Invest Successfully and Still Have a Life

You could spend a lifetime and still not know everything about investing. Luckily, you don't have to be a know-it-all to make money in stocks over the long haul.

Aspiring investors often get excited about getting a handle on the stock market -- until they look at pages of stock listings. With so many investments to choose from, the idea of somehow going through thousands of companies to find the single best one can seem just about impossible.

Of course, you could just give up on individual stock investing and find a mutual fund that will make stock picks for you. Unfortunately, though, that doesn't make anything easier -- you'll still have to decide which of the thousands of different funds you want to buy.

But don't get frustrated. Just remember one thing: You have to start somewhere. But where you start doesn't make a huge difference, as long as you don't give up entirely. There are opportunities everywhere.

Limiting your focus
The world's best investors understand that when it comes to deciphering the financial markets, different people have different strengths and weaknesses. Even Warren Buffett, whom many view as the consummate all-around investor, decided in the late 1990s that he was ill-equipped to invest in even more-established technology stocks like Microsoft (Nasdaq: MSFT  ) and Intel (Nasdaq: INTC  ) -- let alone the newer start-ups of the period like Yahoo! (Nasdaq: YHOO  ) and eBay (NYSE: EBAY  ) .

Now, many credit Buffett's decision not to invest in technology as prescient of the bust that followed the tech bubble. Yet the important thing to take away from Buffett's decision isn't that he avoided losing money -- especially since many other investors managed to ride the early tech wave to a decade of gains in many stocks. Rather, the key is that despite criticism before the bust that Buffett was unable to adapt to a changing world, his fundamental decision was correct -- instead of jumping into something he didn't understand well, he stuck with industries he grasped better and found profitable opportunities. He didn't have to become a tech expert in order to make money.

Where to start
Of course, Buffett has plenty of expertise in a variety of industries, so deciding to ignore a single sector didn't limit his scope very much. If you're just starting out, though, you may not have much knowledge about any stocks at all.

This month's brand-new issue of Motley Fool Champion Funds talks about another successful investor who has succeeded by doing what he's good at. Although the stocks the fund holds are well-known names like Cigna (NYSE: CI  ) , Pfizer (NYSE: PFE  ) , and Kimberly-Clark (NYSE: KMB  ) , the fund's consistent attention to high-quality large-cap stocks has produced outstanding results, both in the recent downturn and over the long haul. If big companies are an area you'd like to explore further, reading about the fund's success can give you plenty of tips for forming your own strategy.

Where you should start investing depends on what motivates you. Think back to that first spark of interest that made you explore investing, and you'll often find out what inspires you most about the financial markets. For some, a particular sector of the market may be most appealing, especially if it mirrors their own career experience. Those who work in the computer industry, for instance, have a head start in researching tech company stocks.

Once you figure out where to start, the nice thing about investing is that nearly all the knowledge you gain analyzing one stock or sector will help you in researching others. Also, looking at mutual funds gives you insight on how professional money managers invest and can teach you lessons you can use in your own investing down the road.

The sheer size of the financial markets can be overwhelming, but don't let it stop you from becoming a successful investor. In these difficult times, knowing more about your investments can mean the difference between holding steady and losing a bundle.

For more on investing through hard times, read about:

To read more about this month's fund recommendation, take advantage of our special offer to look at our Motley Fool Champion Funds service. For 30 days, you'll get full access with no obligation.

Fool contributor Dan Caplinger focuses on closed-end mutual fund investing. He doesn't own shares of the companies mentioned in this article. Microsoft, Pfizer, and Intel are Motley Fool Inside Value picks. eBay is a Motley Fool Stock Advisor recommendation. Pfizer and Kimberly-Clark are Motley Fool Income Investor picks. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy informs you well.


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