I have never invested or bought stock before. I have taken several investment classes but none of the classes taught us how to invest. I mean it was not hands on. I anybody familiar with Scottrade that can give me advice on what type of things to invest in and what to avoid? Is it a wise thing to do? Just invest a little at a time so you dont loose much but you learn as you go. Investing is a learned skill. There are risks in all types of investing no matter how good you are. No one is going to sit down and tell you what to invest in, because if you lost money then you'd be blaming them for your loss. So everyone is hush hush about it. I like Scottrade. Its very easy to open an account. They have regional offices that you can go to in case of troubles. The minimum amount to open an account is $500, and there are NO minimum balance fees, no monthly fees, and no withdrawl fees. Many trades are free, some have a minimal fee. Stock (equity) trades are only $7. Their research material is not as good as some other places, but there are plenty of resources out there to do your research from like Morning Star. So I think you'll be fine with Scottrade. What to invest in is a matter of personal preference. The basic goal is to make money at a faster rate than you can in a bank savings account at 1/2% or a bank CD at 3%. It depends on how much risk you are willing to take with your money. High risk investment instruments will return a much greater ROI when they do well, but the results are more disasterous when they do poorly. You can invest in very safe instruments like US Treasury instruments such as Notes, Bonds, Bills, Strips, Cougars, Corpses etc. All are guaranteed by the full faith of the Federal Government. The short comings are that the rate of return is rather low around 5%, and the minimum purchase amount is typically $10,000. Municipal bonds are fairly safe as well, but you have the same problems of low rate and large initial investment amounts. You can dabble in individual stocks. The problem there is you need to pick a hot stock, and know when to buy it and when to unload it. This requires you keeping your eye on it all day to make sure you jump at the right time or lose out. Mutual Funds are a decent way to go as well. They are pools of different securities. Some are Capital Stock funds. Of those, they may be only large companys stocks, or small companys stocks. Within those groups you'll have growth companys and blends of growth and investment companies etc. The good part is that the fund manager is the one who keeps their eye on the market all day and makes the profits as high as possible and keeps the loses at a minimum. You can also buy Mutual Funds that deal in Bonds, or foreign equity stocks only. The choices are mind boggling. For Mutual Funds you need to watch out for the loads. A front end load fund charges you a fee up front when you buy. A back end load fund charges you a fee when you sell. Some Mutual Funds are load free, but may charge a redemption fee. These typically only apply if you sell your shares in the fund too soon after buying them. So do your research!! Avoid penny stocks. Avoid Mutual Funds based on the indexes. Those look good and are recommended by brokers, but if the market crashes, your fund crashes, and the best you can ever do is the same as the stock index, you want to beat that number. Spread your money around. Invest in several different mutual funds of different types. Invest in different stocks or different bonds. Buy a little gold next time it adjusts down hard, and sit on it. Diversify. Im also new to investing, and have been scottrade over a month. scottrade has the lowest commission at $7. very easy to open as well. refer me MAN!! classes are worthless. I have a degree in Finance and learned little about actual investment those long yrs ago. Fortunately there is little to know if smart enough not to trade. Invest - don't speculate. build a portfolio then keep hands off. Closed end funds (ADX, GAM,PEO) ETFs (EWA EFA PWT) Hold expenses down and don't think too much. No need to understand how market works. Broker does not matter much so Scottrade not important as long as they allow you access to the options you need. Feel free to contact. First of all, CONGRATULATIONS on deciding to invest your money it is one of the most important things to do for your future and very wise. I would also recommend Scottrade. It has one of the lowest, if not the lowest, commission rates and has no inactivity fees among other things.
It is easy to use for trading but remember they are your broker not your investment adviser. In fact, they are prohibited from giving any advice, I think. This is not a bad thing but remember that Scottrade is going to execute the orders that you give not advise you on what to invest in.
If you are like me and really just want an easy to manage investment portfolio, look into index mutual funds like Vanguard鈥檚 market fund or Index ETF's. Playing the indexes is great for long-term investing and so easy to do. One thing that sold me on indexing is that more than half of professional investors do not even match the market, so if these "professionals" cannot do it how am I going to do it.
I concede that you are never going to be swimming in returns but if you are willing to sit on these investments for years, you will be in great shape. Also, remember that buying an index gives you some automatic diversity but you still need diversity in the indexes that you buy, no eggs in one basket even with index funds.
I you want the best practical advice to investing read a book entitled "The Intelligent Investor" by Ben Gram. This book is dated but has practical advice on just about every investing endeavor and is a book worth reading before you begin investing.
The most practical investing advice I can give aside from value investing is that dollar-cost-averaging and long time horizons between transactions are the two best tools any individual investor can use. In addition, remember that time is on your side. You have a choice; you can be old and wealthy or just old. Hi,
If I were young, I would be investing in small cap growth mutual funds or stocks. Go here for excellent low cost advice (http://www.aaii.com/aaiiportfolios/comme...
Don't be alarmed at the low cost - it has some of the best financial advice on the Web.
You have lots of time before retirement which means the magic of compound interest will just keep building and building. It really works and if you keep investing every year, in 10 or 15 years you will be surprised at how it mounts up. In 30 years you could be a millionaire which probably won't amount to much in 30 year owing the the ravages of inflation.
By that time you will need a money manager like Fisher Investments to manage your money - probably before when you reach the $500,000 mark.
And that's the primary reason to keep investing in small cap growth stocks - they will flog inflation to death.
When investing in mutual funds, select the no-load funds only. Do not invest in mutual funds with a "load", an up front commission that you have to pay before when they sell you the mutual fund. Some charge as much as 10% which is a rrip-off. Many studies have shown that the no-load funds do as well as the load funds and sometimes a lot better.
Look at the AAI Shadow Stock Portfolio. I would try and emulate that portfolio if you want to invest in stocks. It was up 25% as of November 2006. The Vanguard Index fund is only up 14%.
AAII has some of the best financial advisers and the cost is very low. They have excellent guides and advice.
You may need a broker so go to e-Trade or Scottsdale who have low commission rates.
Do your own due diligence. Your own ideas are the best. Do not depend on someone else to select investments for you. Learn about investing so you don't have to ask what stocks to invest in.
Be self reliant.
Remember what Emerson said: A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do.
Find stocks that have steadily rising net profits (earnings), low debt, and good P/Es, lots of cash, companies buying back their stock..
What interests you? Find stocks that pique your interest and passion.
You need fast growing good stocks with good earnings and in good sectors. You need to learn more about the stock market before you even think about investing in it.
The stocks world is divided into 12 sectors such as energy which chevron belongs to. It is next to last in the sectors list today.
Technology is numero uno, but things can change in a new york minute, but within the sector, the fastest growing are computer services, not Microsoft. Then, Electronic Instruments and controls. Next is computer storage devices.
The next hot sector is Healthcare, but heed the warning below. Go here for sectors: (http://clearstation.etrade.com/cgi-bin/I...
The best software is Vector Vest if you can afford it. It has sector investing.
Here is a free Web site for charting stocks: (http://www.incrediblecharts.com/).
First of all, stay away from "professional brokers" and tips coming to you via e-mail or friends and acquaintances. And tips at Yahoo! Answers. And e-mail tips. Do your own due diligence - don't rely on someone else. Read Emerson's essay "Self Reliance.
Hey! They will say anything to get you to buy their junk. If it's too good to be true, it is.
Remember this, they are just sales people trying to sell you what their firm is pushing. They are not security analysts or financial planners, not even financial advisers. Trust me, I know from experience that they cannot be trusted especially with a million dollars. You risk losing it all. A million dollar account is known as a "whale" and they would love to get their greedy little paws on it and suck it dry. They just want to make commissions on what they buy and sell for the suckers, err...clients..
Get this book: The Market Gurus: Stock Investing Strategies You Can Use from Wall Street's Best (Paperback)
by John P. Reese (Author), Todd O. Glassman
Risk avoidance is the name of the game.
Remember, the harder I work, the luckier I get.
Penny stocks are highly speculative. I would avoid the ones under a dollar a share. For example, Best Buy started at less than $5. So there are some good companies, but it takes a lot of digging to find the good ones. You are looking for companies with good earnings, little debt, low capitalization, and good P/Es. For stocks under $5, very few will meet these requirements.
Stay away from the pharms unless they have patented drugs - do not invest in generic pharms, no growth there.
Check out which business sectors are the most popular and invest in the companies in those sectors. The number one, two and three are: technology, health care, and cyclicals (retail). These change periodically so keep current.
Go here for a list of growth stocks: http://www.thestreet.com/_googlen/newsan...
There are these lists all over the Web - you pays your money and takes your chances.
Watch CNBC, but don't pay too much attention to the talking heads, except for Jim Cramer, the wild man - but he tries to teach you how to invest and has some great advice.
Get Jim Cramer's Real Money: Sane Investing in an Insane World by James J. Cramer
Listen to Jim Cramer on CNBC.com
Go to Clearstation for quotes and tutorials on investing at (http://clearstation.etrade.com/). Sign up is free. Look up a few stocks. Do their tutorials. Check out the sectors.
Get this book: Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema.
Another good book: The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of (Motley Fool) by David Gardner, Tom Gardner, and Selena Maranjian
Jim Cramer's Mad Money: Watch TV, Get Rich by James J. Cramer and Cliff Mason
I Want to Make Money in the Stock Market: Learn to Begin Investing Without Losing Your Life Savings! by Chris M. Hart\
Sensible Stock Investing: How to Pick, Value, and Manage Stocks by David P. Van Knapp
Stock Investing For Dummies (For Dummies (Business & Personal Finance)) by Paul Mladjenovic
All About Stock Market Strategies : The Easy Way To Get Started by David Brown and Kassandra Bentley
The Motley Fool Investment Guide and their Web site (http://www.fool.com/).
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks by Dan Holtzclaw
How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O'Neil
Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder
Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book) by Price Headley
Extraordinary Popular Delusions & the Madness of Crowds (Paperback)
by Charles Mackay (Author), Andrew Tobias (Foreword) This book talks about the Tulip craze in Holland where people would mortgage their homes to buy Tulip bulbs. Same thing happened in 2001 - 2002 with the Internet bubble that brought the stock market to its knees. The dot com companies were the Tulip bulbs.
Buy Investors Business Daily. It has lots of tutorials and I like it better than the stodgy Wall St Journal.
Money Game by Adam Smith
Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) (Hardcover)
by Philip A. Fisher. Recommended by Warren Buffet who took $100,000 and grew it to $34 billion!
Value Investing with the Masters by Kirk Kazanjian
Valuegrowth Investing by Glen Arnold
The 5 Keys to Value Investing by J. Dennis Jean-Jacques
The Intelligent Investor Rev Ed. (Collins Business Essentials) by Benjamin Graham. Warren Buffet was his student at Columbia.
The Money Masters by John Train
The Bogleheads' Guide to Investing by Taylor Larimore
Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C. Bogle
Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky
Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town . See his Web site at (http://www.ruleoneinvestor.com/). Free sign-up. I got the book at the library.
Listen. You don't have to spend a lot of money on these books - most can be found at your library and those that your library doesn't have they can usually get from other libraries in your state.
Most of these books talk about stock and mutual fund investing, but for a good introduction to other forms of investing Gerald Appel has a great book called Opportunity Investing - How to Profit When Stock Advance, Stocks decline, Inflation Run Rampant, Prices fall, Oil Prices Hit the Roof and Every Time In Between.
First, Break All the Rules: What the World's Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman Not a book on investing, but it's a nice segue into the next book.
Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton
Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance by Marcus Buckingham
Finding your strengths is important when investing. These books teach you to build on your strengths, what you a good at. Everyone is good or passionate about something. Why not get better at what you are good at?
Another good book is: Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, ... and Every Time in Between (Hardcover)
by Gerald Appel
Most mutual funds do not even keep up the the return on the S&P. That's like 99% of them.
Vanguard Index funds are a no brainer.
A CD is better than a savings account. They range from six months to several years. You cannot touch your money tho until the time limit is up.
Check out this Web site on Direct Investment Plans where you can buy shares directly from companies: (http://www.fool.com/School/DRIPs.htm). Usually no fees and you can buy one share at a time.
Bonds are probably the safest. But they are not for the young. You might try a bond fund. They might return 5 or 6 percent. At 5% a million would return $50,000 a year - not a bad income. Remember, you have to pay taxes on the $50,000.
There are also municipal bonds and the income from them is taxfree especially if you buy them in a state that offers them, but they only pay about 3%, but it's mostly taxfree.
Look into Fidelity sector funds. Buy the top three, then in six months look how they are doing and if not so hot, select the next three that are best. Do this for a few years and you will make lots of money.
Kindest Personal Regards,
Walt Brown
Site Build It Certified Webmaster
capecod1@capecod-beaches.com
P.S. This is a life-long learning process. Reading these books and applying the rules to analyzing stocks that may be good It takes time. Be patient and keep reading and listening. Don't be a sucker and follow someone elses advice. Be your own man or woman. Depend on no one except yourself. You can only get smarter and stronger that way.
P.P.S. Internet has lots of good stuff, for example (http://stockcharts.com/school/doku.php?i...
Stockcharts.com is very good and their discussion of MACD is one of the best, barring its originator, Gerald Apple, but now we are getting into Technical Analysis and that is not for beginners. But it is an important factor in finding good stocks that are going up and growing. Remember, tiny acorns grow into mighty oaks. First off, I'm pretty happy with Scottrade. I just heard of a company called SogoInvest that is supposedly as good as Scottrade as far as completing orders quickly and back up customer service along with their research part of the website. They offer $3 trades each way and although I will keep my Scottrade account I'm really thinking of opening up another one with Sogo.
You really shouldnt be investing in anything yourself unless you have a really good handle on what it is your doing. You should know a bit about fundamental investing and preferably something about technical analysis too. I would recommend that you start reading Investing for Dummies and Investing Online for Dummies and also Technical Analysis for Dummies just to get some basics down and underline and take notes to refer to. After your done with that I would recommend Jim Cramer's books just because I thought he took some pretty complex information and was able to simplify it all into whats really important in researching companies. Start making Yahoo finance and MSN Money your friend along with a host of other websites such as CNBC online.
Right now I have positions in GS Goldmann Saks, DIS Disney, NYX - the New York Stock Exchange, AAPL - Apple Computers and MO - Altria. All of these companies have large upside potential in my opinion for this year. NYX has a lot of short selling going on often which creates a lot of temporary volatility but I believe its going to go much higher after the next earnings conference. Hope this helped a bit. |
