Three Steps to Get Started with Financial Education

Learn how to begin your journey toward financial literacy with three simple steps: set goals; identify resources to help you pursue your goals; start learning the basics.

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5 min read

Editor’s Note: Follow Lee on Twitter. During each week in April, she’ll be sharing education ideas and resources that feature a different aspect of financial literacy.

Learning to navigate the landscape of financial concepts can seem daunting at first. But it can also be an exciting journey, one which, in the end, may prove to be rewarding as you become a more knowledgeable and confident investor.

The key to attaining financial literacy is to keep your goals simple, to learn small chunks of information at a time, and to practice consistently and at an even pace. In time, what you learn will start to fall into place; ideas will begin to connect; and what  was once complex will  cohesively transition into a logical arrangement of practical tools and strategies.

You can begin your journey toward financial literacy with these three simple steps:

1. Set Goals

Your first step is to identify what you want to learn, which may depend on whether your investment goal is to seek growth, income, or preservation.

  • Growth investing: The focus is on capital appreciation and higher returns. This approach involves more risk, and it also includes a wider range of asset classes from which to choose—stocks, exchange-traded funds (ETFs), mutual funds, options, and even futures. As growth investing may involve both short- and long-term strategies, in addition to a higher risk profile, this goal may be more suitable for investors with a longer time horizon. Before investing, you may want to consider learning about the different types of stocks, such as blue chip, cyclical, and small cap and how they’ve performed historically in different economic environments. Of course, past performance is no guarantee of future results.
  • Income investing: With this goal, investors seek to generate dividend- and yield-based returns to supplement their current income. Some people who are retired or approaching retirement consider this approach. Before investing, consider learning about dividends—what they are, how they are paid, and how they might fit into a portfolio. Income investing may involve bonds and other fixed income securities. If you’re pursuing this strategy, you should become familiar with the basics of fixed income investing.
  • Preservation: Some investors with sizeable portfolios consider a capital preservation strategy. A preservation strategy is perhaps the most conservative of all three, and it seeks to maintain wealth by foregoing the potential for higher returns generated by riskier assets in exchange for slower growth from low-risk assets. If this sounds like you, you might want more information on how to create a portfolio that balances risk and growth

Once you’ve decided on your investment goal , figuring out your investment style might come easier. Investing styles are typically broken down into two general categories: active and passive. 

  • Perhaps you’re more of a passive investor who buys and holds stocks for the long term.

If so, consider learning more about portfolio management, which is the process of planning, building and managing a mix of assets to align with your goals.

Fundamental analysis is the analysis of investments from a big-picture economic perspective, and something many long-term investors use to help them choose a portfolio mix. After all, the goal of a passive investor is to buy-and-hold investments for the long term.

  • Alternatively, you may be a trader who takes an active approach to buying and selling stocks with higher frequency and on a short-term basis.

If you favor this approach, you might benefit from learning how to interpret price patterns and market data from a chart, a method referred to as technical analysis.

It might also help for you to learn about options. Options strategies can be designed for any type of market movement—up, down or sideways—but they can be risky and may not be suitable for everybody. Learning the ABCs of options can help you decide if they may be right for you.

2. Identify Resources to Help You Pursue Your Goals

Once you’ve set your learning goals, the next step is to gather educational resources to help you learn the concepts and techniques that will help enable you to pursue those goals.

TD Ameritrade offers clients a rich suite of immersive courses that are easy to follow, filled with relevant and practical information, and designed to accommodate your schedule and pace.

Are you looking to expand your long-term investing knowledge? Here’s a sample of courses:

  • Portfolio Management: Investing basics, how to align your portfolio with your goals.
  • Stocks: Fundamental Analysis: How to research, view and understand valuation metrics
  • Income Investing: How to design a portfolio such that it targets income from dividends and interest

Are you an active trader, or interested in becoming one? Consider these courses:

  • Stocks: Technical analysis: Reading stock charts and identifying chart patterns.
  • Trading Options: Learn how options contracts work, strategies designed for any market—up, down or sideways, and the risks involved in options trading.

If you’re not an account holder, you can still access education resources including, in-person events, webcasts, articles, and an assortment of pre-recorded videos on market topics; all of which are accessible via your desktop or mobile device.

3. Start Learning the Basics

Now that you have gathered all of the resources, it’s time to immerse yourself into learning and then put that knowledge to use: in short, learn, practice, and do.

Be sure you’ve thought about how you learn. Are you auditory—meaning you can pick things up by listening? Or are you tactile, meaning you need to touch, feel and interact in order to make something stick? Do you learn best in an immersion environment, or do you prefer to learn in small chunks, with frequent breaks to help you absorb what you’ve learned?

If you enjoy learning alongside other investors, there are chat features in our live webcasts, and also within the Chat Rooms which you can find in TOS platform.

If you prefer in person, check the live in-person event schedule to see when we will be in a city near you.  At live events, in addition to learning in a hands-on environment, you also have the added benefit of being able to ask questions and have conversations with instructors or fellow investors.

For real-time market insights and strategy tips, anyone can tune into the TD Ameritrade Network. This programming is hosted by industry professionals who interpret market events as they unfold, to provide you with real-time information to apply to your strategies, and give you the confidence to make better market decisions during opportune moments.

Once you feel like you’ve made some progress, consider testing your strategies and getting some practice in a simulated market using the paperMoney® trading simulator on the thinkorswim® platform from TD Ameritrade. There you can practice, test, and backtest your strategies in a risk-free environment.

I hope you find these resources useful as you embark upon your financial education journey.

Never stop learning,

Lee 

Should you have questions on these resources, contact us. If you’re on social media, you can also log on and chat with us through Twitter or Facebook. 

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