I recently had the opportunity to interview Kathy Mills, the author of a book called Market Mojo: A Beginner’s Guide to the Stock Market. She’s a world traveler and investing enthusiast with some great tips for newbie investors. Continue reading to discover her advice for new investors!
And don’t miss out on the giveaway she’s sponsoring!
Win a Free Book and $10 Amazon Gift Card (x3)
Before we get started with Kathy’s interview, I’m excited to share that Kathy has agreed to give away a few books and gift cards to readers of A Richer You! Enter here for three chances to win, and keep an eye on our Facebook and Twitter accounts for additional giveaways. Three lucky winners will receive a copy of her book and a $10 Amazon gift card by entering here.
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And now, on to the interview.
Why did you write your book, Market Mojo: A Beginner’s Guide to the Stock Market?
I had to do a lot of research when I started planning for my financial future. I was interested in investing, but couldn’t find information designed for someone at my knowledge level (which was zero at the time). Books that claimed to be written for beginners were deathly dull and steeped with jargon and scary acronyms; they were no help. I also never had any kind of personal finance classes in high school or college. I was going it alone, and it was intimidating.
It seemed a shame that I had to spend so much time and effort to get a basic understanding of how the stock market works. It also seemed a shame that I nearly died from boredom during the learning process. I resolved to put together a fun little guide – one for true beginners – that would allow them to skip the long and grueling research stage and get straight to the basics of finance. Market Mojo is a quick and entertaining read that provides any newbie with a solid foundation in investing.
Why is it important for everyone to understand the basics of the stock market?
We are looking at a very different financial future. Whereas my folks simply relied on a company pension and social security for a comfortable retirement at 62, people of my generation are anticipating working until well past 70 years of age—just to make ends meet. Pensions have all but vanished, and even getting an employer to contribute to a 401(k) can be difficult. Social security may provide some extra cushion in our later years, but it’s doubtful that we’ll be able to live on that income entirely. So rather than counting on employers or federal programs to provide for our retirement (‘cause they won’t), we need to figure out how to invest and create our own nest eggs.
But we don’t need to learn about the stock market just for retirement. We should learn about it because we are missing out on fantastic earning opportunities if we don’t! If you use the “set and forget” method (pick your stocks and keep them for the long haul), dividends and share price jumps will increase the value of your investment over time – you don’t do anything but watch the money roll in. This is known as “passive investing” and it simply rocks. Why wouldn’t folks want to take advantage of this????
What are the biggest misconceptions people have about the stock market?
Oh my, there are lots of market misconceptions floating around out there, but I’ll narrow it down to my top three:
Misconception 1: Investing is just too hard for most people to understand.
When beginners try reading stock reports in the paper, or listening to market analysts on the news, they’re likely to get frustrated. And why wouldn’t they? Those speculative discussions about abstract financial ideas and hypothetical situations aren’t meant for beginners. They also aren’t necessary.
Think about it this way: You can drive a car, but you probably don’t have an intimate knowledge of its inner workings. Should you stay off the road until you can pop open the hood, realign the gears, and rebuild the differential? Of course not!
The same idea applies to investing. There will always be more in-depth knowledge to gain as you go along, but you shouldn’t let that keep you from getting started right now. You can easily learn the basics and begin a savings plan for the future.
Misconception 2: You need a lot of money to invest in the stock market.
That might have been true in the old days—the “E.F. Hutton” years of the market. Back then, you needed a private broker and a pile of cash to even think about investing.
Flash forward to today, and it’s never been easier to invest, even with small amounts of money. There are fewer “minimum purchase” requirements than there used to be, so investors can buy just one or two shares of a stock at a time if that’s all they can afford. Mutual funds are a great option, too. Investors essentially pool their money together in a mutual fund so everyone gets access to stocks that they would otherwise be unable to afford.
Trading fees have come down considerably as well. There are a number of very reputable online brokers that facilitate stock transactions—some of them have offers as low as $5 a trade.
So investing is no longer a rich man’s game. It can be everyone’s game, if they take the time to research their options and invest whatever amount of money they can spare.
Misconception 3: The stock market is all about buying low and selling high. It’s impossible to invest without access to “hot tips.”
This is probably the most pervasive myth about the stock market – that it’s all about identifying a special company while it’s still unknown, buying 1,000 shares of its stock, and then waiting for it to explode into the next Amazon or Apple. That’s a fun idea, and I’m not saying that it never happens, but…..it rarely happens. People build wealth in the markets by adding to their accounts steadily over time. Consistently investing (even a modest amount of money) in a broad range of moderate-risk stocks will always provide a better return that trying to game the system Vegas-style.
If you were able to meet 18 year-old you, what financial advice would you offer?
The first thing I would tell 18 year-old me is to knock it off with the perms and the hairspray. After that, I’d get down to business and lay down these basics:
1) You may not have a lot of money now, but you have something even better – time. With time on your side, you can earn more money than you realize.
2) If you can’t find a minimum of $20 a month to invest, then you’re just not looking hard enough. Make saving and investing a priority, and cut corners in other places to make it happen. It’s worth it.
3) SET REGULAR FINANCIAL GOALS. If your goal is something nebulous like “retire a millionaire,” then it’s going to be difficult to stay on track. Instead, set monthly or quarterly financial goals – ones that are achievable but challenging. That will keep you focused and require you to budget, which is a skill you need to develop anyway.
What are your favorite tools/platforms for investing?
I am a HUGE fan of micro-investing, which allows people to invest – I’m not kidding here – pocket change. You simply link up your debit and credit cards to the micro-investing app of your choice, and then all of your purchases are rounded up to the next dollar. Those extra coins go directly into your investment account and you never even notice that they are gone.
Furthermore, you have the option to make one-time additions to the account if you suddenly come into a little more money. This method doesn’t set you up for retirement, but it is a fantastic introduction to the power of investing small amounts consistently.
Who is the audience for this book?
Anyone who wants to learn the basics of the stock market. Learners as young as 14 or 15 will be able to follow the lessons, so it is a great way for high school students to become familiar with market concepts and theories. College graduates will find it useful, too. They have the amazing benefit of time and compound interest on their side, so they should learn about investing and start putting money away as soon as they get their first job.
Really, though, the majority of readers that I’ve talked to are adults—mid 30s and beyond – who all say the same thing, “Somehow, I just never got around to learning about investing.” So the book is also for everyone who never got a proper financial education when they were in school, or those who have spotty knowledge and want to fill in the gaps. It’s never too late to start learning, so I’ll set the age range for the book (conservatively) between 9 and 99.
What kind of feedback have you gotten since the publication of your book?
To my complete amazement as a first-time author, the book has received recognition in two book competitions. The National Indie Excellence Awards named it as one of three finalists in its “Business Motivational” category, and the Next Generation Indie Book Awards named it one of five finalists in its “Best Nonfiction eBook” category.
I’ve also gotten a fair number of encouraging reviews online. I think my favorite was one from Goodreads that simply said, “I learned a lot and laughed a lot. What more could you want?” That pretty much sums up everything I hoped to achieve with writing the book.
Any last words?
I’d love to hear from readers with their questions and comments (or emoticons, if they’re pressed for time). I can be found on my website, www.wallstreetiswaiting.com, or on Twitter @WallStreetWaits.
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Do you use index ETFs?
There are so many new ways to purchase & own stock, especially on the internet, how do I know which ones I can trust?
I have problems in knowing what to invest in and how to start investing.
I enjoyed reading the interview and it’s never to last to invest. The book and the interview re-enforced this for me. Great news.
Question I have about investing, is how to participate in stocks and track your stocks progress.
How to motivate yourself to start investing and be consistent ?
This is an area I need to focus on.
How do you know if you are investing in a company that will make you money and not get ripped off ?
Investing seems complicated. How do I get started?
What is the smallest amount of money you can start investing with?
Which of these would be safer to invest in? Stocks or Bonds?
I <now a couple of stoc<s I'd li<e to purchase and just put away. How do I do this myself without a bro<er or e-trade etc.?
good luck all
I read differing views on investing in gold, silver, etc. What is the primary reason to invest in metals?
Is it better to have someone else manage my investment or should I pick (knowing I’ll pick names that I like as a way to decide)
What are the best stocks to invest in for your 401k? Should it be a set it and forget it or change it up often?
How long do you have to invest in a company before seeing profit?