Your Questions About How To Invest

Jenny asks…

How much should one invest in being a photographer in weddings and fashion?

I am a college student and I don’t have a big budget but if I wanted to get gigs for wedddings how much would I have to invest?
Do companies pay for your camera if your a professional?

John answers:

An absolute fortune is the sad answer 🙁

By the time you invest in a high end DSLR, or a large format camera, or even an old F4, and all of the lenses, filters, reflectors, flash guns and meters, you will have shelled out a lot.

Then you will need to register your business and get insurance, printing, phone book listings, promotional material etc etc

The best way to start out is to get work with an established photographer and that will mean starting out as an assistant.

Then, when you have earned enough, you can invest in the gear that you will need.

Joseph asks…

How can I invest in a socially responsible way?

I’ve never invested money before, but I’d like to start a retirement fund and make some money to put towards buying a house later in life.

I’m looking for some howto‘s about investing and recommendations for ways to invest in socially responsible ways. Can any help?

John answers:

There are a lot of Socially Responsible mutual funds. Just Google for them. But do a lot of checking before you actually put your money in one. Although it may sound like a great idea to you and I kind of think it’s very nice of you, don’t forget that the idea is to make money and generally speaking, those funds don’t do any better than other funds and many Socially Responsible funds do worse. It’s an old saying that the “sin stocks” are the way to make money. Those would be the
alcohol, cigarettes, and gambling but in today’s market you can’t even count on those stocks.

Carol asks…

How many people here invest in the stock market?

If not, did the events of the past few years scare you off for good? For the people that do, what do you like to invest in, stocks, mutual funds?

John answers:

I should get paid for as much coke i drink-

Lizzie asks…

How does Warren Buffett invest without leverage or borrowing?

Warren Buffett invests big in billions at a time and he don’t use leverage or borrow money from wealthy investors like hedge funds do. So, my question is that, where does he find the money to invest that big. I know he has his own savings but he’s not having as much as he invest in his saving. How does he do it?

John answers:

A great part of Buffett’s genius is his business model that does use leverage, but in a way that doesn’t cost him anything. The main reason a lot of his investments are in insurance companies is that these companies provide huge amounts of cash from policyholders who pay at the beginning of the policy.

Buffett writes about this often. From Berkshires 2009 annual report:
“Insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from
certain workers’ compensation accidents, payments can stretch over decades. This collect-now, pay-later model leaves us holding large sums – money we call “float” – that will eventually go to others. Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our business grows, so does our float. ”

Berkshire’s float was $62 billion at the end of 2009.

When Buffett was a young man, he used leverage to became a multimillionaire by forming partnerships and sharing in their profits. He invested very little, but received a large portion of profits in exchange for his brilliant investment decisions. This was a truly win-win situation for him and his partners.

Read more about Berkshire at its website:
http://www.berkshirehathaway.com/

and you may find the “owners manual” interesting
http://www.berkshirehathaway.com/ownman.pdf

Ken asks…

How do I start to invest in shares?

I’ve always wanted to invest in the shares that are offered to the public. How do I start to do it. Do I have to register at somewhere first? Or do I need to apply for some licenses?

John answers:

Go to an online stockbroker site, such as www.belldirect.com.au (the lowest broker fee) or www.etrade.com.au.

You’ll need your tax file number.

Click “Sign Up”, there will be a simple form to fill out, and then they will send you a confirmation e-mail.

When buying shares, have a look at the 5 year figures to see if they have been steadily increasing. 5 years is a good investment time.

If a stable company gets bad publicity, eg. An airline whose shares have been rising, but then have an engine failure on one of their planes, causing the share price to drop, that would be a good time to buy as the figures will keep increasing once this news fades from the public mind.

Likewise, a well known company who announces a huge expansion would be the way to go, eg. A petrol chain opening 100 new stores.

Cheers, hope this helps 🙂

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