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 E Y N T K Ab S
Ma I

No ha ma phone and app ha e b o gh ock ma ke in e ing o he palm of o

hand, o migh be con ide ing ge ing in he game.

B i can be in imida ing and ome ha ca o illingl fo k o e o ha d-ea ned mone

in e change fo an in angible piece of a compan . The h i ha he e a e man
inc edible p ide o becoming an in e o . And i ea ie han e e o ge a ed.

Thi g ide i he e o b eak do n:

Wha ock a e
Ho o in e in hem
Wha o do befo e in e ing in he ock ma ke
Ho o become a cce f l in e o
Tip fo in e ing d ing ma ke ola ili
W a aS ?

A ock ep e en o ne hip in a piece of a compan . Companie ha choo e o go p blic

and offe he abili o p cha e ock ill e he mone ai ed o in e in hei b ine .
Fi , a compan ill file pape o k i h he SEC (Sec i E change Commi ion), and ill
need o be app o ed befo e he can a ading.

Once he compan i app o ed, i ill e an IPO (ini ial p blic offe ing) da e i h he Ne
Yo k S ock E change. Yo can hen b a ha e once he compan goe f om p i a e o
p blic.

A ming he do ell, companie ma compen a e ha eholde h o gh ca h o

addi ional ock o ein e ea ning back in o he compan , hich benefi ha eholde
i h a i ing ock p ice.

S ppo e o e a big fan of Ta ge and o decide o p cha e a ha e of Ta ge ock. B

doing o, o belie e ha Ta ge i a compan ha ill con in e o g o and be p ofi able
fo he fo e eeable f e.

When he p ice of Ta ge goe p, he ock i aid o app ecia e in al e. Yo hope ha

o e ime, i ill con in e o app ecia e, and o ei he ecei e ongoing di idend pa men
o o can ell he ock a a m ch highe p ice and make a p ofi f om o o iginal
in e men .

If and hen o decide o ell, app ecia ion i ed o ga ge capi al gain . And he amo n
of capi al gain i ha de e mine ho m ch o ll need o pa in a e po - ale.

On he o he hand, If Ta ge doe no pe fo m ell, people ill p obabl be le likel o

in e in i ock. So, i ock p ice ill mo likel go do n, o dep ecia e, beca e he e
i le demand fo i . The al e of a ock picall o k like hi :

If X compan ha 100 ha e of ock and 110 people an o b ho e ha e , i

ock al e ill go p.
Ho e e , if X compan ha 100 ha e , and onl 50 people an o b ha e , i
ock al e ill go do n.

When o o n a piece of a compan ' ock, o a e a pa ial o ne of he compan . All

ha mean i ha o o n he compan on pape . Yo on ha e an po e o manage o
make deci ion i hin he compan i elf, b o can a end ann al ha eholde mee ing
fo he compan , hich ma help o infl ence he deci ion of ha e e compan ha o
o n ock in.

W a I T S Ma ?

The ock ma ke i impl a ga he ing place he e in e o can mee o b and ell

ec i ie and do o in a afe and eg la ed en i onmen . The e ph ical o i al a e ing
hole a e efe ed o a e change .

Pe hap he mo ell-kno n ph ical en e i he Ne Yo k S ock E change (NYSE),

he e compan ep e en a i e ma go o ing he opening bell hen he IPO. In addi ion
o he NYSE, he e a e n me o o he e change in he US and in e na ionall .

The heal h of he ock ma ke i of en ga ged in e m of ho ell ce ain inde e a e

pe fo ming. The e a e h ee main inde e in he US ha o e likel hea d men ioned, he
Do , S&P, and Na daq.

The Do Jone Ind ial A e age (lo ingl efe ed o a he Do ) follo he 30 bigge
la ge-cap US companie . Ho ehold name like Coca-cola and John on & John on a e
of en incl ded. While companie in hi mall inde change occa ionall , i al a
ep e en he hale .

The S anda d and Poo (S&P) 500 again ack la ge-cap US companie , b hi ime
incl de a mo e di e e pan of 500. I aid ha he S&P 500 can ack app o ima el
75% of all p blicl aded ock , hich make i a e eliable ma ke of he o e all
econom .

The Na daq i bo h an inde and an e change. I ha he mo e en i e each beca e

he compo i e inde ack a o nd 3,000 companie ha ade on i ap l named Na daq
E change.

H D Y I I T S Ma ?

Back in he da , o had o call p o ockb oke o e en mail in a le e indica ing o

in e e in p cha ing o elling ha e of a ock. B hank o he i e of he in e ne ,
ma phone , and app , in e ing in he ock ma ke i fa mo e aigh fo a d and fa e
han e e .

One a o ade i b ing a adi ional b oke age compan , like Vang a d, Sch ab, o
Fideli . A b oke age i he middle man ha gi e o acce o e change . Yo can
depo i ca h di ec l f om o bank acco n , choo e o de i ed ade , and he
b oke age facili a e he ade and ac all e ec e he p cha e fo o .

Of en, he e la ge b oke age eq i e a minim m in e men o p cha e ec i ie

(financial a e ). So hile o can open a a able b oke age acco n i h Vang a d f ee
of cha ge, he minim m in e men in an f nd i of en $1,000.

Fo hi ea on, man people op o in e ing bo h a adi ional b oke age and an app
like Aco n o Robinhood. App like he e e e de igned i h he o nge gene a ion in
mind. Wi h he e app , o e g an ed acce o he ame e change , b o can make
malle con ib ion , and ge ing a ed i a b ee e.

App al o p o ide ne and deci ion-making ool a o finge ip in addi ion o fee-f ee
ade . And hen o can in e igh f om o phone, Wall S ee adi ional image a
o ha e . S ddenl , in e ing feel m ch mo e acce ible and a lo le ca .
I o h no ing ha no in e men in a ock i a e hing. B na e, ock picking i a
highl ola ile endea o . Tha h cce f l in e o a en j choo ing indi id al
ock on a him and hoping fo he be .

Becoming a p o pe o ock ma ke in e o ake a m l i-p onged app oach ha incl de

c ea ing a able financial ba e, e ea ch, di e ifica ion, and a long- e m in e ing plan.

C a F a a S ab B Y I

S ock ma ke in e ing i hin and e ci ing. The p ide a e h ge, and hen o a o
look a cce o ie , i make o an o j mp in i h e e hing o ha e igh hi
min e. B hold o ho e . Yo ll an o be e o po i ion o elf fo cce f om he
a . And ha begin i h ge ing he e of o financial ho e in o de b :

Pa a - b . Deb in hi ca ego o ld be an hing o e

8-10% and incl de c edi ca d and pe onal loan . Since a e age e n in he
 ma ke a e 5-8%, an hing o e ha o d be be e off pa ing do n fi o a e on
in e e . An lo -in e e deb like a mo gage o a o loan i oka o keep a long
a i a ea onabl lo a e.
C a a a . The q icke a o c a h o in e men
po folio i b p lling o mone p ema el beca e o need o co e an
ne pec ed medical bill o ca epai . Gi e o elf a ca h c hion of a lea $1,000
a fi . B o k o b ild p o a ing ha ill co e 3-6 mon h of li ing e pen e .

Once o e clea ed p linge ing high-in e e deb and ha e eme genc a ing in ca e of
life p i e , o e in a mo e able financial place o begin o lea n abo and en e he
ma ke .

T S G Sa

The e a e no g a an ee hen i come o ock ma ke in e ing. Yo co ld in e $100

oda and lo e i all omo o . B people in e beca e he ma ke gene all end
p a d o e ime. J ake a look a he all- ime cha of he Do :

E en ho gh i had man p and do n , he o e all end i going p. Thi i e of he

o he o inde e a ell, he Na daq and S&P 500.
And p ing mone in o he ock ma ke i one of he be a o make e o ll ha e
mo e mone in he f e han o ha e oda . I ea o ge a ed i h he e 3 imple
ep .

D Y A a

Befo e o open a b oke age acco n , o need o decide o o e a ching in e ing

app oach and he he o d like o ake an ac i e o pa i e ole.

Do o an o b and ell ec i ie and manage o acco n , o o ld o like

omeone el e o e o mone o make in e men deci ion ?
Do o en i ion ac i el moni o ing o ock ac i i , o do o an o be
hand -off e cep fo ann al check-in ?
A e o comfo able allo ing a oma ed ool o manage o mone , o do o feel
mo e comfo able i h a h man o ch?

The an e o he e q e ion ill lead o o one of he follo ing app oache :

1. DIY: If o fall in o he I d like o do i m elf ealm, o can e a financial app like

Robinhood o ign on i h a la ge b oke age, like Vang a d, Sch ab, o Fideli , a
men ioned abo e. The DIY app oach i a good choice fo an one ho feel he can
p fo h adeq a e ime o e ea ch companie and f nd befo e in e ing.
2. L a a R b -a a a : I ea ie han e e o
be hand -off i h o ock ma ke in e men ing a ool like Aco n . Thi
a oma ed in e men ool make i ea o e ec ing eekl in e men and do
c edi ca d o nd- p o b mp ho e in e men f he . Yo can impl ell he app
ha pe of po folio o an , mode a el agg e i e, fo in ance. And i make
deci ion abo ha ec i ie o in e in on o behalf. To all hand -f ee.
Robo-ad i o - pe ool like Aco n a e popping p a mo in i ion and a e g ea
fo an one ho an o in e pa i el .
3. Ta a I Ma a F a a A : If o like o o k i h
h man , he e a e in e men manage o he e happ o help fo a fee. T picall ,
he e ad i o like o o k i h people ho ha e a bi mo e capi al, o check on
acco n minim m and fee befo e e ing an appoin men .
C a A

The e a e e e al pe of acco n o can e fo ock ma ke in e ing. While ome

acco n , like a 401(k), a e e plici l ied o an emplo e , o he op ion like an IRA a e
a ailable o an one i h a able income.

And deciding ha pe of acco n o ll e o in e i a c i ical deci ion, one hich ma

al o hea il impac he ec i ie o choo e o in e in o ha acco n .

R a a : 401(k), 457, 403(b), o o he

emplo e - pon o ed acco n can be g ea ool ha le e age ock ma ke g o h
hile p o iding income la e in life. Since o can gene all o ch he e acco n
n il age 59 , an in e men o make oda ill be in i fo he long ha l. Since
ock a e of en i kie , i ecommended o ell off ome ock in e men in fa o
of bond he clo e o ge o e i emen .
I a a (IRA ): IRA a e indi id all o ned and managed.
Tha mean o choo e he in e men o hold in hi ehicle. And he a
implica ion a e ba ed on if o con ib ion o an IRA a e p e- a o po - a
 (Ro h). A po - a acco n i of en p ime fo in e ing in eq i ie ( ock ) ince he
acco n g o a -f ee and eq i ie gene all ha e m ch highe e n han bond .
Ta ab b a a : The e acco n e af e - a mone and a e bjec
o a e on g o h. Depending on hen o i hd a he f nd , o ma need o
pa ho - e m o long- e m capi al gain a e , hich o pa on he a e g o h.

D O I a S O F

I a S

Of en he alded a a i k and ola ile a e cla , indi id al ock can al o ha e he mo

p ide hen i come o g o h. If o e indi id al ock picking, i of en eq i e m ch
mo e e ea ch and nde anding of he compan and he o e all ind o be cce f l.

In e o o p ofi on indi id al ock in a fe a : ock in e ing, ock ading, and

op ion ading. S ock in e ing, hich i ha e e co e ing in hi a icle, i he p ac ice
of b ing ock i h po en ial in hope of long- e m gain .
On he o he hand, ock ading i hen in e o b and ell ock f eq en l fo
ho - e m gain . Op ion ading con ac all gi e o he igh o p cha e ha e of
ock ba ed on he he o hink he ock ill go p o do n and b ho m ch.

S ock ading and op ion ading a e q i e a diffe en game han ock in e ing, i h m ch
mo e n ance ha fall o ide hi piece cope. Fo mo e info ma ion on ock o op ion
ading, check o o f ll g ide on ha , he e.

Man a in e o ill pla i h indi id al ock picking a a f ac ion of hei po folio.

I o h no ing hi i no he ame pa of hei po folio he plan o li e off in he f e.
Tha gene all held in f nd .

F (ETF , I F ,M a F )

A f nd i a collec ion of en , h nd ed , o ho and of ock ha c ea e a pool ha

follo a pa ic la ind ec o , like commodi ie , o a b oade inde , like he S&P 500.
F nd offe in an di e ifica ion and a e le i k a a e l.

Yo can p cha e a f nd o ack i all an a e cla , f om p ecio me al o he

in e ne of hing . The mo impo an hing hen coping o f nd i o check he fee .
Ac i el managed m al f nd end o ha e m ch highe fee han hei pa i el
managed co n e pa (ETF and inde f nd ).

H B aS I

Con a o pop la belief, mo cce f l ock ma ke in e o a en ge ing ich off

choo ing ingle ock i h ma i e g o h. S cce a an in e o happen like cce
in mo a ea of life, eall lo l , hen all a once. So e le in fo he long ha l and likel
ea of mono ono ec ing in e men befo e o can deem o in e men a in.
Belo a e he 4 a ea o ll an o con ide o inc ea e o likelihood of doing ell a an
in e o o e he long- e m.

D a a

Billionai e in e o Wa en B ffe i he epi ome of a cce f l in e o . Of co e, B ffe

i ell-kno n fo ama ing in ane eal h h o gh ock ma ke in e ing. B in e e ingl ,
hi a eg i inc edibl imple.
He in e in companie he nde and and look fo ock ha a e nde al ed. Tha
he a eg ha o k fo him, b no e e in e o need o do he ame hing. To each
hei o n hen i come o in e ing a egie . Some of he mo common a e:

B a : Thi i he a eg of mo long- e m in e o and ho e in e ing

pecificall fo e i emen . If o e making ec ing in e men in o a 401(k) and
don plan o change o ell ho e in e men n il o e i e (o ge clo e o
e i emen age), o e pa icipa ing in a b and hold a eg .
Va : A al e in e o look pecificall fo nde al ed companie and
a emp o p cha e hem on ale. Thi can be a ime-con ming endea o a he
nde l ing companie need o be ho o ghl e ed and nde ood. An ea ie
op ion i o b in o a f nd ha ack eq i ie ma ked a al e.
D : The e a e he high-pa ing, of en la ge-cap ock . The pa
in e o a q a e l o ann al di idend in ca h o a addi ional ock ba ed on
compan pe fo mance. While mo e e pen i e, di idend ock end o be hea il
fa o ed beca e of hei abili o p od ce eg la pa i e income.
D H M Y I

In e ing in he ock ma ke i an inhe en l i k en e. And hile ma ke gene all

end p a d o e ime, he e i ill he abili o lo e a lo of mone if o pick indi id al
ock ha end p anking.

Tha h i c i ical o decide o in e men b dge and le e age ha again o he

financial goal like deb pa off, eme genc a ing , and ho and long- e m a ing goal .

Ho m ch o choo e o in e ill be ba ed on o niq e financial i a ion, hich i

e e -e ol ing. Yo ma a i h a li le a $5 pe eek. A o f ee p deb pa men o
ge ai e a o k, o can likel hif a bi mo e o a d in e men if ha align i h o
financial goal .

F S a Pa aB a A A a
Gene al ad ice fo a e alloca ion in a po folio i o ake 100 - o age and make ha
o ock alloca ion. The e o ld hen be in bond o p omo e abili .

Wi h hi eq a ion, he o nge o a e, he mo e mone o in e in o eq i ie . Tho e

ho hold a mo l eq i ie po folio do o fo a fe ke ea on :

The ha e a f ll -f ded eme ge c f d. E en if ome hing come p o of he

bl e, in e o i h an eme genc f nd o ldn need o p ll f om an in e men .
The efo e, he e le i k of needing o p ll he mone f om he ma ke a a lo .
I e me ha e a l ge ime h i . Yo nge in e o ho ma no need o
acce f nd fo 20 o 30 ea can affo d o be a bi mo e agg e i e. O e ime,
he clo e o ge o needing he mone , o can lo l an i ion o a mo e
con e a i e po folio and incl de bond fo abili .
The ca be ha d - ff. When he ma ke goe p o do n, a in e o ick o
hei in e men a eg . Eq i ie a e mo e ola ile b na e, o an in e o ho
can omach he do n n and ick o he plan i a good candida e fo a
ock-hea po folio.

Again, he a e alloca ion and ock o f nd elec ion a e en i el p o he in e o . The e

i no igh o ong; i ha e e make o feel he mo comfo able.
D D a

Di e ifica ion can come in man fo m . In ho , di e if ing o po folio impl mean

ha o o n a a ie of diffe en a e . Yo can di e if ac o a e cla e , like
le e aging eal e a e, eq i ie , and bond , o i hin an a e cla , like b ing di e e
ETF .

When i come o ock ma ke in e ing, i be o make e o e no hea on one

pe of ock o f nd, like g o h o la ge-cap a e ha hea il fa o ech ock . An ea
and q ick pa h o di e ifica ion i choo ing f nd ha complemen each o he .

Fo e ample, a ell-di e ified 5-f nd ock po folio migh look like holding:

20% la ge-cap dome ic g o h

20% mall-cap dome ic g o h
20% la ge-cap dome ic al e
20% mall-cap dome ic al e
20% in e na ional ock
Balancing dome ic la ge and mall-cap i h bo h al e and g o h f nd pl an
in e na ional o eme ging ma ke f nd can of en hedge again he i k of being in 100%
US la ge, high-g o h companie .

The e a e man diffe en a o ackle di e if ing f nd , o hi i a poin he e e ea ch

along ide o long- e m goal ill g ide he pa h.

The p ide o di e ifica ion i ha if one of o in e men goe do n, o on need o

o a m ch, beca e o ha e man o he .

Thi a eg minimi e o i k hen i come o ock ma ke in e ing hile al o

ma imi ing o po en ial o make a p ofi on o o e all in e men hen o finall do
go o ell hem.

T S Ma I I AD

The ock ma ke i ola ile. The e eall no o he a o p i . B gene all , o e ime,

he ma ke end p a d, and ha ha e e all he e fo . When he ma ke ake a di e,
he e a e a fe hing all ock ma ke in e o ho ld do o make e o don :

1. Lo e an gain o e made b elling belo o clo e o o o iginal p cha e

p ice.
2. Mi he p ing hen he ma ke ine i abl e n o no mal and con in e o g o .
Ta E O O T E a

One of he bigge de imen o in e o ope a ing on a p ima il a e po folio i being

p one o j mping in o elling oo q ickl in a do n n. Sepa a e o po folio f om he
olle coa e ha happen in o omach hen o check o acco n .

One a o manage emo ion i o e ec ing in e men and onl check-in q a e l o

ann all . Ano he op ion i o emo e all in e ing app f om o phone and onl check in
on a comp e . Thi can be e peciall helpf l if o e p one o checking o po folio
f eq en l and ma become e ed b mino fl c a ion .

S T Sa

Do n n can be ie ed f om o angle . The fi i he e o ee o po folio

c mbling and feel like o need o j mp in and ell e e hing. O o can ee do n n
a a ale.
An cce f l in e o belie e in b ing ock hen he e on ale and e ploi ing he
ine i able g o h. An ime a ock a ading lo e han i po en ial, i an oppo ni
fo in e o . Make e o ca h in if o e able.

L A O T a U Y S

When he ock o e in e ed in ha e a bad da , and o lo e mone , ha all

heo e ical. Yo ha en ac all lo an hing n il he momen hen o p ll he igge
and ell ho e ha e . Un il o do o, o e no o e off han o e e e e da o la
mon h.

Keep o lo e o a minim m b making in elligen elling deci ion . And a men ioned
abo e, make e hen o look o ell ha o e no coming f om an emo ional
andpoin b a logical and a ional one.

H R B S L
When o p cha e an indi id al ock, o can e ha called a op-lo o de . Tha
mean if a ock dip belo a ce ain poin , o ll a oma icall ell-off ha a e . If o e
pla ing i h e peciall ola ile ock , i can be i e o e hi pe of limi a ion.

And i can ea e he emo ional b den of li ing in fea of a ock anking and lo ing o
en i e in e men .

T B L
The ock ma ke can be o e l complica ed if o allo i o be. Na o ing o foc o
onl he acco n , companie , and f nd ha i o b oade in e ing need enable
o o c h o gh he cl e and in e on o o n e m . If o e ead o ge a ed:

D a a ba . Fea of fail e hen a ing ome hing ne

i o all no mal. Man people don e e ge a ed in e ing beca e he e af aid
of lo ing mone . Take a b ea h. S a lo . In e a li le bi of mone fi and p
mo e in once o e go en o fee e and feel mo e comfo able.
O a a a . S ock ma ke in e ing i inhe en l ola ile. Yo
can emo e ome of he i k b in e ing in mo e di e ified inde f nd o ETF ,
b he e a e no g a an ee . Make e o e co e ed o financial ba ic , like
e abli hing an eme genc f nd, befo e o look o in e .
E a . The e a e o man fan a ic online e o ce and book o di e
in o befo e o a in e ing. Si e like Kiplinge and Ba on and book like, The
Li le Book ha Bea he Ma ke , The Boglehead G ide o In e ing, and The
In elligen In e o con ain a eal h of info ma ion fo ne in e o .

We e li ing in an inc edible ime he e ock ma ke in e ing i open o an one. I a ime

o emb ace he implici of ading and he ab ndance of op ion .

Lea n ha o need, a fe in e men o ge a ed, and don be p i ed if o

a eaching o he he magic of he ock ma ke in no ime a all.