Your Questions About Investing Tips

James asks…

What things do you invest in? any tips in investing?

For example: houses, condos, a business……..etc.

John answers:

Hi, i know what your question means. I also think stock market is a nice place for investing.

I found some useful tips in stock trading. It includes stock basics, how to protect your profit, find a potential increase share, control and manage stock risk, when to sell/buy stock and so on.

Http://www.bernanke.cn/stock-trade/

Best Wishes && Good Luck!

Betty asks…

Is it proper time now to start investing in blue chip shares at current levels for long term gains? Any tips?

John answers:

Ya this is the good time to invest for long term as most of them are hit by recession and cannot cope up. Most of the stocks are their 52 week low. Consider the book value of the stock and diversify your investments. Do not put all the stocks(eggs) in one (basket) Company.

Try to judge and look up for the trend and some charts on the blue chip stocks minimum of a year. You can have an idea of resistance of the stock. I suggest you to visit

http://www.vantagetrade.com/do?sy=09

this is site where I get suggestions from and try to buy the stocks at dips.

So, Invest wise.

Robert asks…

new to investing any tips?

hi everyone .well i have $2000 saved up that im trying to invest in stocks of a company ..any idea of what company i should put my money into….i dont have much so i wouldnt like to invest in a company that are to big because its to expensive .also im not afraid to gamble so if you know of any starter up companies that would be good to invest in please let me know thanks

John answers:

Investing is about risk and investing in a single company has the highest degree of risk which is why you’ll hear people talk about diversification. Of course the highest potential for returns are with the least amount of diversification but it’s better to over diversify than under diversify. However with a small amount of capital, it’s difficult to diversify due to the added costs of investing in more than one company so the best way to start off is with a no load, low fee indexed fund, effectively diversifying across an index. You may not be afraid to gamble but do you know where the limit of reasonable risk is? For example using coin tosses for randomness, if you had two available sets of concurrent coin tosses to wager on, the first set paying 2 to 1 in that you win twice your wager and your wager is returned to you but if you lose you lose your wager and the second set paying 3 to 1. How would you divide your capital to optimize for the growth of your portfolio? The answer is 21% on the 2 to 1 coin tosses with each toss and 31% on the 3 to 1 coin toss with each toss, risking more on either coin toss would not be advisable. Not exactly intuitive eh… You may be willing to take risks but until you learn how to estimate when the risks become unreasonable, you need to be on the safe side and given that with a small portfolio, your choices are to invest in a single company which is the maximum risk or invest in an index fund which is near the minimum risk, you should choose the index fund. Once you’ve accumulated enough to hold multiple positions, hopefully you’ll also have learned how to estimate the degree of diversification that would be most prudent and how to divide your capital amongst the risks to optimize for the growth of your overall portfolio.

Maria asks…

does anyone know good tips on how to invest?

I am looking for information on how to properly invest, and prepare for the future. How does investing works, and what are some useful websites and tips. Thanks to all who respond

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.

Buying a house instead of renting will save you a lot of money in the long run. You don’t have to pay rent and you build equity in your house instead. Buying rental property can be a good investment for some people. However, being a landlord can be hard work, and many people are not good at it. If you don’t know how to handle deadbeat renters, you can have trouble.

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.

Ken asks…

Investing tips??

Hi, I am in my early twenties and started working after college for couple years already. I would like to accumulate wealth as early as possible and hopefully have an early retirement.

After having saved enough money, and having had some surplus funds, I thought it would be financially wise to start investing this surplus fund for long-term growth.

I have an investment horizon of more than 10 years, so I decide to invest in stocks for the highest possible long-term returns. I intend to take a value-investing approach towards my investments.

Does anyone out there have any undervalued stock recommendations? Thanks

John answers:

It is never too early to start saving, in fact ‘retirement is one of the greatest cons of all time. What you really want, what everyone really wants is Financial Independence.

Someone has set up a standard game plan for everyone. It basically goes as follows:
Age 0-5: Baby – Grow Up
Age 6-17: Child – Go to School
Age 18-21: Student – Go to College
Age 22-65: Adult – Work
Age 65+: Senior Citizen – Retire and Die

Retirement usually means that we are no longer dependent on work for our income and daily living needs. Our income is independent from our occupation.

So what you really want is ‘Financial Independence’ much earlier than scheduled for us in the standard game plan. In fact maybe the game plan we really want is more like:
Age 0-5: Baby – Grow Up
Age 6-17: Child – Go to School
Age 18-21: Student – Go to College
Age 22-39: Adult – Work towards Financial Independence
Age 40+: Financially Independent – Enjoy Life

So now that we have a goal of Financial Independence, we need to set a timescale to reach that by and a means of reaching that goal.

In this context we are generally talking about a savings and investment plan that will give us a sufficient amount of money to live off for the rest of our lives.

We will need to equip ourselves with the necessary knowledge and tools to make this work now.

To be successful we will need patience, discipline, and wisdom. But most importantly we need a plan.

It may prove expensive to acquire that much needed wisdom on our own. Learn by other peoples mistakes. Learn from other peoples successes. Read some books. Visit our local book store and find books that we like and feel comfortable with.

Some of the titles I have on my bookshelf include:
One Up on Wall Street by Peter Lynch
How to make money in Stocks by William J. O’Neil (Founder of Investor’s Business Daily)
The Millionaire Next Door by Thomas J Stanley and William D Danco

Check out web sites like fool.com and yahoo finance.
Investigate trading strategies with a proven track record over 3, 5, 10, and 15 years.

Pick something that we understand, find easy to use and will help us realise our goals. Pick a strategy where we can take responsibility for your investments and be in full control of our capital.

Systems like the Stocks Monthly system (which has generated an average return of 49%p.a. Over the past 15 years) are definitely worth investigating once we are up to speed with the nuts and bolts of investing.

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