Learn to Invest in 4 Easy Steps [First 2 May Surprise You]

When you are new to investing everything can seem overwhelming.  There is an entire language dedicated to just investing.

Just looking at stocks you immediately see terms like domestic stock, large cap stocks and emerging markets.

It is enough for you to run screaming.

Please don’t do that.  Taking the time to learn what it all means can be easier than you think.  Plus you do not want to miss out on the benefits of investing just because the word domestic stock scared you.

As with learning a foreign language you learn one word at a time. You do not expect to be immediately fluent at the start of learning a new language.

Instead you start by learning the basics such as “hello” and “good-bye.” Then slowly learn more words and eventually complete sentences.  After time and practice you are able to speak another language.

As with a language you start with the basics in money.

Live on Less Than You Make

You first need to start by making sure that you are living on less than you make.  Why is this first step to learning about investing?

When your budget is not in balance you have extra stress. When your brain is stressed it is not able to learn at an optimal level.

The short science version is that when you are constantly stressed the chemicals in your brain are not balanced.  This causes the cells in your hippocampus to become either injured or destroyed.

The hippocampus is the area of your brain needed for learning and memory.  Thus when you stressed about meeting your basic needs it is harder for you to process information on investing.

In addition it has been shown that those impacted by financial scarcity have a lower IQ, which reverses when financial resources are available.

So start with a budget or written spending plan if that sounds better. Start to figure out how to ensure you are not negative every month and that you have the room to begin to save money.

Emergency Fund

The next step involves reducing your stress levels even more. Time to build an emergency fund.

Without an emergency fund, stress can mount when things go wrong.

Remember stress impacts how we learn, so not having extra funds will slow down how quickly you learn about investing.

As a side bonus, with an emergency fund when you invest you can leave it working for you longer. You will have the cash to deal with problems so you can leave the rest in your investments.

Start Reading

Now you have finally reached the part where your brain can handle learning something new.

The best way to begin to learn about investing is to read.

Begin to read anything you can get your hands on about investing.

At first it might not make sense, but as with a foreign language it will all start to come together.

Set aside at least 15 minutes a day to read about money.  As with learning a language if you don’t work on it you will not learn it.

Once you have some of the basics down you can add things like online classes and seminars.

Get Experience

As with learning a language you make more progress by experiencing the it in real life.

When studying Italian, you will make more progress by traveling to Italy and using the language there.

With investing you learn more by actually doing.  So start small and start investing.  What you learn along the way will supplement what you are reading.

Before you know it you will be fluent in investing!