New To The Market? Time To Double Down On Education
The past 18 months or so have been transformative for retail investors. From the move to $0 commissions to the impact of the COVID-19 pandemic, investing today looks vastly different than it did even a couple of years ago. In fact, a recent survey conducted by Charles Schwab indicates that a whopping 15 percent of all current U.S. stock market investors say they first began investing in 2020. The face of investing, too, has changed; with younger participants engaging more, we’re seeing firsthand the ways this new generation of tech-savvy, socially plugged-in investors may shape the markets. But, in this era of greatly diminished barriers to entry into the markets and an array of available information of varying (and sometimes dubious) quality, how can new investors access effective, sound information to set off on the right foot?
We know new investors are hungry for education. Again, Schwab’s recent survey found that 94 percent of new investors want access to information and tools to do their own research, and 90 percent want educational materials to improve their investing skills. If you’re new to the market, I’d argue that not only is it your broker’s imperative to provide quality education to its clients, but that to do so is a demonstration of an investment in the future. Brokers offer platforms, products and services to their clients and educating them on how to use those offerings is a fundamental deliverable. Investors don’t need complicated jargon - they need solutions to the problems they are trying to solve, easy-to-understand, accessible information, and tangible updates on their progress towards their financial goals, whatever those goals may be.
But knowing not all investor education is created equal – what should you look for as you set out on your quest for investing knowledge? Let me give you a few ideas.
See also: Stock Market Education Courses
Simplify Varsity-Level Trading Strategies To Avoid ‘Newbie’ Pitfalls
One of the most exciting things about the financial markets is the seemingly endless ways to engage and potentially grow your money. The access to trading platforms, low cost to participate, the sheer number of online brokers make the markets more accessible than ever. But with that comes the need to ensure that you protect yourself. Knowledge is power, so one of the best ways to be an effective investor is to boost your knowledge.
Start simple, set a goal, and formulate a plan to execute on that goal. Look for resources that help you navigate your various “firsts,” with content that’s simple to understand so you can feel confident, understand the risk, and know where to go next to learn more. At TD Ameritrade, we have really focused on this “first” steps concept whether it be creating your first portfolio, placing your first stock trade or your first options trade. By curating the right educational content for the key goals our clients have, the path to achieving those goals can be created in a smart, more knowledgeable manner. And remember learning is life-long, so once you master a topic, rinse and repeat, continue to move along that learning curve, and progress as an investor. But don’t jump into the deep end until you can swim – see my next point.
Take A Risk- (Vs. Reward-) First Approach
Here’s something that’s universally true: People are always more comfortable with the upside of any financial decision than they are with the potential downside. But living in the real world, we know things don’t always go the way we want or expect them to, and the results can be devastating. To understand investing you need to understand risk and reward, that is imperative. You need to balance that appetite for risk and reward, and for many investors, that’s a very personal endeavor. Ask yourself when making decisions: What could I gain? What could I lose, and am I comfortable with that? If you are not comfortable, pivot!
You also need to understand the trading platform you use. It’s tempting to hit the ground running but understanding the mechanics and navigation of the platforms you are using to execute on your strategy is critical. One great way to do this is to seek out opportunities to test out your strategies in a virtual environment so you aren’t putting your “real” dollars on the line until you are ready. Of course, all investing involves risks and there are no guarantees of success. But when you have full awareness of risk/reward, have a plan, and are comfortable with the tools and platforms you are using, you’ll be facing a much lower likelihood of unfortunate “surprises” down the road.
Embrace Digital Education Offerings In The COVID-19 Era
It’s an understatement to say things have changed over the past year when it comes to travel and the ability to connect in-person. Pre-pandemic, it was much easier to seek out in-person learning opportunities if you were a newcomer to the market looking to explore investing in depth. 2020 of course changed that, and in many ways, that’s a plus for the retail investor as companies have had to really pivot towards deeper digital learning experiences. The best brokers listen to what their clients need help with and deliver that to them in personalized ways. In today’s day and age, that means enhanced and adapted offerings for a virtual environment – many of the classes/workshops that used to be conducted in person, for example, have become available virtually. You don’t even need to leave the house - Sit in the comfort of your own home and have live interactive experiences with industry experts coaching you, often for free.
Check For Educational Resources On The Platforms And Channels You Already Use
With more and more reliance on social networks and other web-based channels, it can be tough to control for quality when it comes to the investing education that’s out there. Many brokers, TD Ameritrade included, have made a significant investment in showing up on channels where newer investors already are – YouTube, for example, and streaming platforms like Twitch. By seeking out education from well-known and trusted brands on these platforms, you can ensure the information you’re getting has been vetted and crafted by professionals, not just content creators hungry for views or clicks.
Remember The Stakes
Money isn’t everything. But you’d be hard-pressed to name something more personal and more fundamental to a person’s quality of life than their financial welfare. Investors entrust their brokers with their financial future, and we take that responsibility incredibly seriously. I like to talk about the three “P”s when it comes to investing: Investing is personal — only you can decide what’s right and important for you as an investor--to invest confidently you need to have a plan for what you want to achieve and then execute on, and finally, you must be ready to pivot when needed (after all, even the best-laid plans sometimes need an adjustment!).
When you’re new to something, you’ll usually benefit greatly from giving it some solid study, and the good news is the information is out there, free and ready for you to consume. An educated investor is an empowered investor and one who’s more likely to be prepared when aiming to reach their financial goals than someone who doesn’t take that time. Education is the best investment you can make in yourself – your financial future is worth it!
TD Ameritrade® commentary for educational purposes only. Member SIPC.
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