Your Questions About Investing Tips

Robert asks…

Investing Weekly Need Tips?

I am wondering what my best option is.
I plan on taking automatic $100 from my paycheck to invest early (17 years old). I hear stocks are 10% average. What is a safe, reliable (if any) stock to invest, or is there any other method of investing I should consider, (money market, bonds, CDs.)
I would also like to mention I have a daughter, so starting a nice purse for her now also wouldnt be a bad idea, (as well as college expenses for her).
Think long-term, 100 every 2 weeks. What would you consider?

John answers:

The simplest thing for you to do is to invest in an S&P 500 index fund. No fuss and you’re guaranteed to do almost a s well as the market, which on average is 10% (minus the expense ratios; however those are low for most index funds).

Susan asks…

Investing in silver. Tips and advice?

Hi, i’m 17 years old and i want to get into buying silver. I have done a lot of research and am fully convinced that its what i want to do. Id rather put my money into my future rather than clothes or electronics. I don’t have much money right now so gold is out of the question. I have enough money right now for about 3 or 4 ounces. Im thinking of starting out with American Silver Eagles or Canadian Silver Maples. Any tips on where to buy from? Gainsville coins seems like they have a good deal on 1 oz coins. Apmex is slightly more expensive but that can add up. Also, any tips on books or websites where i can learn more? Thanks in advance!

John answers:

For that small amount, you would be better off going to a local coin shop. Certain online dealers charge a premium for smaller orders, and you have to pay shipping. I would go to sites like bulliondirect.com, or kitco.com, or libertycpm.com, add to your cart what you want and get an estimate for the price of the metal + handling + shipping. Then go to a local coin shop and get a quote from them for something similar. Liberty Coin and Precious Metals (libertycpm.com) is in the San Diego area. Last I checked, their prices were cheaper than both bulliondirect.com and kitco.com. And if you are local, you can buy directly from their store.

You could also try craigslist, but you have to weed through the scams. But you can negotiate wth people trying to sell their silver and possibly get a better deal than you would through a dealer.

“If you can’t hold it, you don’t own it.” -Mike Maloney
http://www.youtube.com/watch?v=LFxMC9y4Njg

Joseph asks…

can you give me some tips about companies to look out for investing and trading this year ?

John answers:

Hi,

Do your own due diligence. Your own ideas are the best. Do not depend on someone else to select stocks for you. Learn about investing so you don’t have to ask what stocks to invest in. Be self reliant.

Remember what Emerson said: A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do.

Find stocks that have steadily rising net profits (earnings), low debt, and good P/Es, lots of cash, companies buying back their stock..

What interests you? Find stocks that pique your interest and passion.

You need fast growing good stocks with good earnings and in good sectors. You need to learn more about the stock market before you even think about investing in it.

The stocks world is divided into 12 sectors such as energy which chevron belongs to. It is next to last in the sectors list today.

Technology is numero uno, but things can change in a new york minute, but within the sector, the fastest growing are computer services, not Microsoft. Then, Electronic Instruments and controls. Next is computer storage devices.

The next hot sector is Healthcare, but heed the warning below. Go here for sectors: (http://clearstation.etrade.com/cgi-bin/Itechnicals?Event=srp&Section=redge&Refer=/redge.html)

The best software is Vector Vest if you can afford it. It has sector investing.

Here is a free Web site for charting stocks: (http://www.incrediblecharts.com/).

First of all, stay away from “professional brokers” and tips coming to you via e-mail or friends and acquaintances. And tips at Yahoo! Answers. And e-mail tips. Do your own due diligence – don’t rely on someone else. Read Emerson’s essay “Self Reliance.

Hey! They will say anything to get you to buy their junk. If it’s too good to be true, it is.

Remember this, they are just sales people trying to sell you what their firm is pushing. They are not security analysts or financial planners, not even financial advisers. Trust me, I know from experience that they cannot be trusted especially with a million dollars. You risk losing it all. A million dollar account is known as a “whale” and they would love to get their greedy little paws on it and suck it dry. They just want to make commissions on what they buy and sell for the suckers, err…clients..

Risk avoidance is the name of the game.

Remember, the harder I work, the luckier I get.

Penny stocks are great, but highly speculative. I would avoid the ones under a dollar a share. For example, Best Buy started at less than $5. So there are some good companies, but it takes a lot of digging to find the good ones. You are looking for companies with good earnings, little debt, low capitalization, and good P/Es. For stocks under $5, very few will meet these requirements.

Stay away from the pharms unless they have patented drugs – do not invest in generic pharms, no growth there.

Check out which business sectors are the most popular and invest in the companies in those sectors. The number one, two and three are: technology, health care, and cyclicals (retail). These change periodically so keep current.

Go here for a list of growth stocks: http://www.thestreet.com/_googlen/newsanalysis/ratings/10345212.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA

There are these lists all over the Web – you pays your money and takes your chances.

Watch CNBC, but don’t pay too much attention to the talking heads, except for Jim Cramer, the wild man – but he tries to teach you how to invest and has some great advice.

Get Jim Cramer’s Real Money: Sane Investing in an Insane World by James J. Cramer

Listen to Jim Cramer on CNBC.com

Go to Clearstation for quotes and tutorials on investing at (http://clearstation.etrade.com/). Sign up is free. Look up a few stocks. Do their tutorials. Check out the sectors.

Get this book: Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema.

Another good book: The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of (Motley Fool) by David Gardner, Tom Gardner, and Selena Maranjian

Jim Cramer’s Mad Money: Watch TV, Get Rich by James J. Cramer and Cliff Mason

I Want to Make Money in the Stock Market: Learn to Begin Investing Without Losing Your Life Savings! By Chris M. Hart

Sensible Stock Investing: How to Pick, Value, and Manage Stocks by David P. Van Knapp

Stock Investing For Dummies (For Dummies (Business & Personal Finance)) by Paul Mladjenovic

All About Stock Market Strategies : The Easy Way To Get Started by David Brown and Kassandra Bentley

The Motley Fool Investment Guide and their Web site (http://www.fool.com/).

The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks by Dan Holtzclaw

How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O’Neil

Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder

Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book) by Price Headley

Extraordinary Popular Delusions & the Madness of Crowds (Paperback)
by Charles Mackay (Author), Andrew Tobias (Foreword) This book talks about the Tulip craze in Holland where people would mortgage their homes to buy Tulip bulbs. Same thing happened in 2001 – 2002 with the Internet bubble that brought the stock market to its knees. The dot com companies were the Tulip bulbs.

Buy Investors Business Daily. It has lots of tutorials and I like it better than the stodgy Wall St Journal.

Money Game by Adam Smith

Common Stocks and Uncommon Profits and Other Writings (Wiley Investment Classics) (Hardcover)
by Philip A. Fisher. Recommended by Warren Buffet who took $100,000 and grew it to $34 billion!

Value Investing with the Masters by Kirk Kazanjian

Valuegrowth Investing by Glen Arnold

The 5 Keys to Value Investing by J. Dennis Jean-Jacques

The Intelligent Investor Rev Ed. (Collins Business Essentials) by Benjamin Graham. Warren Buffet was his student at Columbia.

The Money Masters by John Train

The Bogleheads’ Guide to Investing by Taylor Larimore

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor by John C. Bogle

Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics by Gary Belsky

Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! By Phil Town . See his Web site at (http://www.ruleoneinvestor.com/). Free sign-up. I got the book at the library.

Listen. You don’t have to spend a lot of money on these books – most can be found at your library and those that your library doesn’t have they can usually get from other libraries in your state.

Most of these books talk about stock and mutual fund investing, but for a good introduction to other forms of investing Gerald Appel has a great book called Opportunity Investing – How to Profit When Stock Advance, Stocks decline, Inflation Run Rampant, Prices fall, Oil Prices Hit the Roof and Every Time In Between.

First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman Not a book on investing, but it’s a nice segue into the next book.

Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton

Go Put Your Strengths to Work: 6 Powerful Steps to Achieve Outstanding Performance by Marcus Buckingham

Finding your strengths is important when investing. These books teach you to build on your strengths, what you a good at. Everyone is good or passionate about something. Why not get better at what you are good at?

Another good book is: Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, … And Every Time in Between (Hardcover)
by Gerald Appel

Most mutual funds do not even keep up the the return on the S&P. That’s like 99% of them.

Vanguard Index funds are a no brainer.

A CD is better than a savings account. They range from six months to several years. You cannot touch your money tho until the time limit is up.

Check out this Web site on Direct Investment Plans where you can buy shares directly from companies: (http://www.fool.com/School/DRIPs.htm). Usually no fees and you can buy one share at a time.

Bonds are probably the safest. You might try a bond fund. They might return 5 or 6 percent. At 5% a million would return $50,000 a year – not a bad income. Remember, you have to pay taxes on the $50,000.

There are also municipal bonds and the income from them is taxfree especially if you buy them in a state that offers them, but they only pay about 3%, but it’s mostly taxfree.

Look into Fidelity sector funds. Buy the top three, then in six months look how they are doing and if not so hot, select the next three that are best. Do this for a few years and you will make lots of money.

Kindest Personal Regards,

Walt Brown
Site Build It Certified Webmaster
capecod1@capecod-beaches.com

P.S. This is a life-long learning process. Reading these books and applying the rules to analyzing stocks that may be good It takes time. Be patient and keep reading and listening. Don’t be a sucker and follow someone elses advice. Be your own man or woman. Depend on no one except yourself. You can only get smarter and stronger that way.

P.P.S. Internet has lots of good stuff, for example (http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve
Stockcharts.com is very good and their discussion of MACD is one of the best, barring its originator, Gerald Apple, but now we are getting into Technical Analysis and that is not for beginners. But it is an important factor in finding good stocks that are going up and growing. Remember, tiny acorns grow into mighty oaks.

Charles asks…

Tips on trading, stock investing?

Hi,

Starting investments on stocks by using an online broker.
Any tips to this new-by so I don’t lose my money and make some extra to pay my bills instead?

Thanks

John answers:

Do not bet more than you can afford to lose

learn from what happens.

The stock market is not a linear, cause and effect, situation. It is one of odds, gambling, and great uncertainty. Deal with it.

James asks…

How should i start investing?

Im a 21 year old married male and i want to start investing but dont know where to start or what to invest in. Does anyone have any tips or suggestion to helo me out?
i dont have to much money to play with only a couple of hundred.

John answers:

There are two routes you can go.
If you plan to invest that money, get a Roth IRA (right now the limit is $4,000 a year) and buy either SPY (tracks the SP 500) or DIA (tracks the Dow Jones Industrials also known as the Dow or the Dow Jones). This will put you in the top 20% compared to mutual funds. Just ride the ups and downs. After 58 you can take it out at any time or never touch it. If you do take the money out, you don’t pay any federal taxes on the money.

The second choice is to open up a non retirement account with a stock broker (online or over the phone) and buy SPY or DIA. You can sell whenever and you will have to pay taxes on the gains.

Don’t day trade or buy annuities (you will get a better deal buying bonds). Stocks go up and down so don’t panic.

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