Your Questions About Investing Tips For Beginners

Mandy asks…

investing tips for a beginner?

i really want to start investing sum extra money whenever i can, short term and long term, any advice

John answers:

Either get some books and start reading or find a financial advisor. If you want to do it yourself it is time consuming and you better get learning or else you will lose your money. If you dont have the time find a professional who can do it for you, although its only fair to warn you that many professionals are not that good.

Laura asks…

What is some advice/tips on investing for a beginner?

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%.

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.

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 expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. And ~20-30% in a foreign stock index fund. The Vanguard Total Bond Market Index Fund is good for a bond fund. The Vanguard Target Retirement funds can be good all-in-one stock and bond funds for an IRA. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

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.

Sandra asks…

Advice on investing for beginner?

I am 17 years old and very interested in investing but really have no clue where to start or what method is best to learn information on investing. Any tips or advice on how/where to look for information would be much appreciated.

John answers:

Well very broad question here 🙂
But it’s great to see you’re interesting in learning about investing..
Http://beginnersinvest.about.com/od/typesofinvestments/Types_of_Investments_An_Explanation_of_Financial_Instruments.htm

The above link has a very comprehensive introduction to different types of investments, I would start there and delve into one of the specific types further that you’re interested in.
Investing can be as simple or complicated as you make it, you could hire a financial advisor or use a company’s investment program, alternatively you could go on your own and analyze investments for yourself.

Once you determine what route you’d like to take I’d be happy to assist you in the next steps.

Chris asks…

Thinking about getting into stock trading. What is the best site fore beginners?

I have no experience and I want to study up before I get into anything to hastily.

What is the best site for tips and advice?
What is the best site for beginners to invest on?

John answers:

Hey dude If you want to Trading in Stock Market and invest on shares than i have a site which provides the full knowledge of share market. I have also no experience but this site is very helpful for me and provides the Free Share Tips. So you also check this site :
http://www.quantshare.com

Daniel asks…

What are some tips for beginning to trade stocks online?

Any programs, websites, books or other useful tips before a beginner should start to trade on a long term basis, not a day trading basis. Looking to learn so I’d like to invest little at first perhaps 1,000. Thanks in advance.

John answers:

1. My first tip has to be to develop a strong, well balanced portfolio. If you only invest in companies based on who you think will do well, you’re taking a gamble. But, if you do it scientifically according to modern portfolio theory, you can minimize your risk and still post high returns. Do research on how to calculate the variance and standard deviation of stocks and use these tools regularly. You still can and should invest in companies that you have confidence in, just make sure that you do it with all of the modern balancing theory in mind.

2. The S&P 500 is probably the most important weighted index data to pay attention to. News sources won’t shut up about the Dow Jones Industrial Average, but that’s really a ridiculous measurement. It’s outdated, only looks at 30 companies, and ignores companies that are not ‘industry leaders.”

3. The Wall Street Journal. Because it’s the best there is.

4. Michael Bloomberg’s popularity as NYC’s mayor isn’t what it used to be, but his business is better than ever. Bloomberg offers the best software, information, and analysis that you can ever get, although it is far more advanced and complex than the WSJ.

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