For many, the stock market dangles the lure of easy income. While investments in equities is the best long-term way of earning more inflation – and far more than a checking account with a bank – such investments come with substantial risks. As a starting point, you should complete a self-test of the basic concepts involved in securities investments. From there, you can find extensive free online materials to learn more about the markets.
One of the best self-tests is the Investor Literacy Test from the National Financial Capability Survey conducted by FINRA approximately every five years. This is a national survey, whose findings are representative of adults Americans across the country. Click here for the questions. But be careful. On the first five questions, the most common answer is the correct one. However for the next two questions, more people got it wrong than those who answered correctly. If you have thoughts of investing in gold futures, stock options or indeed anything apart from a mutual fund, then you need to be able to answer all ten questions correctly – and without hesitation. Otherwise, start taking courses in finance (not the free lunch scams) and build your expertise in finance – or invest in a Standard & Poor’s 500 Index.