Investing thread for teh beginners

[adlep]

Hmm,
I just have signed up with a free/no minimum online brokerage through costco.com (have to have a card though) here.
The account is basic, but there is a good part, stock trades are just $4.00 per trade.
Is anyone here actually making a good money trading stocks these days?
Or I should quit right now, before wasting my money?
Share your knowlege here...

 

[Shockwave]

I've done decently well. My problem is having enough money to make it worth it. The less you have to work with, the more change you need to really see a decent profit. If you have 1 share and it goes up 1 dollar, you made a dollar. If you have a 100 shares and it goes up a penny, you made a dollar.
Penny moves can happen throughout the day. Dollar moves arent so common.

 

[adlep]

Thanks and bump

 

[Hector13]

Originally posted by: Shockwave
I've done decently well. My problem is having enough money to make it worth it. The less you have to work with, the more change you need to really see a decent profit. If you have 1 share and it goes up 1 dollar, you made a dollar. If you have a 100 shares and it goes up a penny, you made a dollar.
Penny moves can happen throughout the day. Dollar moves arent so common.

not sure I agree with that... if you have a 100 shares, you paid a 100 times more (assuming you are talking about the same stock). So you need a $100 gain to get the same percentage gain as a $1 gain on a single stock.

Now commissions are a different story. If you don't have much money, commissions can eat into your capital real quick.

 

[Hector13]

oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

 

[Shockwave]

Originally posted by: Hector13

Originally posted by: Shockwave
I've done decently well. My problem is having enough money to make it worth it. The less you have to work with, the more change you need to really see a decent profit. If you have 1 share and it goes up 1 dollar, you made a dollar. If you have a 100 shares and it goes up a penny, you made a dollar.
Penny moves can happen throughout the day. Dollar moves arent so common.

not sure I agree with that... if you have a 100 shares, you paid a 100 times more (assuming you are talking about the same stock). So you need a $100 gain to get the same percentage gain as a $1 gain on a single stock.

Now commissions are a different story. If you don't have much money, commissions can eat into your capital real quick.

Problem is, percentage gains dont look at fees. If you make a 3% on 100 dollars, you lose money due to fees. If you make a 3% on 100,000 dollars, you came out really well.

 

[adlep]

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Can't I just buy index funds on the stock exchange?
Do they trade just like a regular stocks?
Can I just start trading NASDAQ index or NYSE index?

 

[Shockwave]

Originally posted by: adlep

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Can't I just buy index funds on the stock exchange?
Do they trade just like a regular stocks?
Can I just start trading NASDAQ index or NYSE index?

Lookup qqq I believe it is. Which I might add has been an amazingly poor invest in the long run. Do a 5 year graph on it, its frickin sickening to think about. But hey, thats the stock market 🙂

 

[adlep]

Originally posted by: Shockwave

Originally posted by: adlep

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Can't I just buy index funds on the stock exchange?
Do they trade just like a regular stocks?
Can I just start trading NASDAQ index or NYSE index?

Lookup qqq I believe it is. Which I might add has been an amazingly poor invest in the long run. Do a 5 year graph on it, its frickin sickening to think about. But hey, thats the stock market 🙂

Now it should start picking up again...No?

 

[Hector13]

Originally posted by: adlep

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Can't I just buy index funds on the stock exchange?
Do they trade just like a regular stocks?
Can I just start trading NASDAQ index or NYSE index?

You can buy ETFs (Exchange Traded Funsd) on the Amex. These are just like mutual funds, though you will pay a commission for each trade (but you can trade them intra-day, which, IMO, I don't think is worth the extra cost in commissions).

As for investing in the NASDAQ or NYSE "index", you can, as Shockwave said, buy QQQs for the NASDAQ and Diamonds (DIA) for the dow jones. The "cubes" (QQQ) track the nasdaq 100, so they are not really the same as the nasdaq index (which is only 30 names, I think?) that you see on the news.

In either case, I probably wouldn't recommend either as both are pretty concentrated (QQQ is almost all tech, DIA is only 30 "blue chips"). I would go for something like a s&p 500 or russell 1000 index fund. If you have enough, you should put some money in small caps (russell 2000) and/or international equities (perhaps a MSCI EAFE fund).

 

[RossMAN]

Here's my simple investing tip.

If you have debt (especially credit cards) pay it off first before investing.

 

[Shockwave]

Originally posted by: adlep

Originally posted by: Shockwave

Originally posted by: adlep

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Can't I just buy index funds on the stock exchange?
Do they trade just like a regular stocks?
Can I just start trading NASDAQ index or NYSE index?

Lookup qqq I believe it is. Which I might add has been an amazingly poor invest in the long run. Do a 5 year graph on it, its frickin sickening to think about. But hey, thats the stock market 🙂

Now it should start picking up again...No?

Well now, if I knew that I'd drive a Ferrari and not a Ford. 😉 :beer:

Yes, I believe it WILL go up. My view is 5 year historical prices are horribly skewed. Looking at them still includes the end of the stock market balloon and bubble pop that happened a few years ago. So I believe that those charts reflect a historical price that was artifically high. Thus, *I* think it will go up. But we aint playin with my money here, we're playin with yours. Do as you see fit. 🙂

 

[TommyVercetti]

Originally posted by: RossMAN
Here's my simple investing tip.

If you have debt (especially credit cards) pay it off first before investing.

What if you have student loans? Student loans don't seem like a huge burden, and it's only simple interest.

 

[RossMAN]

Originally posted by: TommyVercetti

Originally posted by: RossMAN
Here's my simple investing tip.

If you have debt (especially credit cards) pay it off first before investing.

What if you have student loans? Student loans don't seem like a huge burden, and it's only simple interest.

Student loans, car loan and home mortgage are conisdered "good debt" in my opinion.

 

[Shockwave]

Originally posted by: RossMAN

Originally posted by: TommyVercetti

Originally posted by: RossMAN
Here's my simple investing tip.

If you have debt (especially credit cards) pay it off first before investing.

What if you have student loans? Student loans don't seem like a huge burden, and it's only simple interest.

Student loans, car loan and home mortgage are conisdered "good debt" in my opinion.

I would say the car loan depends. If you got financed for twice the value of the car, bad loan. But THATS never happened 😉

 

[RossMAN]

What are some reputable and affordable companies to open a Roth IRA with (besides your local bank or CU)?

 

[wyvrn]

What if you have 5.9% interest on your credit cards (I do). I'll take a cash advance from that before I'll take money from an investment fund to pay something.

 

[LordSnailz]

Originally posted by: RossMAN
What are some reputable and affordable companies to open a Roth IRA with (besides your local bank or CU)?

I like Fidelity and Vanguard ... ended up going with Fidelity, wonderful customer service that will walk you through what funds to consider, but Vanguard is known for low expense ratios.

 

[Ilmater]

Here's a tip:

If you're a beginner, get a savings account and use that instead.

 

[DaveSimmons]

Originally posted by: LordSnailz

Originally posted by: RossMAN
What are some reputable and affordable companies to open a Roth IRA with (besides your local bank or CU)?

I like Fidelity and Vanguard ... ended up going with Fidelity, wonderful customer service that will walk you through what funds to consider, but Vanguard is known for low expense ratios.

And vanguard will let you buy their own (excellent) funds like VFINX without a transaction fee.

I'm with Schwab, but I can't recommend them unless you have a large 401k rollover to make their minimum balance requirement to avoid maintenance fees. Even then, VFINX is better than Schwab's onw S&P500 because of the lower management fee.

 

[usold]

Read some books... like The Millionaire Next Door & A Random Walk Down Wallstreet. They both push index funds and effecient market theory.. www.vanguard.com & www.diehards.org

 

[wyvrn]

I would suggest using small amounts at first until you get an idea of your risk tolerance, and learn how to invest. Put the rest in a treasury security or bond fund for the next six months while you learn. Read all the investment sites, and maybe pick up a college finance book from half price books and work some of the chapter problems. After 6 months, you should be pretty good at not losing your money. Stick to funds and not individual stocks, and you will have much better long term success.

 

[FeathersMcGraw]

My nutshell guide to investing for beginners:

1) Do not invest any money that you cannot afford to lose.
2) Have at least three month's expenses in savings before you start investing.
3) Reduce high-interest rate credit card debt/loans first.
4) Read about how the stock market works before investing.
5) Participate in your 401(k) first.
6) Contribute to an IRA (Roth or traditional) next.
7) Read and understand the prospectus of anything you invest in.
8) Invest in no-load stock index funds (e.g. Vanguard) at regular intervals, regardless of how the market is doing.

 

[rodgerthedodger]

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

or clueless.

 

[Zenmervolt]

Originally posted by: Hector13
oh.. and as for the original question... you can search here (or somewhere like fatwallet) and you will get a ton of similar threads.

but, to sum up my point of view... quit while you are ahead. You are better off sticking with index funds then trying to beat the market (unless you are very lucky).

Listen to this man.

Interesting tidbit from one of my finance textbooks: If Donald Trump had put all the money that he inherited from his father into an index fund or a passively managed mutual fund at the time he inherited it, he would still have approximately the same amount of money as he did when the textbook was written, which was before his recent problems with his casinos. So Trump, a person people look to as a great example of a person who can actively manage his money, is no better off than he would be if he had put his inheritance into a passively managed mutual fund.

ZV