. I’d be happy to offer you my services. Please do check my other blogs here.
I am NOT a certified broker or financial advisor. Please DO NOT make investment decisions based solely on my blogs. My intention is to show you how to research stocks or funds for yourself . I hope you will be empowered and knowledgeable to do your own investigations and invest with confidence. It is best to consult with your broker or advisor if you have questions. You can also reach me, and I’ll do my best to help you with your queries.