Investing
Investing questions and answers
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Q: how do learn about investing in the stock market?
I have been interested in investing a little bit of money in the stockmarket with low risk to begin with until i become comfortable. Is there a site i can go to or any references i can refer to before i begin this. I would like to know as much as possible before i jump in not knowing what the heck I'm doing. Any advise is appreciated.
A: Consider an investment club. They are a great way to learn and over the long haul, they usually do pretty well in terms of return on money.
Here are a couple of references.
Q: What is a good place for a beginner to learn about investing in stocks?
I would like to start investing, but I have know absolutely nothing about it. Is there a site that I can learn about it? Are there any sites that can arrange stocks by their market price, gains/losses, etc.? Again, I have no clue about it, including how to go about discovering stocks, and how to research them.
A: 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/commentaries/stockportfolio/200701comment.cfm).
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.
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/Itechnicals?Event=srp&Section=redge&Refer=/redge.html)
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..
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/newsanalysis/ratings/10345212.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA
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?id=chart_school:technical_indicators:moving_average_conve
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.
Q: How do I start investing in stocks?
Hi! I am 17 and want to start investing in stocks! Does anyone have any tips on how I should start/ what exactly to do? thanks!
A: I think low cost no load mutual funds would be great to start with.
Q: What is the best book for understanding basics of investing?
I want to wet my hand in this investing business but don't know where to start. I know very basics of investing..and wondering yahooers cha suggest me few books to learn investing.
A: Best info for understanding basics of stock investing.
If you are new to the stock market, some research is necessary to be done on your part.
Try the below url:
http://www.sogotrade.com/help/faq.aspx...
For New visitors, it has extensive information available like:
How do I get started?
How do I fund my account to buy stock?
and Investing section gives information like:
How does the stock market work?
What are the risks and advantages of investing in the stock market?
How do I choose what to buy?
What are some tips for beginning investors?
The following tutorials might be helpful to you:
Stock-Investing-for-a-Beginner
http://ezinearticles.com/?Stock-Investing-for-a-Beginner&id=828865
How-To-Buy-Stocks-Online
http://ezinearticles.com/?How-To-Buy-Stocks-Online&id=734725
Q: All ways heard that investing or putting in swiss bank all ways safe and give more returns.How true it is?
All ways heard that investing or putting in swiss bank all ways safe and give more returns.How true it is and why?
A: Swiss banks are known for their safety - but I thought there were no returns. You pay them well to guard your money, you don't get interest back on it.
Q: What are the rights and obligations of Canadians for offshore internet investing?
I am interested in opening an account with Minvestment and p-2-p internet investing sites.
I want to know
1. if this is legal for a Canadian citizen
2. what my obligations are (rules to follow) regarding income tax once I want to withdraw my profits.
A: It is legal to invest your money anywhere in the world.
You are required to report total of investments over $100,000 by checking a box on your tax form
You are Required to report and pay taxes on worldwide income.
Q: Whats a good online investing company to start with?
I am a 20 year old college student looking to get involved with mutual funds and maybe some stocks. I already have a roth ira and am looking for a good online investment company like Charles Schwab, Fidelity, and Ing Direct to start and play around. I am looking to investing a couple thousand for now since that is what I can afford.
Any advice, pros and cons, and anything else you have to say would be appreciated. What is a good company to start with. We all have to start from somewhere.
A: Been happy with Schwab the last 12 years. Lots of good research available, access to many no-load and loaded funds (not all Schwab). And offices in many areas if you need to visit one. Good help desk if you have questions about the website or IRA question. Not full of poor english speaking foreigners, like other companies support staff.
Q: Where can I go to learn more about investing?
I am looking to either invest or open my own company.
But I would like to educate myself before I make any decision.
Where can I go to find some information or to educate myself a little more on investing before I do anything?
A: There are many free websites where you can learn about investing.
Try this one.
http://www.investopedia.com
Q: How do I go about investing in stocks?
My friend/ roommate says that investing in stocks is the best way to earn residual income, coming form interest, etc. How do I go about doing that? What would be my first steps?
A: Right now is a good time for real estate investing, or so says this
http://real-estate-investing.guidearticles.com/free-ebook-dvd.php
Q: How should I be investing my extra cash?
Currently, I am investing in my employers 401K to the max as well as my Vanguard Roth IRA to the max. I also have an individual account with Vanguard (T-Bills) which is my emergency fund/big ticket down payment account. What do I invest in now? Currently, if I have anything left over at the end of the month, I've been investing in another index fund within my individual account. Basically, my current strategy is the keep the extra cash liquid, but I'm willing to gamble it.
A: First of all, make sure that you have enough money set aside JUST IN CASE you were to lose you job. I would advise you keep 6 months through 1 year of liquid cash. With that in mind, any additional money should be invested in the stock market. I have done the same, but instead of extra money, I invest a good amount of my monthly pay check in stocks. Stocks are VERY cheap right know. I project to see returns as high as 50-200%. Do your research and make sure the company you choose to invest in is financially stable and will be able to weather the recession. I have personally invested some money in Apple, Sprint, HIG, Wal-Mart, McDonalds, etc. I have diversified my portfolio, meaning instead of investing in just one company I have invested in multiple companies. Another good thing to keep in mind is that you may have to wait about 1-3 years. I hope to see returns within 1 1/2 years, but am willing to wait 4 years in total. There are going to be more though times ahead, but I think I will be able to make it with a good profit. I hope this helps and good luck.
Q: What do you think about investing during financial economical crisis?
I know that this financial economical crisis will last for 2 years at least. But I want to get some financial benefit from banks in anyway.
So what do you think about investing during financial economical crisis period? Will it be successful or self-destructive plan?
A: Hi,
Depends. If you plan on "bottom fishing" and hoping to pick up some good bargains, be prepared for a wild ride -- and probably many losses.
It's tough to invest for capital gains/price appreciation when the market has gone down so much. Volatility is at historically high levels.
Also, it's tough to guess which companies are going to prosper in and after these tough times. Big names are on the ropes. Who's next?
Also, don't forget that baby boomers have just started to retire. We might depress the markets for a lot more than just two years.
So, my advice -- as always -- is to invest for income. You can pick up many bargains in dividend-paying stocks. You don't have to care how their prices fluctuate in the future, so long as they keep paying you dividends.
best, Rick Stooker
Q: Im turning 18 soon and want to start investing. What's the best way, what should i do, who to get help from?
I just want to know everything there is to start investing and the process. Also, certain firms or people that can help me start investing and help create portfolios and such. I've read a lot of articles but still get confused. Thank You for the input.
A: Before you invest in any security, the first investment you should make is in yourself, and the best investment you can make is by educating yourself.
Start your education by learning why you should invest and the importance of being able to make your own decisions or what the pro’s make theirs.
Start by reading,
What Works on Wall Street by James O'Shaunessey
Beating the Street by Peter Lynch
One Up on Wall Street by Peter Lynch
The Warren Buffett Way by Robert Hagstrom
Trading For a Living by Alexander Elder
Mastering the Trade” by John Caster
How to Make Money in Stocks” by William O’Neil
The Disciplined Trader by Mark Douglas
Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance. (http://moneycentral.msn.com/home.asp http://finance.yahoo.com/ )
While at MSN following the strategy lab analysts to get a feel for what the pros are doing and why. This site has some basic information for beginners. If any site offers free information, take it.
Other website that can provide instructions and help with procedures and terminology are
Investopedia - http://www.investopedia.com/ Stock Charts - http://stockcharts.com/
Other - http://www.investorshub.com/ http://www.1source4stocks.com/
Visit some of the more professional websites like Zacks - http://www.zacks.com/
Smart Money - http://www.smartmoney.com/ Schaeffer’s – http://www.schaeffersresearch.com/
Some of these web sites will have advertisers who are worth looking into also. And remember, if they offer free information, get it.
Attend all the free seminars you can, just be careful and don’t get pressured into anything you really don’t want or need. Most schools offer courses in finance and economics, but very few will have courses on the mechanics of the investment markets, if they do try taking the course. You may want to consider on-line courses, the New York Institute of Finance use to have such courses. Try to get some fee information from the stocks exchanges they all have (had) free booklets, SIAC and some of the regulators (FINRA SEC MSRB CBOE) may provide some free literature.
What do you need to go into the market?
1 - A written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself.
2 - Sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you trade/invest.
3 - A written money management program in place. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested.
4 – A full and complete understanding of the rules & regulations of the industry.
You at least have made the right decision to start investing, this is the first big step and it won’t be your last. Keep taking those steps forward and along the way never take the advice from people that are not in the market or try to tell you not to invest.
Good luck on your journey
Q: Roth IRA help - What type of funds to invest in for someone who knows little about investing?
I'm 34 and want to start a Roth IRA for myself and plan to to contribute the max amount in one contribution each year. I know I want to go with either Fidelity, Vanguard, or T. Rowe. I know very little about investing and would like to feel secure with the investment. I know there are too many funds to choose from and I don't understand them. Thanks for your suggestions.
A: I'm a Vanguard fan myself. If you are just starting out I would recommend their Star fund - which invests in a number of their other funds - it is well diversified with Large, small and foreign stocks and several bond funds. I put my daughters in that fund when they started their Roth.
Then try reading up - I suggest The Bogleheads Guide to Investing by Taylor Larimore (and others) - it is written for regular people. Also, check out their web site: http://www.diehards.org - just read the answers to what others ask and you will see that they are very kind to people starting out who might have "dumb" questions.
As you get more money and experience you will want to move out of the Star fund into several index funds.
You can do it. It really isn't rocket science. There are a lot in the media that what to make it confusing but a few simple index funds can give you a diverse, low cost portfolio and you don't have to do a lot of trading - every year or so rebalance to your original plan.
Q: What is your favorite investing forum? Which is the most popular investing forum?
What is your favorite investing forum? Which is the most popular investing forum? Specifically focusing on stock trading.
A: Investor Village is the best if the individual stock board is active; Motley Fool is also terrific; and the Street.com also has some really good participation. Here's a guide to all of them:
Q: How can I get my fiance to discuss finances and investing before we get married?
I have always been responsible with money. I have a good amt of emergency savings, an excellent credit score, and started investing for retirement and long-term goals like a home. My fiance on the other hand does not. He does not make very much money and has quite a bit of debt, he claims he cannot open a retirement account yet since he does not make enough and he is 6 years older than I am. He pays high interest on his debt and has no money for investing in our future. I am concerned that we might someday have problems with money, even though we are okay now. However I know once kids enter the picture things may change. When I try to talk to him about it things can get heated because he says he is doing everything he can and feels put down when I lecture him about money. I don't have a problem being the main supporter of the family, I just don't want him or us to be in a bad situation down the road. Are there any suggestions to get him to begin investing or any books on this subject?
A: You both need to sign a pre-nup. Then: Take a night and put it all on the table-> earning power, savings, investments. If it looks dim, dump him.