Lux Investing

Is this good way of investing and if yes when should I buy?

Friends, I would like to invest some money. I am thinking about following approach. Buy 25 to 30 shares of 8 to 10 large cap stock and hold it until more than 4% price growth. I only pay $1 per trade so I am not concerned about commission. Is this good way of investing and if yes when should I buy? Thanks in advance…..

Public Comments

1. Keep your money in the bank and forget about parting with your money.
2. Your approach could be profitable, if you choose the right large cap stocks. Choose ones that have good fundamentals and techincals chart patterns. This will take a little more work on your part, but will get you to your goal faster. If they meet this criteria and pay dividends, all the better. ///
3. What if they go down? You need to have exit plans for both profits and losses. Also, 4% is probably not going to make you near as much money as if you simply nvested in the DIA (Dow-tracking ETF) with a similar strategy.
4. No. There are too many things working against you. First is taxes. After you pay taxes your 4% gains wind up being maye 2% gains. Next, many "large cap stocks" tend to be poor investments in the short term. Just because a stock is large cap does not necessarily mean that it will increase in price 4%. Then after you take your 4% gain and realize your 2% net, what do you do with the realized funds? You have to either reinvestment or let them sit. If all the other large cap stocks have increased in value 4% along with the ones you just sold (they do tend to move more or less together one way or the other) then you have to reinvest your money at 4% higher prices, but you made only 2%. You are loosing 2%. A far better approach is to put your money in an index funds and just let it sit there and increase in value tax deferred until you are ready to spend it, which hopefully will not be for about 20 years at which time more than likely your original investment will have increased to about 5 x all tax deferred and when sold the taxes should be at a very favorable rate. Of course congress might change the tax law in the next 20 years.
5. better you should take advices from experts and brockrage
6. Do you only want 4% growth? If so, you can get that now with a simple savings account or CD. Go to www.bankrate.com to find out current rates. If you want a higher rate of return, it depends on your risk tolerance and time-frame. Individual stocks have the highest risk (and possibly the highest return). Investing in these may not pay off in the immediate future. You don't want to invest in these if you need your money soon, because it may go down in value for a while before seeing any returns. Long-term, though, should not be a problem. Just do your research. Investing in an index fund, or other mutual fund, may be the way to go if you are looking long-term (10 yrs+). Index funds have low management fees and will provide the diversity you seek. It could make more than 4% in the first year, and you could take it out, but why would you? Unless you have another investment idea, you should let it continue to grow. The power of compounding will allow your money to work for you :)