Reddit reviews Understanding Wall Street, Fifth Edition (Understanding Wall Street (Paperback))

I think that a great first step would be to look outside of r/finance. This subreddit is really not advanced at all.

Yorn just recommended you an arbitrary portfolio and some very, very specific (and illiquid) assets. There's a multitude of things wrong with what he said but the biggest ones are:

1. You have $40,000. There is no way to invest in that many assets, so you can't even execute the strategy that he recommended. Not to mention the transaction costs would be ridiculously high.
   
   
2. Commodities are highly mean reverting over the short and long term. There is no guarantee of an increase in price with inflation. Technological advances could cause the price of a commodity to be must cheaper in the future for example. They aren't buy and hold instruments.
   
   
3. The high risk section. Taking a total punt with 20% of your net worth is pretty stupid.
   
   He is right that you need to learn a lot to invest successfully. One of the first things you should learn is that you don't take unfounded investment advice.
   
   Now, for my advice (which you should research heavily):
   
   There are a few strategies that retail investors can implement if they would like to pursue active management of their portfolio.
   
   These are:
   
   Value - buying stocks that that are undervalued based on some fundamental factor (like earnings). Value is conducive to longer term holdings. This book, despite its dumb title, is a good primer.
   
   Low volatility - Buying stocks with a low standard deviation of price returns. www.betaarbitrage.com Also conducive to long term holdings.
   
   Momentum - Buying assets that have recently increased in price. Tougher to implement and requires more frequent trading, but can be done at the sector level (and across asset classes) through ETFs.
   
   Also, be wary of the advice that index investing as your best/only option. The S&P500 has returned basically 0% in the last decade with 2 50% drawdowns. Not the type of characteristics I'd like to see in my portfolio.
   
   Also, diversification means buying assets that are negatively correlated in bad times. Not just buying a lot of things.
   
   EDIT: Just read below that you don't know what a mutual fund is. I like this book for an introduction to financial markets.

This has been a fundamental of investment strategy for at least 40 years. So much so that you can read about the advantage of index funds over mutual funds in wikipedia.

Here's a lay article from Wharton about it.

Here's an article from Money in 2008 that said that of the mutual funds they tracked, not a single one was profitable. Although dated, fundamentals haven't changed since then. (Hint: that a mutual fund beats its peers is not praise.)

Investment and lay financial publications routinely publish comparisons of mutuals to index funds. All of them are like the Money article.

The last I remember reading about mutuals the stats were something like: a huge percentage (something like 70-90%) of funds fail after 5-10 years, and of the ones that survive, most lose money. Of the ones that don't, only a few meet (much less beat) the market.

You need to remember that financial companies are not interested in making you money. They are interested in making themselves money. And your money doesn't just disappear. It goes to someone. (Whenever I say this I usually get howls from investment professionals.)

A simple test is to look at the annual returns of any company's funds. The numbers are dire.

In contrast, it's relatively easy to use a stock screener at a site like yahoo or google to identify any number of large caps that regularly pay dividends in excess of 10%. It requires a little work, but via dividend reinvestment a person literally can earn a fortune over time.

Anyone planning on putting money into the market needs to educate him/herself first. (And with much respect I don't mean by asking on reddit.) So here's what to do: start reading Barron's, Forbes, Investor's Business Daily, the WSJ, the Motley Fool, Seeking Alpha. Read them critically; don't just believe what they say. (As an example, I've never found the Motley Fool's suggested investments to be useful, although its analyses generally can be educational.) Here's a book, a very basic one, about the market.

Finally of course no needs to take my advice. I'm just some guy on reddit.