Your Questions About How To Invest In Stocks

Maria asks…

How do you get into investing in stocks and bonds? What is the minimum to invest?

I’m thinking about investing in stocks and bonds but I don’t know the first step to take in investing in one. Do I go through a broker? How do I find one? How do I find one that won’t jip me out of money?

John answers:

In today’s world the easiest way is on-line. E-trade being one of the on-line traders they are cheap and do not require a large minimum. Different stocks and bonds have different requirements for purchasing. For stocks 100 shares is a typical minimum. For Bonds I believe you might still find some for 1000 dollars. But there are always exceptions and you can still buy 1 share of some stocks.

Before you start understand trading is legalized gambling and though it is monitored there is still corruption. Only invest what you can lose. Always pay off your debt first.

For information on Trading. The local library is always a good source. There are also several Magazines and Newspapers always willing to give you pointers and their view of how you should invest.

Best strategies invest for the long term consistent gain.

Robert asks…

what are some good stocks to buy right now ?

what are some good companys to invest stock in right now? im doing a class project and we are given fake money and we have to put it into company stocks and see how much money you earn, so what are some good stocks to invest in right now?

John answers:

Good stocks are alcohol and smokes cause people will buy them weather the market sucks or not

Jenny asks…

How do you invest in stocks?

For years I’ve wanted to try and invest some money in stocks to make money, but I have no clue what website to sign up on, or anything.

John answers:

Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. If you are like most people you will invest part of your money aggressively in stocks, and part conservatively in money market funds and bond funds. However, some young people will go all stocks, and some very conservative people will go all money markets. The links below have on-line questionnaires which will give you an idea of how to do “Asset Allocation,” determining how much to put in each type of investment.

You want to buy a diversified portfolio of stocks as individual stocks are too risky. Highly knowledgeable people can buy a properly balanced portfolio, but most folks have a difficult time balancing things on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Back in 2000, Some people bought all Internet stocks; they got burnt when they all crashed together. You have to diversify across industries. Unless you know what you are doing, it is best to buy mutual funds that will diversify for you. Buy no-load, low cost funds. Mutual funds should have expense ratios of less than 0.5%.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest management fees. For stock funds, I like putting ~70% of one’s money in the Vanguard Total Stock Market Index Fund. And ~30% in the Vanguard Total International Stock Index Fund. The Vanguard Total Bond Market Index Fund is good for a bond fund. The Vanguard Target Retirement funds can be a good all-in-one stock and bond funds for an IRA. (If you have less than 3,000 dollars, you can’t invest in most Vanguard funds. For such people I would suggest Schwab funds.) There are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

Once you have stared investing, you need to keep adding money on a regular basis. Many funds allow you to set up automatic investment programs that take a set amount of money out of your bank account each month.

If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

I will warn you that there is a tremendous amount of stock investing books and websites that teach stock investing strategies that don’t work. Particularly bad are people that teach “technical analysis” systems that sound impressive, but don’t work.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

Thomas asks…

How do you begin to invest in stocks? Do you need a special bank acct to get started or something?

Just wondering what it takes to get started investing in Stocks. Is the money being transferred in and out of a bank acct or something. I don’t know anything about stocks so I am just wanting to check it out.

John answers:

Before you invest a cent, read up everything you can. Investopedia has a good tutorial on stock investing for beginners at http://www.investopedia.com/university/buildingblocks.asp.
It also has a stock simulator, so you can get a feel for stock trading without committing any real money at http://simulator.investopedia.com/
Once you feel ready to invest for real you will need an account at a brokerage, which you can link to your bank account to transfer funds between the two.

Betty asks…

What are stocks? how do you make money from stocks? im a newb?

I want to make some money investing stocks im 19, i have 2599 dollars in my savings and i want to invest 20 dollars on stocks just to start investing something to get some money going on. can you guys give me some info please on how to get started

John answers:

If you don’t even understand what stocks are, you are no where near ready to start investing in them directly. You can lose your money just as fast as you make any gains and without a whole lot of knowledge about what you’re doing you can kiss that $2600 good bye. I’m not trying to be mean here, I’m trying to save you from losing your hard-earned money.

Talk to your bank or a financial planner about basic investing you can do. Low-risk but will get you a better interest rate than your bank account pays out.

To answer your question though, stocks are just a small portion of ownership in the company. If you own an Apple stock, you actually own a very small piece of the company. The value of the company goes up and down all the time as other investors are willing to pay more or less for a piece of the company. If it sounds as though the company is doing well, the value of the stock rises. If news isn’t so good, it falls. To make money you need to buy it at a lower price and wait for the price to go up and sell. How will you know when to buy and when to sell is extremely risky, and even seasoned professionals lose money all the time (they just gain a little bit more than they lose, so they come out ahead by a bit)

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