How to invest in stocks?
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$4 Answers
Most Real Estate speculations need people getting into debt. Special laws give real estate investors advantages over everyone else, in order to give sometimes positive returns. The major financial crises of our times have been caused by these special rules to landowners. Without these special concessions by banks and lawmakers, real estate might not stand alone as good investments.
Stocks are certificates of ownership. Because of this, stocks can also be used to own real estate. What stock ownership adds however is liquidity, and the ability to sell off parts of your property, without selling the whole. Exchange traded share certificates can be used as collateral at almost any bank anywhere when you need cash, or sold through a Broker.
If you want to know how boring it is to own stocks you should buy them with a significant amount of funds. Now that we got that out of the way, how much money should you invest, and what are the stocks that are worth owning?
Because your goal here seems to be learning how the game works, there is no need to take unnecessary risks. No matter what stocks that you buy, they can always be sold to buy something else. So, just go online and find a Broker who can legally sell to you, and buy any old thing.
After you get in, you may have reservations on your first security. Learn about it, and trade into something else if you want. The first step when you decide to take value from today, and send it ahead for use in the future, is to learn more. Education is everything in the game of stock ownership.
Mark Mobius manages more than thirty Billion dollars ($34,000,000,000.00), for smaller investors. Listen to what he has to say, on the news, in the newspaper, or on the web. Form an opinion for yourself on how you think the future is unfolding. Put your money in the area where you suspect the most enduring long lasting patterns, and sit out the dips using your own vision.
I look for securities that I can sell for more than I pay for them. Investments spread out all around the world, in many currencies. They pay me a bit of income, which has always been reinvested, and I can get my original capital out on short notice when I feel like it.
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$
1. Through 401k plan or 403b plan - 401k retirement plan is a special type account funded through pre-tax payroll deductions. See complete details here: http://beginnersinvest.about.com/od/401k/a/aa122104a.htm
Or through 403b retirement plan - is another retirement plan for tax-exempt organizations, most employees of public schools, and self-employed religious ministers. See complete details here, too: http://beginnersinvest.about.com/od/403bplan/a/403b_plan.htm
3. You can also invest stock through brokerage account. This method allows you to purchase stocks, bonds, mutual funds, and other investments by paying commission to professionals that buy and sell items for you as you told them.
4. Through a direct stock purchase plan or dividend reinvestment plan (DRIP) - Choose a company that pays big dividends for your invested money. There are some I know in my country but I really haven't tried investing the fastest way to earn dividends because most of them just give fixed rate for a certain amount of money and that's given only annually.
Please watch also this helpful video from Mr. Warren Buffet:
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$
The amount of dividends a company pays can be deceiving. The best growth companies reinvest earnings because they can get a greater return than shareholders. So like Microsoft in the early years they do not pay any dividends at all. The share price just goes up.
For companies that do pay out, you want to be sure they earned the dividend, and are just not returning your own capital to you. It also wastes company funds to pay out dividends frequently. Everything that costs money comes out of your pocket.
If you want to know what to invest in, in your country. Look in the portfolios of the worldwide funds and see what they own in your country. These managers will have done the research and put their own money down.
You can tell which management is better by looking at their portfolio turnover ratio. If they know what they are doing they will be holding securities about five years, with a turn over of 20%. Each year they buy one-fifth, for five years out. If they have high turnovers 100% or more, they do not know what they are doing. The buying and selling all the time, makes profits for the brokers who own them, not the shareholders who own the company. You can find these on Morningstar. Start with ticker EMF and MSF. You can then buy the companies that they already own, direct.
But really no matter where you live the goal here is to have increasing value in your portfolio. Why not own shares in the fastest growing populations where ever they are. As the standards of living rise, Brazil, India, China, all over the world. Where the young people are is where the money is.
These plans 401k plan or 403b plan - 401k retirement plans are not ways to invest in stocks. They are forms of ownership that have restrictions compared to outright ownership. They are really types of trusts. You will still be buying the shares though a broker, on the stock exchange, or a series of middlemen, each of which you will have to pay, reducing your total return.
I have stock in Prudential and that's been very steady for me over the years. A good thing to have would be a mutual fund where the funds are distributed across many different sectors of the economy. That way if one is doing poorly, the others might be doing well and you can still earn some money. If you put it all in one sector and that goes bad, you can lose it all. My fund is an assset allocation fund which is a mid range fund across many sectors, which include retail, automative, real estate, etc.
Before investing anywhere, consult a reputable financial advisor who can help you make the right decision for what you want to accomplish in the stock market.
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$1. The best rule is to "buy low and sell high".
2. When investing in stocks, it should be a solid, long term commitment. These should not be an investment that you wish to see results off of in less than 5 years. Every piece of stock you buy as an investment should be a long term purchase. People do make money at day trading and penny stocks. However, this is not as safe and there are a lot of fees and headache with that.
3. Don't invest more than you can afford to lose. You should not invest your total nest egg into stocks. You can make a decent, sizable investment, but avoid investing it all. Set aside a percentage of your money you can save. Come up with a plan like investing 1/3 into stocks, 1/3 into something very safe like CDs or an IRA and put the 1/3 into something that can be taken out very easy for emergencies. If you lose the 1/3 in the stocks, you haven't lost it all or even 1/2.
When I started buying stocks, I spent a great deal of time researching companies through the yahoo financial reports. I looked for companies that where affordable, but had proven records of growth and success over the past 3 to 5 years. A steady increase of profit and their future plans. I did most of my buying and selling myself with etrade. I had to sell all my stocks about 6 years ago and it broke my heart. It's something I really enjoyed and actually made money at. One stock I bought for 4 bucks a share, I sold for 33 each. This was a great find in my research. I knew the company had contracted jobs forecast for the future by reading up on the company. Use common sense.
Another method of buying stocks I used, was Hillard Lyons. I would tell them what stock I wanted, how much to buy and what price I would give. Whenever the stock would go down to that price, they would buy it for me. I kept money in an account for that. You can get your own financial advisor, but I found it better to do my own homework. If you want something more low risk, buy into low to moderate risk mutual funds.
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$
cosmopinkice > I said don't buy into stocks if you expect to see a return in less than 5 years.
Yes excellent advise, "you have to hold 5 years if you expect to see a return."
What cosmopinkice says about a three to five year time frame is true. Three to five years is not long term however. Long term is a few generations. A buy & hold strategy like that used by Warren Buffett suggests that you hold for life.
cosmopinkice > People in the 80s kill themselves when the stock market crashed.
But stocks went up in the 1980s!
Not investing more than you can afford to lose, is a rule for trading commodities, not for stocks. A diversified portfolio, that is investments spread across many companies, countries, and economies, can never go completely to zero. One company yes, but a diversified strategy no. Stocks are liquid and you can get your money out.
What we look for in an investment is the possibility of selling it for more than you pay for it. You want it to pay you an income to cover the costs of owning it, even if you reinvest that yield. You want to be able to take your original capital out. And you want to be able to get out on short notice, so that you can switch to a better opportunity.
The problem with this "buy low and sell high" rule is you don’t know ahead of time if it is low, or high, right now. There are better ways to get your costs below the average price of the shares you are buying. Experienced investors will tell you that a technique called “dollar cost averaging,” is a better way to accumulate stocks.
What you want to do is spread out your purchases over time, regardless if you think the prices is high or low right now. More shares are purchased when prices are low, and fewer shares are bought when prices are high. Your average cost per share will end up being below the average price of the shares over any length of time.
@owl, why not write your own answer. People in the 80s killed themselves when the stock market crashed. That's why you don't invest more than you can afford to lose. I didn't say hold on to the stocks for 3 to 5 years. I said research their earnings for the past 3 to 5 years. I said don't buy into stocks if you expect to see a return in less than 5 years.
Experienced investors today own indexes, exchange traded funds, and closed-end funds, instead of open-end Mutual Funds. Mutual funds attract people easily swayed by advertising, unaware that when they buy into the funds they will be paying high fees, for the advertising to pull in new investors. If we were managing two funds in the same securities. One open-ended the other closed-end. We would expect the closed-end fund to out perform the mutual fund. We could charge lower fees; we would have less turnover, and higher profits to the shareholders.
Closed end funds originally the private store of capital for the very wealthy do not advertise. You have to find them yourself. Only the best brokers will put you into closed-end funds. The buy stocks for $20.00 a week crowd, need not apply. Profits are paid out to shareholders each year, who may choose to reinvest, often at no, or very low, commissions.
+ show 1 comment