If you want to learn how to invest, you need to start with the basics. Do not get lured into the mirage of getting rich quickly by trading options. Those types of investments require knowledge, leverage, and a high tolerance for risk.
1. Do not invest in what you do not understand
Peter Lynch, one of the most successful value investors of all time, stated that you should always invest in companies that you understand. When you understand a business, how it brings in cash, and what service or product it sells, you will find it easier to predict how successful it will be. You should be able to explain why you own the stock and what their business is about.
2. Dollar-cost averaging
Assuming that you have a brokerage account, you are set to start investing. A brokerage account is the first step. Learning how to invest should start with a quick lesson on dollar-cost averaging. What this means is that you invest consistently every single month in the same stocks that you like. If you like a company, continue buying stock consistently. Mathematically speaking, this is the best way to ensure you are making capital gains on your investment despite the volatility of the stock.
3. Think long term
If you decide to buy stock in a certain company, you should think of it in the long term. Short terms investments are much more susceptible to failure due to market volatility. In the long run, people that consistently held onto their investment managed to turn a profit. If you want to learn how to invest, you need to look at the historical performance of a company and you will notice that stocks always rebound after corrections. To put it simply, long-term investing reduces risk. The only thing that matters is that you pick stocks of companies with a healthy business model that you believe will be around for many years to come.