This is the second part of the talking about investing article. Part One can be read here.

In Part 1, we examined and talked through 3 of the pretty common reasons that young professionals like us don’t invest our money in the market. Let’s keep talking through some of these next issues:

4) I don’t understand any of the fundamentals and have no idea where to start.

Well simply put, buy the stock low and sell it while it’s high. There are often two types of companies to invest in. One is a growth stock and one is a dividend stock.

A growth stock is the stock of often a younger company that still has plenty of room to grow. A lot of growth companies are in the technology sector (like Apple, Google or Amazon). These companies are solid and still have plenty of room to grow and will experience growth via their share price. A dividend stock is a more mature company (like Coca-Cola or Proctor & Gamble). A good dividend stock won’t see its price appreciate as much as a growth stock but will pay strong dividends each quarter. As an example, Coke pays $0.28 per share per quarter and P&G pays $2.41 per share per quarter.

There’s no magical formula or cheat sheet list of good stocks to invest in. No one knows the future and anyone that tries to tell you about a sure-fire stock pick that you need to invest in right now is probably lying. Take some time to learn about the market and how it works before investing some of your hard earned money.

5) I just don’t think I have that much time.

There are two ways to invest in the stock market. The first is as more of a day trader. Day traders watch the market daily, and trade stocks quite often. They try to take advantage of short increases in price to sell and buy when the stock is slightly down. Any given stock might swing anywhere from a couple of pennies to a couple of dollars each day, and they try to make money doing that.

A longer term value investor is in it for the long haul. Arguably the most famous long term investor is Warren Buffet. He famously once said that he could turn off the internet/TV and not check the price of his stocks for years, he was that confident in his investments. This is probably the approach that you or I should take. We don’t have enough time to sit on the internet checking stock prices. You could easily do your research, buy your stock and check in once a week or even once a month. By making good decisions, you shouldn’t have to check the stock price; you should be confident in your picks and not have to worry.

6) I don’t know, after reading the first four, I just don’t think that it’s for me.

Fair enough. Investing in the stock market isn’t for everybody. What has hopefully come across while reading this article though is that you don’t have to be a super nerdy person that invests a ton of money and a ton of time in the market. Anyone can do it, and you can spend as much or as little time and money as you please doing so. If you choose not to invest in the market though, you should still seek out other investment methods. One great way to passively invest in the market is through mutual funds, but that’s another article in and of itself. Check back next week for “How Mutual Funds work”.

Thanks for reading! Hope you enjoyed the article. Here are some others you might enjoy:

9 Financial Things every Young Professional should know

The ins and outs of health insurance

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