any of you do this? not that I have a particular interest in it, I just keep seeing that damned commercial for Ameritrade. I know nothing about buying, selling or trading of this sort so I was wondering if some of you do it. if so, are you relatively successful at it? how does one learn about investing in your own future? I don't think i'm willing to gamble with my 401k but i'd like to have a better sense of where my money goes.
e-trading: stocks, bonds, mutual funds, etc
- Thread starter gaseousclay
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I haven't gotten into any actual trading, however, I have taken multiple college level courses on various investment instruments (stocks, bonds, commodities/futures, options). Likely the best way to learn about investing is by taking college classes. See if there are any local classes at the local community college. If not, maybe bump it up to a 4-year school. There are tons of ways to get into "investing," but you need to get to know the different techniques used in trading (like finding entry and exit points, going long/short, leading indicators, etc.). Stocks are what the average joe "invest" in, but the reality is that you can lose your money quite easily by doing that. There are even specific things to look for when entering into a mutual fund (like the charges that are involved).
Perhaps the best way to get a feel of the different markets is to sign up with a free mock-trading website. You can make mock accounts and learn to spot warning signs in the markets, learn how specific trades work, how to read graphs, and a bunch more stuff. Just remember that stocks aren't the only security out there. You can use a lot of leverage in some securities, like trading futures (corn, oil, currencies, hogs, etc.). Another type of security that uses leverage is options, which are based off of futures.
Hopefully, I didn't ramble too much, but it is a huge industry with many different ways to invest your money. It's always best to learn before doing, but don't be put off by how much information there is out there. Maybe it's best to focus on one type of trading and learn about that and get comfortable with that and then branch out.
Perhaps the best way to get a feel of the different markets is to sign up with a free mock-trading website. You can make mock accounts and learn to spot warning signs in the markets, learn how specific trades work, how to read graphs, and a bunch more stuff. Just remember that stocks aren't the only security out there. You can use a lot of leverage in some securities, like trading futures (corn, oil, currencies, hogs, etc.). Another type of security that uses leverage is options, which are based off of futures.
Hopefully, I didn't ramble too much, but it is a huge industry with many different ways to invest your money. It's always best to learn before doing, but don't be put off by how much information there is out there. Maybe it's best to focus on one type of trading and learn about that and get comfortable with that and then branch out.
I would put my money is precious metal. There is a lot of smack talk on pm's. Look at it this way. Let's say you buy a stock and you buy a gold coin. You bury both. In 50 years when you uncover them both which will more likely have value? Precious metal will always retain some sort of value. Stocks? Well? I think only one stock remains today that was on the stock exchange during the Great Depression.
But go ahead and get a little of everything. Like the saying goes, don't put all your eggs in one basket. That is the key.
But go ahead and get a little of everything. Like the saying goes, don't put all your eggs in one basket. That is the key.
I use Scotrade. I don't actively trade, though. Everything I have is for long-term gains. The $7 commission fee is cheap enough, though.
DL
DL
I use etrade to invest in index funds. I buy more when I can and rebalance once a year.
Index funds are the best set and forget investments IMO.
I think using some e-trade like system is probably a good way to DIY too. Avoiding commissions can sometimes make a worthwhile difference in the long term - as long as you know what your doing!
+ 1 on the idea of trying out a type of "virtual" stock exchange first, that is a great way to get your feet wet so to speak while you are learning the fundamentals.
Once you get ready, there a few self service brokerages as mentioned above that give you your own control of what you invest in, be that individual stocks, mutual funds or even ETFs (Echange Traded Funds). I like ETFs since they allow you to target a particular area of investment, without depending on the fortunes of a single stock.
Either way, the key is to do your due diligence and research as to what you want to invest in. Best of luck!
Once you get ready, there a few self service brokerages as mentioned above that give you your own control of what you invest in, be that individual stocks, mutual funds or even ETFs (Echange Traded Funds). I like ETFs since they allow you to target a particular area of investment, without depending on the fortunes of a single stock.
Either way, the key is to do your due diligence and research as to what you want to invest in. Best of luck!
Yes, I do my own investing. You don't have to be a genius or prescient to do it either I mean look what happened with this "Great Recession" that left many people scratching their heads going, huh, didn't see that coming
I made some mistakes when I first started out about three years ago and after spending my time learning I have settled into an investment approach that I find works, value investing. Your research may lead you somewhere different, but that's what works for me.
Now, however, you do need to do a bit of research
, but you don't need college level courses. If you can read and do arithmetic, not calculus, you can make your own investment decisions. If someone starts talking about betas, alphas, and moving indicators
the person is not an investor, but a speculator (more on that later). I started out with the Armed Forces Guide to Personal Financial Planning. From there I went to investopedia.com and started reading Ben Graham's, The Intelligent Investor, and Philip Fisher's, Common Stocks and Uncommon Profits. There are many more, but those books are the ones that really stick in my head and I keep on hand. The library is a great place to get books on finance.
Now on investors and speculators. An investor looks at a business and fairly values it without getting excited whether it's the next Google or Microsoft. The investor then will pay a fair price to buy a part of the business and be patient as the business grows or recovers and gains in value. A speculator is looking for the next big move and usually due to trading costs and the like ends up breaking even or losing money, but everyone gets a break now and then in Vegas.
Individual stock investing requires some time to research, probably a few hours+ a company. Mutual funds are much easier because someone else makes the decisions for you, probably a lot like your 401k, but you have to pay a maintenance fee. Now if I own a mutual fund it must be no load and have a low expense ratio morningstar.com does a great job on fund profiles. There are many funds out there and again beware, I think index funds are decent. They tend to have low expense ratios and follow the market. Most funds after they take out their expenses can't even do that, for example, the market is up 8%, the fund returns 8.5%, but has an expense ratio of 1.25% taking your return to 7.25%. If you can't beat the market you might as well track the market.
You'll learn a lot more about finance set-up as you read, but I set my stuff up like this: 5-years+ (retirement, daughter's dowry, etc.) the money goes into stocks. 2-5 years (new computer, dream vacation) I put my money into bond index funds or laddered CDs. 6 months-2 years: that money goes into a money market account or CDs again. Less than 6 months: money market account or checking account when I need it. Finally I have an emergency savings account in a money market account.
Some people will cry that they don't have that much money, but neither do I. I'm just lucky to have a steady paycheck because I'm in the Army and I've set out my goals and scrimped, saved, and budgeted for some years. When my friends bought big screen TVs and PS3 with Rock Band, I stuck with my computer and Craigslist, people give stuff away for free as they upgrade! Plus, not everyone needs Rock Band, it can be a four person game. Others will also say that there are so many other products out there for finances, and yes, there are, but so far these are the subjects I know thoroughly and if I recommended others (futures, options, short sales) I would be a fool for giving bad advice and make you a fool for following me if you chose, but as they say here YMMV. I hope this helped some.
I made some mistakes when I first started out about three years ago and after spending my time learning I have settled into an investment approach that I find works, value investing. Your research may lead you somewhere different, but that's what works for me.Now, however, you do need to do a bit of research
, but you don't need college level courses. If you can read and do arithmetic, not calculus, you can make your own investment decisions. If someone starts talking about betas, alphas, and moving indicators the person is not an investor, but a speculator (more on that later). I started out with the Armed Forces Guide to Personal Financial Planning. From there I went to investopedia.com and started reading Ben Graham's, The Intelligent Investor, and Philip Fisher's, Common Stocks and Uncommon Profits. There are many more, but those books are the ones that really stick in my head and I keep on hand. The library is a great place to get books on finance.Now on investors and speculators. An investor looks at a business and fairly values it without getting excited whether it's the next Google or Microsoft. The investor then will pay a fair price to buy a part of the business and be patient as the business grows or recovers and gains in value. A speculator is looking for the next big move and usually due to trading costs and the like ends up breaking even or losing money, but everyone gets a break now and then in Vegas.
Individual stock investing requires some time to research, probably a few hours+ a company. Mutual funds are much easier because someone else makes the decisions for you, probably a lot like your 401k, but you have to pay a maintenance fee. Now if I own a mutual fund it must be no load and have a low expense ratio morningstar.com does a great job on fund profiles. There are many funds out there and again beware, I think index funds are decent. They tend to have low expense ratios and follow the market. Most funds after they take out their expenses can't even do that, for example, the market is up 8%, the fund returns 8.5%, but has an expense ratio of 1.25% taking your return to 7.25%. If you can't beat the market you might as well track the market.
You'll learn a lot more about finance set-up as you read, but I set my stuff up like this: 5-years+ (retirement, daughter's dowry, etc.) the money goes into stocks. 2-5 years (new computer, dream vacation) I put my money into bond index funds or laddered CDs. 6 months-2 years: that money goes into a money market account or CDs again. Less than 6 months: money market account or checking account when I need it. Finally I have an emergency savings account in a money market account.
Some people will cry that they don't have that much money, but neither do I. I'm just lucky to have a steady paycheck because I'm in the Army and I've set out my goals and scrimped, saved, and budgeted for some years. When my friends bought big screen TVs and PS3 with Rock Band, I stuck with my computer and Craigslist, people give stuff away for free as they upgrade! Plus, not everyone needs Rock Band, it can be a four person game. Others will also say that there are so many other products out there for finances, and yes, there are, but so far these are the subjects I know thoroughly and if I recommended others (futures, options, short sales) I would be a fool for giving bad advice and make you a fool for following me if you chose, but as they say here YMMV. I hope this helped some.
There is a lot of good info on the net, but it can be hard to sift through. This article "Investment Wisdom and Human Values" by Vanguard founder John Boogle is just one of good read out of many.
Trying to invest directly in stocks in your 401K/IRA is difficult because I believe most companies charge high trading fees (a good bit higher than etrade, scottrade, etc). You need a big fat 401K account to overcome that overhead. Most folks are better off in some type of fund(s) with low expensive fees and good diversification. In a private account as long as you have enough cash to have at least 10-15 stocks for diversification and some basic knowledge of balance sheets and income statements, then you should be okay. Though the constant stories about hedge funds & mutual funds trading on insider information means the little guy is always at a disadvantage.
Trying to invest directly in stocks in your 401K/IRA is difficult because I believe most companies charge high trading fees (a good bit higher than etrade, scottrade, etc). You need a big fat 401K account to overcome that overhead. Most folks are better off in some type of fund(s) with low expensive fees and good diversification. In a private account as long as you have enough cash to have at least 10-15 stocks for diversification and some basic knowledge of balance sheets and income statements, then you should be okay. Though the constant stories about hedge funds & mutual funds trading on insider information means the little guy is always at a disadvantage.
- Thread starter
- #10
Yes, I do my own investing. You don't have to be a genius or prescient to do it either I mean look what happened with this "Great Recession" that left many people scratching their heads going, huh, didn't see that coming
Now, however, you do need to do a bit of research
Now on investors and speculators. An investor looks at a business and fairly values it without getting excited whether it's the next Google or Microsoft. The investor then will pay a fair price to buy a part of the business and be patient as the business grows or recovers and gains in value. A speculator is looking for the next big move and usually due to trading costs and the like ends up breaking even or losing money, but everyone gets a break now and then in Vegas.
Individual stock investing requires some time to research, probably a few hours+ a company. Mutual funds are much easier because someone else makes the decisions for you, probably a lot like your 401k, but you have to pay a maintenance fee. Now if I own a mutual fund it must be no load and have a low expense ratio morningstar.com does a great job on fund profiles. There are many funds out there and again beware, I think index funds are decent. They tend to have low expense ratios and follow the market. Most funds after they take out their expenses can't even do that, for example, the market is up 8%, the fund returns 8.5%, but has an expense ratio of 1.25% taking your return to 7.25%. If you can't beat the market you might as well track the market.
You'll learn a lot more about finance set-up as you read, but I set my stuff up like this: 5-years+ (retirement, daughter's dowry, etc.) the money goes into stocks. 2-5 years (new computer, dream vacation) I put my money into bond index funds or laddered CDs. 6 months-2 years: that money goes into a money market account or CDs again. Less than 6 months: money market account or checking account when I need it. Finally I have an emergency savings account in a money market account.
Some people will cry that they don't have that much money, but neither do I. I'm just lucky to have a steady paycheck because I'm in the Army and I've set out my goals and scrimped, saved, and budgeted for some years. When my friends bought big screen TVs and PS3 with Rock Band, I stuck with my computer and Craigslist, people give stuff away for free as they upgrade! Plus, not everyone needs Rock Band, it can be a four person game. Others will also say that there are so many other products out there for finances, and yes, there are, but so far these are the subjects I know thoroughly and if I recommended others (futures, options, short sales) I would be a fool for giving bad advice and make you a fool for following me if you chose, but as they say here YMMV. I hope this helped some.
wow, thanks for the advice, it was incredibly helpful. I'll continue to research the topic until I get a better grasp of the fundamentals.
+1 on Index Funds, Investopedia, and virtual portfolios. I use UpDown.com and I think right now I'm outperforming the market by about two to one.
I like gold too (granted this is all theoretical, I'm a broke college student), because there's not much risk and it generally protects you from inflation.
I've read up a lot on stocks and trading and will probably take some grad level classes next year on investment instruments because I want to be able to do my own wealth management, much like yourself.
I've also had a lot of conversations with my parents, and from my perspective (I'm pretty conservative), low risk is the best. Unless you're doing this full time and just awesome at this, high risk investments will just get eaten up. Also, depending on your income level, the capital gains tax will absolutely bend you over.
Long term investments like gold, or index funds, will keep your money from being eaten by inflation. Outside of that, if you pick stocks, then pick stocks that you think will have steady growth and dividends over a long period of time. You also want to pick companies that you have some expertise or knowledge of (I pick tech stocks because I'm gadget obsessed, and banks because my father was a banker and I know quite a bit about banking).
Anyway, e-trading is probably a good plan, but I think putting retirement funds into anything aside from low risk stuff is asking for trouble. Set aside some extra income to invest and put into risky stuff.
But yeah, now is definitely a good idea to get into the market, I wish I had some money to invest because the market's good to make some decent gains right now since it collapsed.
I like gold too (granted this is all theoretical, I'm a broke college student), because there's not much risk and it generally protects you from inflation.
I've read up a lot on stocks and trading and will probably take some grad level classes next year on investment instruments because I want to be able to do my own wealth management, much like yourself.
I've also had a lot of conversations with my parents, and from my perspective (I'm pretty conservative), low risk is the best. Unless you're doing this full time and just awesome at this, high risk investments will just get eaten up. Also, depending on your income level, the capital gains tax will absolutely bend you over.
Long term investments like gold, or index funds, will keep your money from being eaten by inflation. Outside of that, if you pick stocks, then pick stocks that you think will have steady growth and dividends over a long period of time. You also want to pick companies that you have some expertise or knowledge of (I pick tech stocks because I'm gadget obsessed, and banks because my father was a banker and I know quite a bit about banking).
Anyway, e-trading is probably a good plan, but I think putting retirement funds into anything aside from low risk stuff is asking for trouble. Set aside some extra income to invest and put into risky stuff.
But yeah, now is definitely a good idea to get into the market, I wish I had some money to invest because the market's good to make some decent gains right now since it collapsed.
I also use ETrade to invest in primarily index funds (ETFs to be specific). I don't have time (or desire) to do the research on individual stocks, and very few non-index fund managers can beat the market as a whole anyway. I have, in the past, invested in companies that I frequent and value as a customer (e.g. Target), but in general, I think index funds are the way to go for the casual investor.
Yes sir, they're fun too. I even won a $300 Amazon.com gift cert last year on one of these virtual exchange sites.
For the last year or so I've been using Tradeking and I've been happy with it so far.
I've worked for 15 years in the financial services industry, and have been investing for 25years. Even with my extensive experience trading stocks, I would say that less than half of my stock choices--all identified through fundamental research--have big "winners."
Trading individual stocks is almost always a losers game for small investors. You'll almost never be ahead of the big institutional investors who get information far ahead of everyone else, so buy the time you buy or sell (unless you've truly identified a undiscovered 'gem') you'll lose.
The mock account idea is a good one, but only if you truly treat it as real risk. Anyone can throw money at stocks in a play money session when you have nothing "real" to lose (it's the equivalent of playing 'play money games' on online poker sites). When you're investing with what could be your retirement, your down payment, or your children's education, you need to be far less risky, unless you've got a pile on money you can afford to lose.
As others have suggested, for your retirement money, you're better off investing in a portfolio of ETFs or index funds. If you're young, you should have at least 70%-80% invested in a variety of stock funds--large, mid-cap, small cap, and at least diversified international fund. The rest you can put into a bond index fund to generate income.
If you really want to invest in indivual securities, start with a small amount--say $1,000 or so--or non-retirement money you can use at the start. Below that amount, you'll probably not really be able to buy enough shares of anything to justify the commissions you'll pay, even at $7.95 a trade. Don't invest in things you want to trade right away--you'll generate unwanted short term capital gains taxes and you'll be market timing, which almost never works. Instead, invest in companies or industries with products you know something, so when you read the research reports or see the product flying off the shelf you'll get a good consumer viewpoint as to the effectiveness of the company. Then, invest for the long term--at least a year or more, unless you read news about the company (like an impending bankruptcy) that threaten to tank the price. But by the time you read these stories, the big houses are already way ahead of you.
Jeff in Boston
Trading individual stocks is almost always a losers game for small investors. You'll almost never be ahead of the big institutional investors who get information far ahead of everyone else, so buy the time you buy or sell (unless you've truly identified a undiscovered 'gem') you'll lose.
The mock account idea is a good one, but only if you truly treat it as real risk. Anyone can throw money at stocks in a play money session when you have nothing "real" to lose (it's the equivalent of playing 'play money games' on online poker sites). When you're investing with what could be your retirement, your down payment, or your children's education, you need to be far less risky, unless you've got a pile on money you can afford to lose.
As others have suggested, for your retirement money, you're better off investing in a portfolio of ETFs or index funds. If you're young, you should have at least 70%-80% invested in a variety of stock funds--large, mid-cap, small cap, and at least diversified international fund. The rest you can put into a bond index fund to generate income.
If you really want to invest in indivual securities, start with a small amount--say $1,000 or so--or non-retirement money you can use at the start. Below that amount, you'll probably not really be able to buy enough shares of anything to justify the commissions you'll pay, even at $7.95 a trade. Don't invest in things you want to trade right away--you'll generate unwanted short term capital gains taxes and you'll be market timing, which almost never works. Instead, invest in companies or industries with products you know something, so when you read the research reports or see the product flying off the shelf you'll get a good consumer viewpoint as to the effectiveness of the company. Then, invest for the long term--at least a year or more, unless you read news about the company (like an impending bankruptcy) that threaten to tank the price. But by the time you read these stories, the big houses are already way ahead of you.
Jeff in Boston
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