Your Questions About Money Making Stocks To Buy

Joseph asks…

How do you actually make money off investing?

I want to invest, but I’m not sure how I’d make money. Where would I get the money in cash? It’s all too virtual to picture as if I’d actually get any real money to blow in Vegas. What if the price of stocks drop? How do I sell or decide to stop investing on a stock?

John answers:

To make money, you buy a stock or bond at one price and then preferably sell at a higher price. You start by opening a brokerage account and depositing a sum of money (usual minimum to open an account is $500). When you buy stock, the broker takes money out of your account to buy the stock (like you take money out of your bank accounts to buy something). When you sell the stock, the money you get goes back into the account.

Knowing when to buy or sell is much harder – you need to learn to analyze companies and stocks. There are plenty of books at the library on the various ways to analyze stocks and companies as well as how to invest. Note that there is no guarantee that you will make money so do not invest any money you cannot afford to lose.

Chris asks…

which stock can i buy and make a lot of money in a short time?

i am looking at low price stocks or penny stocks with good potential

John answers:

Stay away from penny stocks they’re nothing more than organized gambling.Stocks n which you can make a lot of money in a short amount of time that’s a tough one. is a great website.Its fee based but a lot of people have made excellent profits with their service.Also you might wanna try shorting stocks also.Selling at the top n then buying them back for cheaper at the bottom.In a bear market it’s a great strategy to make earn some nice profits.Just educate yourself n make sure you don’t need the money you plan on investing.Hope this helps you out

Steven asks…

what stock should i buy to make loads of money long term?

i have only about $3200 to play with in an ira rollover acct so i want to make alot of money for my future. any suggestions?

John answers:

We all feel the urge to buy that magic stock that you hope will go up 50 times or more in value. However the stock market is very treacherous and unpredictable, and all good investment advisers recommend that you buy a diversified portfolio, not bet all your money on one stock. I would suggest putting your money in a diversified low-expense no-load mutual fund. I like Vanguard,com, although there are other good companies out there.
Putting all your money in one stock is essentially gambling, not something you should be doing will 3,200 dollars. You will probably end up losing money if you try this tactic.

Laura asks…

VERY Basic stock questions: If I buy a $7 stock for example, what now? how to make profit? how to lose money?

first of all, i’m just asking out of curiosity. I have nothing to do with stocks and stuff, just a topic I have always been interested about. seems so confusing. was hoping i can udnerstand just the basics.

If i buy a $7 stock or $4 or whatever, what happens now? just wanted to understand the basic concept of profiting from buying stock and losing money from it.

If the company is doing good, my stock price go up right? so in order to make profit, I would have to sell the my now “higher valued” stock to make the profit correct?
or, does the profit ssytem work differently? if company does well do extra profit go straight to my bank?

what about losing money? if company falls for exmaple.
I already brought the $7 stock. what now? if they lose a huge amount of money, do I lose anymore than the $7 I paid?

John answers:

Let’s use your example and say you buy 100 shares of stock at $7 each. Your cost is $700 then right? Not exactly. You have to pay a brokerage commission to buy or sell stock. Scottrade, an online broker charges $7 per trade, whether you buy 1 share or 1,000,000 shares. So your cost is really $707.

Stocks go up and down for many reasons. It is not as simple as the company doing well. Amazon does well, but the stock has a lot of future expectation for growth built into it. So it has to do even better than expected for the stock price to go up. Also, the economy as a whole (interest rates, inflation worries, worry about recessions, etc.) affects stock prices. You may have the best stock in the world, but if the economy is expected to do badly, the stock price will still probably go down.

OK, back to your investment of $700. There are two ways you can make money on stocks. One is dividends and the other is capital gains. Dividends are when a company pays out a share of profits to each stockholder every so often. Take your fictitious stock as an example. Let’s say they pay a dividend of about 2% (not all stocks pay dividends). So every year on your $700 worth of stock, you would get a $14 dividend. But let’s say your stock goes way up in price to $10 per share and you decide to sell it. You instruct Scottrade to sell your shares at $10 per share. You made $1,000 on the sale, less of course a $7 commission to sell.

Your net gain would be the $1,000 you sold it for, less $14 in commissions less your $700 cost. So you netted $286 in this example.

On the other hand, say your company does very badly and the stock goes down to $3 per share. You decide to sell. Your sale proceeds are $300, less $14 commission less $700 cost = negative $414. If you opened your investment account with $707 you now have only $286 left in it.

Susan asks…

When I buy stock how does it make me money?

Like say i bought $50 in ford how do i get paid if the stock goes up do i have to sell im confused thanks
im 16 btw

John answers:

You should get a book on basic investing fundamentals and terms and definitions like Investing for Dummies and Stock Investing for Dummies.

If you read a few more books, then you will be able to develop a trading plan, then you can test your plan on a simulator before you risk your hard-earned money. Once you’ve used the simulator, you will see how money is lost much easier than it is gained, and have answered your basic questions.

You really need at least $500 or really a thousand dollars or more to begin and make it worth your while. Otherwise, brokerage commissions eat up any gains you might luck into. Let’s just call it what it is: if you know nothing about it, then any gains you get will be through luck only, correct? Without luck, you are looking at consistent losses.

Besides, if you buy one share of stock for $50, and your commission is $10, you’ve got a 20% loss the second you enter the trade. But if you’ve invested $500, the commission is 2%; still a hefty loss to overcome. If you can make 2% per month, you’ve beat most industry experts, so you can see that expecting a 2% gain every month is unreasonable, and you can’t even make up your commissions to break even with only $500 to invest.

Your question of “making money” is a little premature.

Http:// (simulator, and finance terms and definitions)…

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