I need to make my money work but I don’t have enough knowledge about the topic to do smart things with it, but I love studying and learning new things.
What would you recommend to learn how to administer money in the best way possible?
I found a 2008 edition of the Finance Theory I [1] course on MIT OpenCourseWare , would it make sense to learn from there?
For context I studied computer science with a focus on artificial intelligence, machine learning and data science.
Also context, I am in the EU (Italy).
Unlike most things in life, putting more effort into investing will lead to worse results.
I recommend the Bogleheads forum at bogleheads.org or reddits r/personalfinance prime directive: https://www.reddit.com/r/personalfinance/wiki/index/
This flowchart will set you right. https://i.imgur.com/lSoUQr2.png
I would also add that the work you “put into” this is mainly in how you vote. We’re seeing the results of the “line must go up” culture in various parts of the world right now - most notably in the US. My biggest fear is that the global economy will need another Great Depression, probably right around the time I’m getting ready to retire, to realize that there is more to company stewardship that making rich people richer.
For most people, assuming they have disposable income, this is probably the right answer. One of the cornerstones of these forums is that trying to time the market is more often than not a fool’s errand unless you have inside information. Secondly, they rely on a long term view of investing. If you’re planning on retiring in 5 years, they’re a good start, but you’ll probably need more than they can offer. If retirement is still 10-20 years off, they can be very helpful in getting you pointed in the right direction. If you’re still in your 20s, they’ll have you set. I’ve often seen it said in these groups that if their strategies don’t work over 30-40 years, the economy probably has much bigger problems (like impending collapse)!
For a more approachable flowchart I like the bogleheads one to get you started- https://www.bogleheads.org/wiki/Prioritizing_investments
Find an ETF index fund that’s highly diversified across both sectors and regions, with total expenses under 0.5%, and set up an automatic monthly investment into it. It’s the boring way to invest - but unless you’ve got a crystal ball and can predict the future, I wouldn’t start gambling on individual stocks. This is basically the same advice Warren Buffett would give you.
ETF index fund
ETF is exchange-traded fund, so “ETF index fund” becomes “exchange-traded fund index fund”
But there are also index funds that are not ETFs.
??
Just thought the phrasing is funny because it is like ATM machine.
And also ETFs that are not index funds
Personally, I found Khan Academy helpful.
For context I studied computer science with a focus on artificial intelligence, machine learning and data science.
Given your background, you may also be interested in Georgia Tech OMSCS’s Machine Learning for Trading.
Unless you have plenty of time and knowledge - in which case you might as well be a daytrader or join a hedge fund or HFT - you are likely better off taking the easy way out by buying index ETFs.
There is a Humble Book Bundle about this expiring in a day or so:
https://www.humblebundle.com/books/get-good-with-money-books
I have no opinion about it, just letting you know it is there. I haven’t bought it myself.
I don’t think finance theory will help you much. But it’s worth reading the classic “A Random Walk Down Wall Street” to protect yourself from certain kinds of superstition.
i liked Investing For Dummies, it gives you fundamental to medium knowledge about pretty much every investing option there is, and you can look more into the investing routes that fit your risk attitude.
but if you’re not very interested in investing, then I would look into index funds specifically, which means you’ll invest some amount of money, usually a minimum of $1,000, into a fund composed of hundreds of stocks, so you’ll own exposure to the majority of the market, a fraction of every industry instead of investing in just a few different companies.
index funds are a fairly simple set it and forget it type of investment with a good return and don’t vary much regardless of how the overall market or different industries are doing.
you usually pay a small commission annually to the company who manages the fund you invest in, and the trade-off is that you put in money, have access to the entire stock market, watch your investment gain interest and you don’t have to do anything else, just let it gain compound interest until you want to take your money out.
Others have said it, but it depends on what you are trying to do. I know NYSE, so particular recommendations may not be applicable to you.
Find a sector you believe in. If its tech you can go for something like the NASDAQ fund QQQ. If you want a little more risk/reward, follow the industry, then find who is the big players. Dont sleep on support businesses too. So if you like AI, NVIDIA is the obvious answer, but conpanies like GE Vernova who do a lot of power gen solutions for ai companies offer a growth opportunity with the industry you like, but offers a little more diversity.
If you want highest risk/reward, you want options. There are safe ways to use options and other strategies are simply chaos. But you need to do the above before you start to think about options.
Lastly, dont think wallstreetbets is your friend. You wont learn anything there
You can get entire degrees in this and still be terrible at it. So go into it knowing what you can do and what you can’t. Personally I think a small class that you take after work at your local community college might be the best path. I’m not talking a degree or anything, there are little classes for people exactly like you. Find a quality class that really starts at the basics.
Depends on what you want to achieve.
Simplest advice:
I have about one month expenses plus some extra on my card because I can’t be bothered to log in and micro manage it.
3-6 months expenses as a backup fund. I’ve got mine on an interest bearing account that I can withdraw from by the next bank day.
The rest in ETF with a low fee. I can’t tell a specific one because I’m not familiar with what’s available in Italy.
Read as many diverse books on the subject, anything you can find, from Rich Dad Poor Dad to Intelligent Investor.
Then, after you think you know enough, read A Random Walk Down Wall Street by Malkiel, and eventually you’ll end up at the Bogleheads wiki and forum.
