Your Questions About Investing Tips

Lisa asks…

Investing tips?

I want to get my feet wet in the investment pool. What should I try first and what are the odds of making a profit on it? Also, how do I even gt started, how much do I need up front?

John answers:

Join a free stock picking group:

http://finance.groups.yahoo.com/group/TradingZoom/

and follow their stock picks for a while, talk to people who have been there ahead of you.

Your odds of making a profit are directly proportionate to the amount of time and effort you are willing to put into it.

Donald asks…

investing tips?

John answers:

I think Jason has a good idea for real estate but I might wait a few more months depending on the part of the country you live in. Some parts of the country didn’t have the build up of real estate prices that other parts of the country had. This is particularly true if you live outside of these areas: Washington DC north through Boston, California coastal areas, Chicago, Florida and Denver-Colorado Springs-Ft. Collins Areas. Cities like Dallas, Oklahoma City, Tulsa, Saint Louis, Memphis, Nashville, Omaha, etc. (the core of the country) did not see the extreme run up of prices as much as the other areas. You need to check it out before you jump in. Gain information, don’t do it because we say get into real estate.

Do not do any zero down stuff in Real Estate. Be conservative. Check it out. Take a course at your Junior College or State Technical school.

Have you funded your Roth IRA? Do you have a 401K at work? If you have a 401K at work and they match your contribution look at this first. IRAs and 401k are major investment programs to use to delay or avoid taxes. But again don’t do it because we say so, do it because you know it is right for you.

Suppose you have a smaller amount of money to invest than required to go into Real Estate intelligently. Look at mutual funds. Go to Smartmoney.com and Yahoo Finance and read up on mutual funds. Then use Yahoo’s fund screen to find funds that fit your needs.

Depending on your age start out with a core capital appreciation fund like T. Rowe Price’s Capital Appreciation. You also might want to look at Vanguard Funds because they have some funds that just track the S&P 500. Then quickly diversify into some long term growth fund. The younger you are the more you should look at small cap funds like Fidelity Small Cap Fund. But given the market trend toward Large Cap Stocks you might want to look also at Larger Cap growth funds.

Most important – Read the material in Kiplinger’s Magazine, Business Week and on DaveRamsey.com. Read and explore before you do anything. Make your decisions based upon your age, income level, and risk tolerance.

Nancy asks…

Investing Tips?

I’m 14 and i’m appraising NIKE corp. I realize a comapny like NIKE, Microsoft, Phizer, etc. stock price can’t be justified by assest value rather future growth and market position. Is current asset value more important than future growth or are both needed to clear any specualtion? I’m a investor looking for cheap comapanies but not risky comapanies. To intertwine my question how could I use MPT and efficient frontier to judge my portfolio? (I just recently came accross the theory and I’m intrested in learning more about it and how to useit)

John answers:

I’m 14 also so I’m happy to help. Future growth and asset value are both important. I know Modern portfolio theory and how to use it, but unless you understand higher mathematics, then the idea might make sense but you won’t be able to put it into practice.

Donna asks…

I want to start investing in stocks and shares. Any helpful tips?

I currently don’t know much about how this works but i’m willing to try, my bank (TSB) offers shares.

Where should i invest.
In companies that i think will have an increase in profit?
In companies that i think not many people will buy shares for?

if i invest say £10 in a company are there any other fees that can drag me to a loss of more than i put in amount.?

John answers:

If you’re serious about investing, I recommend that you learn as much as you can about the process before you actually commit your money to anything. I would spend some time reading about the terms of the stock market, famous investing strategies and maybe start a portfolio of investments to watch that you don’t actually own (just go to finance.yahoo.com and create a portfolio as if you owned the stocks). Once you have a good understanding of how to invest your money, you will be able to make educated decisions and eventually get higher returns on your investment.

For your other questions:

You want the companies you invest in to increase in profit (since this means that their business is making more money and becoming more valuable) this drives the stock price up.

You should invest in companies that you think people WILL buy. If more people want to buy a certain stock, the demand increases and the price goes up.

Normally, when you trade their are commissions that you pay to your broker, these vary on the size of your trade, broker, etc. On an investment, these commissions would mean that you lose money unless you get returns to compensate for the commission. Lots of times you incur a “minimum” charge, no matter how small your investment, and this switches to percentages after you increase how much money you are trading. Unfortunately, this makes certain small trades uneconomical. Ex. If you invest $100 dollars and the commission is $40, you need to earn a 40% return to break even. Obviously this is bad for you. I would check in with your brokerage firm to see their rates etc. And then factor that into any calculations that you do.

Hope this helps, check out websites like Forbes, Bloomberg and the Wall Street Journal to learn more about markets and investment techniques and a quick internet search will result in plenty of beginner investing tutorials.

Good Luck.

Thomas asks…

How should i go about investing in stocks ?

i was thinking of entering the stock market world and start investing, i have to admit that i am young and only in high school, but i have such an attraction to the stock market. i plan to use the money to save up and help pay my tuition for college. Ive been reading about stocks and researching but i need help in going into it.

How could i start ? What could i do as of now to help me invest properly, and what tips could you give me once ive started ?

thanks in advance.

John answers:

You can do a general course in Economics to get the background of the industry and basic knowledge etc then an Investments course at college. You should also enlist a professional stock-broker to explain to you the current market trends etc and get them to explain and teach you about what they do. Also you could volunteer for work experience at a Brokerage Firm, you will learn all the jargon and many other things…

Stocks are rather complicated as there are so many influences, predictable AND unpredictable. Sometimes you do your homework and lose, other times you take a punt and purely get lucky… Its not only skill but luck comes into the draw as well.

Make sure you have researched the financial reports for the companies you wish to buy shares in and reading the financial review daily is a must.

You can try your hand without it costing you anything by investing an imaginary $1000 into shares then assess how the shares are doing each day (plot values on a graph for each share so you can see if there is a trend and also know what influences caused the share price to go up or down). Set yourself a period of say a month then calculate how much you have made or lost on the original $1000.

There is also expensive share/trading software you can use for share price and trend predictions but the results are all based on computer algorithms (ie calculation of probabilities and you never really know which way a share will go unless you came back from the future!)

Another good idea is to invest in currency – when USD is strong, buy other currencies, when the other currencies are weak, convert em back to USD etc.. But you have to get the timing right.

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