Your Questions About How To Invest In Commodities

Thomas asks…

How much money should a beginner start out with before investing online?

I want to invest in stock online. How much money should I start out with? How many different stocks should I buy? Whats the best online trader? Is day trading difficult to do? Thanks

John answers:

Your best bet is to get some education and experience before you start putting your hard-earned money on the line. Read a book (Investing for Dummies is a good starting point) or take a course to learn how the markets work, how brokers work, what types of investments you can buy etc. Find a website that will let you create a free “practice account”. This is basically “pretend” investing where you enter buy and sell transactions of real stocks but you don’t actually own them. You can see how your “investments” react over time and whether you made or lost money and then learn from your successes and failures.

As for how many different stocks you should buy, there’s no rule and it’s completely up to you but a good piece of advice is to spread your risk around so that your money is not tied up in the fortunes of just one company. The best way to do this is with mutual funds and ETFs. Mutual funds look like stock in that you buy shares at a particular price and then it either goes up or down and you make or lose money based on that. The difference between mutual funds and regular stock is that a mutual fund owns stock in many different companies, so when you buy mutual fund shares you’re actually buying shares in lots of different companies rather than just one. ETFs, or Exchange Traded Funds, are the same idea except that they are usually tied to an index or a commodity. For example, you could buy an ETF that is tied to the movement of S&P 500 index or one that is tied to the price of oil or natural gas futures contracts.

Whatever you decide to do, don’t ever invest more money than you can comfortably afford to lose. And don’t be in a rush to sink your money into something you don’t really understand. Learn as much as you can first, get some practice experience and seek out the advice of professionals or people you trust who have some investment experience before stepping onto the investing roller coaster. I rushed in when I had some extra cash sitting around and I promptly turned $25,000 into about $5000 by not knowing what I was doing and making rash, emotional decisions. I’ve learned a lot along the way and my investments are slowly recovering, but I sure wish I hadn’t gotten my education the hard way! Lol

Good luck!

Laura asks…

What should you one do if one wants to invest in gold, to counter the dollars value due to inflation?

Is it smarter to buy gold from a stock broker or some other commodities agent? Or should one simply buy the bars and store them? But where can someone just go and buy the bars, and then where to later sell them. What is the smartest and most practical choice?

John answers:

If you are looking for protection solely from inflation I would suggest looking into buying TIPS (Treasury Inflation Protected Securities). These bonds are adjusted every year to account for inflation. If you are also actually worried about US dollar decline versus other currancies I would suggest diversification into other currencies.

Gold has historically had a low return. I personally would avoid it. In 1988 years ago gold was about $400 at todays price of about $845 that is a 112% return or about 3.80% per year. Inflation for the same period averaged 3.06% so you did gain against inflation, but not by much. There are a lot of investments that returned a far greater amount.

Sandy asks…

Is now a good time to invest in stocks/ETFs?

What is your view on the economy now and in the next couple of years? I am invested in commodities like agriculture, oil, etc in etfs and have etfs that invest in China and Asia except Japan. I see Japan is hurting from the big quake and stocks are down but commodity are up; but, should people be still investing in equities like stocks and etfs? Jim Rogers says to invest in commodities and short equities. Etc?

John answers:

For every winner there is a loser! You can go bullish or bearish. Can make money either way, so to answer your question. You can invest anytime!!

George asks…

How to chosse the best mutual fund to invest in?

I am Saving around 20,000 Rs per month i want to start investing i MF’s i am not able to understand how to choose the best mutual fund to invest in.

John answers:

The best MF last year may not be the best this year and the best this year may not be the best next year. In other words ‘past performance is indicative of future performance’. You just have to pick 4 to 6 funds in different sectors for diversification and dollar cost average monthly to buy less when price is high and buy more when price is low. An example would be a total US stock market index fund, International index fund, emerging markets fund, bond fund, REIT fund, and commodities fund (metals, energy, agriculture, etc.). Check Vanguard for lowest cost (low expense ratios).

Paul asks…

What is the best way to invest my money?

I can invest about 100 a month and looking for a way to earn a higher interest than at the bank. What can I do to get a better rate of return?

John answers:

The only surefire way to make a profit is by investing in gold or silver.

Throughout the last 2000+ years, these two commodities have always grown in value. I like http://investingoldandsilver.com for buying gold.

The site tells you the current market value of gold and has a ton for sale. You can buy gold bars and coins but steer away from jewelry. Gold is more worthwhile (has a higher resale value) in its un-fiddledwith state. 🙂

Oh, and be sure to pick up a safe to store it all in.
Then, once you’re ready to sell it simple places like ebay get gold sellers the highest possible price for gold.

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