Want safe returns? They're smaller but have less risk. Index funds, CD's, t-bonds. Want lots of money? You take a gamble.
Unless you are applying machine learning etc into higher freq trading, I'd avoid stock picks in general. The market thrives off little guys shoveling cash into the mouths of big movers who have faster connections and data sources (bloomberg terminals), know more, and move faster on info. Algorithmic trading accounted for over 85% of market volume in 2012!
If you are really interested though, I think the key differentiator for those who still pursue more risky options is hedging techniques.
I'm just a sysadmin learning data science and wanting to apply it to the market, only paper trading so far, so take what I say with a grain of salt.
Just a clarification, because it seems like the most mentioned facet of what traders do these days is something with "machine learning" and "high frequency trading", but the actual use of either of those in active trading is small. Even in algo trading, the "machine learning" is very often just rebranded statistics, and not very complex statistics either (think linear regression).
That said, unless you have a real plan to do better than average in the market, you probably won't, so the advice to just invest passively is right on the mark.
If you're looking at investing five figures or more and unsure of allocation, it's worth doing a bit of research or sitting down with a financial professional.
Also remember that everyone has their own risk tolerances. If people give you advice like "never buy individual stocks", that's just their way of saying that their risk tolerance is below average. It's worth feeling out how much you'd be comfortable losing in exchange for potentially greater rewards.
What specific index funds do you invest in?
The gain is expected from capital growth, not dividends.
Bogleheads wiki and forum has good information and knowledgeable forum participants.
https://www.bogleheads.org/wiki/Main_Page
In addition, following books will give you good fundamental understanding of why and what of investing.
Your Money or Your Life, Vicki Robbins ...
Millionaire Next Door, Thomas Stanley
A Random Walk Down Wall Street, Burton Malkiel
Personally, 95% of my investment portfolio is in Index Funds/ETF. The other 5% I use as play money that keeps me engaged in investing, finance, and trying out new strategies and investments.
Studies have shown that a 60:40 stock:bond portfolio performs almost as well as all stock portfolio but with lower yearly volatility.
But I have a small yearly budget (less than 5%) for gambling with stocks. I enjoy picking stocks and reading financial news. I got lucky with a few picks but mostly it is a wash. This is a hobby for me, just requires a lot of discipline to not go above yearly budget.
As for how I pick stocks; financial news, regular news, if I like the company & its CEO. I definitely read up on CEO's biographies. Finally, I would do financial analysis, mostly avoid companies with a lot of debt, or very high PEs.
https://news.ycombinator.com/item?id=14256980
(I recommend using the search box at the bottom in the future.)
Why not invest in your own business, you get total ownership at a huge discount to the stock market.
I'm looking at getting back into cryptocurrencies (Bitcoin and Ethereum).
Buying stocks with some of your savings when you're 27 is probably not too bad.
