Making investing easy seems like the most logical start point for anyone looking to dip their toes into the metaphorical investing pool, but not many people know how to! If you take the right steps and look in the right places – it’s really not that difficult!
To make investing as easy as possible, you will want to ensure you’re doing your research on every investment through books & websites. You should also make your portfolio as passive as humanly possible using funds and trackers.
The principles sound easy but what books should you read? What sites should I look at? What even ARE funds and trackers? Well, let’s take a little look.
Doing your research
This is probably the most important step on your investing journey. You need to be comfortable with what you’re investing in. Although this doesn’t SEEM super easy – once you’ve picked that golden investment, you can just keep putting money into it regularly… Now THAT’s easy!
There are a few ways to research – not just stocks but also investing knowledge to help you with your stock research.
Read a book
Instead of filling up this article with tonnes of recommendations on books to read, go to my Recommended Books resource page – you can see every book that I’ve read and recommend to get you started.
These books cover a whole wealth of knowledge that you 100% need to know to get you started with your ‘Super Easy Investment Strategy’.
However, if you’ve had a change of heart and want to delve deeper into the active investing life or even trade (rather than invest), there are books that cover this too!
Surf the web
If you haven’t got the time or patience to read a book then you’ve always got the world’s biggest library at your fingertips… the world wide web!
You’re obviously going to need something to search into Google to get you started, this is why I recommend going for a book first – you can then use Google to consolidate your understanding and help to wrap your head around concepts covered in the books.
There are also a great number of sites that cover investing (shock – I’m not the only one). You can simply search ‘investing made easy’ and a few should pop up.
Pick someone’s brain
Obviously – this is the number one thing to do above reading books and surfing the web. The reason this is third on my ‘Doing your research’ list is because finding someone who can give you valuable advice is quite difficult to do… especially for free!
Everywhere you look, you see these ‘insta famous investors’ who claim they earn millions from just tapping away at their phones whilst on the toilet. Often, these can be scams as literally no-one can tell you exactly what is going to do well – if they can, that’s called insider trading my friend.
The best way to find someone is to reach out on forums – there are lots of experienced people out there willing to give their 2 cents. Just take everything with a pinch of salt – if you get the same answers from 5-10 different people, you can have some sort of confidence that they might be right.
Use funds to your advantage
Now, you’re probably wondering what funds are and just how you can use them to your advantage.
There are two types of funds – an actively managed fund (also known as a mutual fund) and a passive fund (also known as an ETF or tracker) but we’ll cover these in a little lower down.
Picking the fund
You’re going to want to do your research before you put all of your savings into a fund. I know I said that would be super easy but I promise this will be the hardest you’ll ever have to work!
First of all, I’d give the fund a search on Google – see if they’ve been up to any dodgy dealings or have had any bad news published recently. If they have, make sure the culprit isn’t managing the fund!
Secondly, have a look at a few graphs over the last five years. When we invest, we invest for the long term – don’t worry yourself if the fund is down for the year, this is a good sign to buy in whilst it’s low, if anything!
If the graph is consistently trending upwards over 3-5 years, that’s a great sign.
Finally, take a look at their top 5 holdings and make a quick assessment as to whether you’re comfortable with these choices.
I like funds that have very defensive and stable holdings – things like PayPal or Apple. These companies will not be going out of business any time soon!
However, if they’re top stock is, say, Tesla – I would probably keep looking…
Don’t forget the charges
Unfortunately, fund managers don’t work for free and earn their money from charging you fees. These fees can vary greatly but often they’re around the 0.5% to 1% mark.
These don’t look like much but if you’re investing with bigger amounts, these soon add up! However, my ethos is – I’d rather have 99% of something that is managed by a crack team of investors than 100% of something I’d have to work super hard to keep track of!
Try a tracker
Trackers are a beautiful thing. They’re simply a single stock you can invest in but it represents a pool of specific stocks. For example – you could have a tracker that goes up and down in line with the performance of stocks in the Technology industry.
A common tracker most people have is stock market trackers. This essentially allows you to invest in a single stock but gain/lose based on the performance on the stock market as a whole (including every single stock inside it) – pretty cool right?
Why are they so special?
Trackers are amazing because they’re actually commonly used to benchmark the performance of actively managed funds! You often hear investors brag about ‘beating the market’… this is just the performance of the stock market… which you can invest in using a tracker.
Why would you try and invest in various different stocks in an effort to beat the market, when you can just invest in the market itself, as a whole, and easily perform at a level professional funds and their highly skilled teams are trying to beat!
Don’t overthink it
You can do all of the research in the world and still not be completely confident with your investing decisions. Ultimately it comes down to how much do you back yourself?
Reading books, surfing the web, researching different funds – they’ll all give you a great tool kit to determine the good investments from the bad but you can never be 100% sure how an investment will perform in the future. Even the pros can’t!
If everything looks right and the research looks good – just go for it!
Summary
To summarise this article – the way to make investing super easy is to do your research once, then keep investing in the same investments over the long term.
You can perform research through reading books, surfing the web and speaking to people. Once you’re confident on how to research investments – take a look at funds and trackers and put your newly formed research skills to the test!
Diversify your portfolio using a mix of funds and trackers – make sure you watch out for any annual charges from funds!
Finally, if you’ve done all of the above – just go for it. Of course, only invest what you can afford to lose as success can never be guaranteed… but you can make it more likely!