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Posted: 1/24/2002 5:11:03 AM EDT
I just opened an account with a brokerage firm. How do I know which co. to invest in. What to look for. I do NOT intend to day trade, just looking to make more than 4% annually the bank pays. Also, I just opened the account with a small amount, so I won't be able to buy 300 shares of Walmart. Any help is appreciated. Thanks.
Link Posted: 1/24/2002 5:18:16 AM EDT
[Last Edit: 1/24/2002 5:19:05 AM EDT by j_collins]
Glockdiver, I manage a charitable foundation portfolio of about $350 million in stocks and bonds. You are asking a question that begs a very lengthy answer, because there are many strategies and methods of stock picking. If you are a true "new guy" with no experience, I would suggest you start at www.fool.com It is the web site of the "Motley Fools" who arguably have one of the most consistent, easily understood, and successful investment strategies going. You will find plenty of information and suggestions there. J
Link Posted: 1/24/2002 5:28:01 AM EDT
Glockdiver, do you really want to invest in just one company? That comes very close to the fine line between "investing" and "gambling". [;)]
Link Posted: 1/24/2002 5:42:27 AM EDT
A good base for a small portfolio is a Mutual Fund that tracks the SP500. This way you're not too heavy into one company or sector.
Link Posted: 1/24/2002 5:42:48 AM EDT
Begin by focusing your investment goals: 1) what is my goal? (retirement, college for kids, new car in three years...) 2) what is my time horizon? (2yrs, 5yrs, 15yrs, 25yrs?) 3) what is my "risk tolerance" (usually less than most people immediately think) 4) how much am I going to need to achieve my goal? 5) how much can I afford to invest per period to achieve that goal? 8) will I need to consider tax implications of my choice? 7) what vehicle (individual stocks or bonds or mutual funds, etc.) is best for MY goals, time horizon, tolerance, and $$ ? For start-up advice, learn about it through many sources: Best books IMO are anything by John Bogle: "Winning the Loser's Game" "John Bogle on Investing" "Common Sense On Mutual Funds" John Bogle is the "Father of Index Funds" and probably the most [u]sensible[/u] voice in investing out there. Also, head on over to Morningstar site at [url]http://www.morningstar.com/[/url] and check out their forums - EXCELLENT place to begin learning about investing. Also good is Motley Fool site at [url]http://www.motleyfool.com/[/url] they have good newbie advice and also put out a several good beginner-books. Be sensible with your money, don't expect miracles - Good luck.
Link Posted: 1/24/2002 5:47:31 AM EDT
[Last Edit: 1/24/2002 5:48:37 AM EDT by The_Macallan]
Originally Posted By Renamed: Glockdiver, do you really want to invest in just one company? That comes very close to the fine line between "investing" and "gambling". [;)]
View Quote
Actually, picking a handful of stocks [b][u]IS[/u][/b] gambling! AVOID PICKING INDIVIDUAL STOCKS AS THE CORE OF YOUR PORTFOLIO!! The VAST majority of all PROFESSIONAL stock-pickers can't even pick consistent winners that can beat large index funds or the market, and they do it for a living. Oh, and did I mention... AVOID PICKING INDIVIDUAL STOCKS AS THE CORE OF YOUR PORTFOLIO!!
Link Posted: 1/24/2002 6:00:58 AM EDT
I think investing in Mutuals is a reasonable first approach. The others have already mentioned that picking individual stocks can be iffy. The Enron mess shows you how company officials, in cahoots with their accounting firm, can cook the books to the point that even the professional investment firms can't correctly evaluate a companies position.
Link Posted: 1/24/2002 7:05:09 AM EDT
Originally Posted By The_Macallan: Begin by focusing your investment goals: 1) what is my goal? (retirement, college for kids, new car in three years...) 2) what is my time horizon? (2yrs, 5yrs, 15yrs, 25yrs?) 3) what is my "risk tolerance" (usually less than most people immediately think) 4) how much am I going to need to achieve my goal? 5) how much can I afford to invest per period to achieve that goal? 8) will I need to consider tax implications of my choice? 7) what vehicle (individual stocks or bonds or mutual funds, etc.) is best for MY goals, time horizon, tolerance, and $$ ?
View Quote
Best advice you can have is this written by MaCallan. Do ask yourself these question. If you are indeed and INVESTOR, setting a longer time horizon is always to your benefit. Also once you are invested set an "out" price. Do not become bullish on a stock, or any other security, just cause you own it.
Link Posted: 1/24/2002 7:39:35 AM EDT
Glockdiver: A word of caution here: I made a lot of money on the Market and then I managed to lose it all. Now I just save like crazy and put it all in the bank. Before I got wiped out, I had more than enough money to buy a very nice house outright. Now I am back to building up my savings. Here are some of the things that I learned the hard way. (1.) Brokerage Fees can eat up all of your gains pretty fast and you will still owe money for Capital Gains Taxes. (2.) NEVER ever play Stock Options or Buy Stock on the Margin. If you do..you will be SORRY! (3.) NEVER ever buy Penny Stocks (Stocks whose value is less than 5$ per share). (4.) The BEST thing to invest in is in a very good Index Mutual Fund. Such as the Vanguard Fedility Index Fund or some other fund. (5.) NEVER ever put all of your money in one stock or mutual fund. (6.) ALWAYS keep a significant percentage of your money in the bank. (7.) Always do your Home work. That is find out everything that you can about the company or mutual fund BEFORE investing. Always take a good hard look at the market. (8.) Diversify your investments and spread your risk. (9.) And this is the MOST IMPORTANT rule. NEVER invest ANY MONEY that you cannot afford to LOSE.
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