Your Questions About How To Invest

Lisa asks…

How can I invest in penny stocks and how much do I need to start?

What do I need to look for to invest in the right ones and where do I start?

John answers:

Penny stocks are far riskier than other stocks. They are completely inappropriate for the novice investor.

The following information is directly from the SEC (Securities and Exchange Commission) website. If you do not fully understand all of these risks, avoid penny stocks.

“How Are Microcap Stocks Different From Other Stocks?

Lack of Public Information

The biggest difference between a microcap stock and other stocks is the amount of reliable, publicly available information about the company. Larger public companies file reports with the SEC that any investor can get for free from the SEC’s website. Professional stock analysts regularly research and write about larger public companies, and it’s easy to find their stock prices in the newspaper. In contrast, information about microcap companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes.

No Minimum Listing Standards

Companies that trade their stocks on major exchanges and in the Nasdaq Stock Market must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies on the OTCBB or the Pink Sheets do not have to meet any minimum standards.

Risk

While all investments involve risk, microcap stocks are among the most risky. Many microcap companies tend to be new and have no proven track record. Some of these companies have no assets or operations. Others have products and services that are still in development or have yet to be tested in the market. Another risk that pertains to microcap stocks involves the low volumes of trades. Because microcap stocks trade in low volumes, any size of trade can have a large percentage impact on the price of the stock.”

The SEC document also includes a section on frauds in small stocks including:

– E-Mail spam
– Internet fraud
– Paid promoters
– “Boiler Rooms” and cold calling
– Questionable Press Releases
– “Pump and Dump” schemes

Chris asks…

How do I invest my earnings as a new self employed contractor?

I want to invest as much of my earnings as possible without getting taxed. I could earn up $60K in a 10 week period and that is all I plan on working per year. 10-16 weeks max. I make very good money but don’t need the stress that goes with this work. How many different IRA’s can I open or what other tax deferred options are there.

John answers:

There are many options however I will give you tWO that are the ones you are looking for “TAX DEFERRED” with the most you can invest out of your earnings.
1. SEP IRA 20% of your net earnings up to a max of $49,000 + $5500 catchup if over 55.
2. 401K for self employed. 100% of earnings up to 16,500 + $5000 catchup if over 55. Then you can deduct 25% of net earnings to the max total to reach $49,000 + $5500 catchup if over 55.

I prefer 2. 401k with your income you will be able to put the minimum of $16500 + $5500 if over 50 the the remaining 25% net profit.
With the SEP you would only be allowed 20% of income. So lets say you out of the $60k you had a $50k profit. You could only put in 20% of the $50K or $10K in the SEP IRA.

I have been using the 401k a quite a few years and these are very easy to open as an individual self employed person. Base on your scenario and going with a 401K you would probably pay no income tax outside of Social Security taxes. After expenses and your 401k deduction you would probably be at zero income.

Betty asks…

How to Invest what is the minimum amount required to invest?

I want to invest in a share market. I am just a beginner. I would like to know more about the share market. Please tell me how to invest? where to buy the shares?

John answers:

There is no minimum amount required.
If u are from delhi, you may have a look at the source site

Mary asks…

How can I invest in the licensing or product of a private organization?

For example; When Carmelo Anthony was traded from the Denver Nuggets to the New York Knicks, is there a way to invest in the potential of his Knicks jersey sales. And no I cannot buy part of the team. Thanks.

John answers:

It is difficult to be that specific about private investment. You can look into certain elements present in the licensing agreement with a new invention. Some inventors are looking for investors help to fund marketing and licensing agreements. You can look at retail that is public as well if jersey sales was your investment strategy.

Nancy asks…

What is real estate investing and is it good to invest in it?

Im in 12th grade about to graduate and plan on investing, How would you invest in real estate threw ETF’S? or something else? are their any negatives investing in real estate?

John answers:

An ETF for REITs you mean?

Any way there are several ways you can begin to invest in real estate. A REIT or real estate investment trust is a kind of stock that represents a share in a RE investment company. REITs usually specialize in rental housing or commercial property. There are many specialties within these categories as well. Law requires REITs to pay out almost all income back to shareholders as dividends. REIT shares are usually pretty easy to buy and sell, so they are a decent way to start.

If you want to be a real real estate investor however, you have to buy and lease or sell property in your own right or with partners. One of the key reasons for this is leverage. When buyinf REIT shares you are buying straight-up equity. But when you buy a shopping center or rental house, a bank will lend you part of the money to buy, freeing up more cash to make improvements or buy additional properties.

This ability to leverage, receive income and tax deductions while realizing capital appreciation, (real estate inflation) over the long term is what makes RE investing so powerful. Most rich people in the US made a substantial portion of their fortune through RE investing, Good luck

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