6 Things All Beginner Investors Should Know

Before you start investing you must ask yourself couple of tough questions. First of all, do you want to be an active investor or a passive investor? Passive investment is you invest your money in a secured fund and don’t worry about it. Buy a handful of low cost index funds and try to make money passively. On the other hand, in active investment you want to outperform the market by actively participating in it.

Once you have decided about your investment style, now the question is what type of investment? Value investment or Growth investment?

Value investing is trying to buy stocks at a discount to their intrinsic value. During the first half of 2oth century Benjamin Graham developed this field of securities analysis. Value stocks tend to sell at a discount to the market because of certain problems. For example, before Steve Jobs returned in 1997, Apple stocks seemed to be on the brink of going out of business.

Growth investors are seeking leaders in an industry — the next Google or Amazon. They are less concerned about buying assets at a lower price. This investment approach was developed in the 1950s by Philip Fisher and Thomas Price. Fisher described his investment philosophy in his book ‘Common Stocks and Uncommon Profits’.