Lux Investing - A few questions from a beginner about investing?

A few questions from a beginner about investing?

I have about $20k in savings. I am interested in investing some of it. I am 37 years old and have never invested in stocks or bonds (besides 401k). How do you pick and chose what to invest in? There are obviously so many companies to invest in. Do you reccomend one of the online do it yourself sites? Is there a rule of thumb how much of your life savings you should invest? Thanks.

Public Comments

I have a tdameritrade account, and I have no complaints. Their fees are resonable and offer real time quotes. Where other sites whose fees might be lower have a 15 minute delay in quotes. In today's economy I would recommend getting started with a DRIP. That is a dividend reinvestment program. Say you want to invest in ge. You could put $100 into buying stock in GE and all dividends earned will be reinvested into buying more stock. GE is a safe stock, and is a good value right now.
It's great you're interested in investing. It is never too late to become a great trader and investor. I'll give you the same advice I was given five years ago and now I'm a successful trader. The best thing you can invest in is your brain. Learn everything you can about the markets and how to trade. Let me recommend three of my favorite books: "Japanese Candlestick Charting" by Steve Nison, "Mastering the Trade" by Mark Douglas, and "How to Make Money in Stocks" by William O'Neill. Read these and you'll have a great base to move forward. The other thing I can't recommend highly enough is for you to learn technical analysis. It is the best way to learn how to be a successful investor. Good luck! Matt
In the beginning you don't invest any money to speak of. You invest your valuable time. You're just like every other "newbie" - you want to dive right in. It just doesn't work that way. When you take the plunge, the market will eat you alive. It loves taking the money from folks who don't know what's going on or how things are done. In the beginning you LEARN HOW: A] the stock market works. B] to invest in many, many various ways. C] to properly trade D] many other concepts and aspects. Beginning or novice ['newbies"] investors and traders ALWAYS make mistakes. In fact, throughout a person's avocation or hobby to do trading, he/she will make mistakes. In the very beginning, you READ AND LEARN about the market and how it works: Read "Investing for Dummies" As you are reading and doing research about the investments you are interested in, sometimes you'll come across a financial or investment term you never heard before. You can usually find excellent, easy-to-understand definitions of many financial and investment terms by going to Investopedia’s dictionary. http://investopedia.com is a free site. It’s recognized by Y! A as a "Featured Knowledge Partner". It probably won’t be long when you’ll feel you’re ready to invest your hard-earned money. Before taking that step, you really should do research about what you are investing in. It also has a free, paper trading platform. You can set up a virtual account and almost trade as though you were trading with real money. http://finance.yahoo.com is also recognized by Y! A as a "Featured Knowledge Partner" The thought processes are: 1] to have more successful trades than failing trades. 2] to minimize the losses of those losing trades. 3] "To live to trade another day." Having enough money in the trading account to return to the market. ALL this is accomplished by a few true expressions used on Wall Street: Some trading expressions come to mind: A] "On Wall Street there aren't any gifts." No one gives anyone else anything - not even stock tips. B] BUlls [BUyers] earn money. BEars [SEllers] earn money. Pigs get fat. Hogs [Greedy Traders] get slaughtered. They lose the money in their trading accounts. C] "Trees don't grow to Heaven. Neither do stocks or any other investments." In other words: What goes up, MUST come down! D] "Plan your trade. THEN trade your plan!" Have a trading plan with rules for that plan for each strategy. Thanks for asking your Q! I enjoyed answering it! VTY, Ron Berue Yes, that is my real last name!
Paying off debts gives you the best return. Preventing a debt from growing counts just as much as a gain from a stock, plus you don't have any risk involved. "How do you pick and choose what to invest in?" Two concepts you need to know: 1) Diversification 2) Best of Breed. Diversification - don't put too much of your money in one sector of the economy. Spread out over 5 different sectors (such as retail, big oil, drug companies, defense contractors, manufacturing, telecommunications, etc) At most times, 2 or 3 will be going up, and 2 or 3 will be going down. Best of Breed - Once you have your 5 sectors, find the company that's doing the best in that area (Verizon, not Sprint. Wells-Fargo, not Bear Stearns) Those 5 stocks are the ones to buy. Hold onto them for 20 years. -------- "Is there a rule of thumb how much of your life savings should you invest?" For this, I'll quote from Dave Ramsey's plan. Follow his "baby steps" in order, once you see what step you're on: 1) $1,000 cash starter emergency fund. 2) Pay off all your debts, except the mortgage. 3) Finish the emergency fund - 6 months expenses, cash in a money market. 3b) Save for a down payment on a house. 4) 15% of your income now goes to investments. 5) Save for your kids college fund. 6) Pay off the mortgage in full. 7) Live like you're rich. Spend, Invest, Give. -------- Types of accounts: Roth IRA: You can put up to $4,000/yr into a Roth IRA, then use that money to buy stocks and bonds. If you wait until you're 59 1/2, you can begin withdrawing all of it TAX-FREE.
I like to invest for the long term and make use of dollar cost averaging and dividend reinvestment. I do this through my DRIP Plan. They are seldom recommended by brokers due to the low rate of commissions received. However, these reinvestment plans can be very powerful long-term investments. Studies have shown that DRIP's are one of the best strategies on Wall Street. They are inexpensive and easy to start. New investors to the stock market should definitely consider a DRIP Plan. Companies like Toyota, Royal Canadian Bank, Sony, Bank of America, General Electric and many other Blue Chip Stocks can be purchased through your DRIP Plan, with as little as 1 share in most cases. These long-term plans are great for beginners as well as veterans. Check them out. Best of Luck
Hello, I also had a similair problem as you have. I had a good amount of money, and wanted it to grow. So I looked around on the internet to find something that is: 1) giving me great returns towards a relatively small risk 2) Professional people who know what they where doing with my money. I'm glad to say I finally found a moneymanager who is capable of giving me good returns and give me a great support. On this blog you can follow up all the results that he is making: http://my-robottrader.blogspot.com/ My money is working for me, in three months time I already have a ROI of 76%. So you don't hear me complaining! Annyway if you would like to get in touch with my moneymanager to have some more information feel free to contact me you can send an email to me at derrekmay at gmail.com. Then I'll give you the email adress of my moneymanager Hope this has helped you!