Chapter 1. Getting Yourself Ready for Online Investing

In This Chapter

  • Analyzing your budget and determining how much you can invest

  • Taking the basic steps to get started

  • Understanding what returns and risks you can expect from investing

  • Getting to know your personal taste for risk

  • Understanding your approach to investing: Passive versus active

  • Finding resources online that can help you stick with a strategy

If you've ever watched a baby learn to walk, you've seen how cautious humans are by nature. Babies will hold themselves against a wall and scoot along before actually going toe-to-toe with gravity and trying to walk. That skepticism stays with most people as they get older. Before doing something risky, you probably think good and hard about what you stand to gain and what you might lose. Surprisingly, many online investors, especially those just starting out, lose that innate sense of risk and reward. They chase after the biggest possible returns without considering the sleepless nights they'll suffer through as those investments swing up and down. Some start buying investments they've heard others made money on without considering whether those investments are appropriate for them. Worst of all, some fall prey to fraudsters who promise huge returns in get-rich-quick schemes.

So, I've decided to start from the top and make sure that the basics are covered. In this chapter, you discover what you can expect to gain from investing online — and at what risk — so that you can decide whether ...

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