I recently began trying to increase my knowledge of investing. I am mainly focusing on the stock market because I am young and afford more risk. I have been watch Jim Cramer and have one of his books on the way. In case some of you don like him, I dont take his advice as the word of God but I am looking good methodology on picking stocks. What pieces of advice do you have to offer because I need to fund the AD's somehow.
Investing noob
- Thread starter Voomie
- Start date
Voomie,
First and foremost, if you have any debt, pay that off before investing into the stock market. Chances are that your return from the market will not be as much as you are paying in interest in student loans, car loans, credit card debt, etc. Plain and simple.
I love Jim Cramer but I also recommend you checking into Dave Ramsey. He can give you good insight into investing. Good luck and have fun!
DL
I think Cramer is a shill, but that is my opinion. +1 on paying off debt, any debt. I would try Dividend Reinvestment programs or DRIP's. You can google it. the quick take, some companies that pay dividends allow you to take your dividends to reinvest automatically into more stock. You are young, so it will pay off in the long run. once you set them up, forget about them, you will be surprised to see what you have in 5, 10 20 years.
+1 on Dave Ramsey. First thing he'll tell you (after telling you to get out of debt) is not to take advice on money from someone who doesn't have any. I believe he steers people to growth stock mutual funds with a long record.
Kramer is more geared toward short-term trading as opposed to long-term investing. I'll be graduating this December with a degree in financial planning and have an internship with Edward Jones this summer. So, ask this question again in January.
How do you get $1 million dollars from investing in the stock market?
Start out with $4M.
If your employer offers any stock-purchase plans or 401Ks or something similar where they will match funds with you, jump on that bandwagon and sign up for as much as you can afford to spare out of each paycheck.
I have a friend who has been convincing me to invest in Silver. I've been watching the spot prices for a few months, and it does seem to give a good ROI, but it is a buy-and-hold investment. You won't make anything in the short run. Any precious metal is a good investment, but Silver is extremely affordable. If you do get into the metals market, you want to take physical possession of anything you buy, not just a certificate that says you own it, or shares in a brokerage account.
For investing in stocks, be sure and shop around carefully for a broker. Some of them have outrageous fees that will eat up and destroy and profits you think you may have made on paper.
I have a friend who has been convincing me to invest in Silver. I've been watching the spot prices for a few months, and it does seem to give a good ROI, but it is a buy-and-hold investment. You won't make anything in the short run. Any precious metal is a good investment, but Silver is extremely affordable. If you do get into the metals market, you want to take physical possession of anything you buy, not just a certificate that says you own it, or shares in a brokerage account.
For investing in stocks, be sure and shop around carefully for a broker. Some of them have outrageous fees that will eat up and destroy and profits you think you may have made on paper.
Last edited:
As someone who has worked in the industry for nearly two decades and has spent a great deal of times creating marketing programs for brokerage companies trying to convince people like you to play the market, my advice to you is: DON'T.
That is, DON'T mix "investing" with stock trading. Stock trading is glorified gambling. If you play that game, you are far more likely to lose than you are to win. Small investors never win in the market if they're trying to trade short-term. The big investors will always know what's happening before you do, and you'll buy high and sell low. The Cramers and all the other stock-callers of the world are shills and fools, and for every right call they're remembered for they make a hundred losing calls that no one remembers.
"Investing" is a different animal entirely. Investing is a process you use to grow the overall value of your money by making shrew investments that, hopefully, will grow over time. You INVEST for retirement. You don't trade stocks for retirement.
If you're a beginning investor, you're much better off starting with mutual funds. These funds will do the stock picking on your behalf and if they do a decent job they'll beat the overall performance of the market. Think about creating a diversified portfolio of different kinds of stock and bond funds and let the experts do it for you. Most brokerage companies have online planning tools that let you figure out how you should spread your assets among different asset classes based on your timeframe, future financial needs, and your risk tolerance.
Once you've put most of your money into a solid mix of mutual funds, and once you gain knowledge, you may want to keep a couple thousand dollars on the side to invest in individual stocks. Consider this "play money" that you can afford to lose. Don't get involved in day trading; any gains will get eaten by commissions and, again, you'll end up behind rather than ahead. Instead. focus on choosing a small number of stocks from companies you either recognize and/or businesses you understand and experience firsthand. Noticing a long line of people going for the new McRib sandwich? That might tell you that McDonald's has picked a winner and is poised for greater profits in the coming quarter, which could be a reason to invest in it. Pick what you know, not what someone else thinks is hot.
Before you put a dime in the market, do as much research as you can. Nearly every mutual fund sight has very decent free investor education that can explain the basic principles of investing to you. Understand the factors that drive the market and the price movement of different stocks and industry sectors. Also understand that right now the market as a whole is approaching its proper valuation, meaning that there is not going to be a huge amount of upward movement, particularly if oil prices remain where they are and inflation returns. So, don't plan on short-term gains; think long-term growth over time.
The stock market is in serious transition, in my amateur opinion. Arbitrage trading by computer dominates the trading traffic. The old strategy of companies continually driving their stock prices higher is showing some wear. The wiser people I know are now investing only in stocks which pay dividends.
I myself have gotten completely out of stocks. I do not know if or when I will decide that this market is attractive. I actually have more invested in antique cameras and saxophones than I do in stocks. Sometimes I think that a garden is a better investment than stocks. There are also some more conservative investments like CDs.
Jim Cramer is an entertainer.
Listen carefully, again. Jim Cramer lives on ratings and his entertaining persona. If you listen too much to Jim Cramer, or those idiots at Investor's Business Daily, you will soon have nothing left to invest. If you have lots of wealth to experiment with, it might be fun to follow one of these gurus. Otherwise, I suggest you follow Raisindot's advice, and learn all you can before you put actual money into something which could dive to the ocean floor any minute.
Keep an eye on Lew Rockwell, they usually have at least one good economics article every day. The Mises Institute, also closely related to Lew Rockwell, is another great place to learn about economics.
Basically, invest is precious metals... and like dpm802 said, make sure you physically own the metals. America has been known to confiscate these things in the past.
Basically, invest is precious metals... and like dpm802 said, make sure you physically own the metals. America has been known to confiscate these things in the past.
Actually, putting away just $300 per month starting at age 25 and assuming an 8% return on investments (which is fairly reasonable these days, the market was up 10% each of the last 2 years), you'd have $1M in your account when you hit 65.
I could show you the math and the graph on this if you'd like. I actually had an interviewing class this past semester and I had to give a persuasive interview, so I decided to try to persuade a recent college grad into investing in a 401(k).
And to the OP:
I'm a member of the Financial Planner's Association and I receive newsletters. This one may be of interest to you. (Apologies for the ugly looking link)
http://echo4.bluehornet.com/hostede...058966875&ch=6EB160E00D33C4855FD7F754E9B98E77
I might also suggest a Roth IRA. My friend is a CPA and said it really is the only gift the government gives you.
Contributions to a Roth IRA are not tax deductible....however when you finally retire and you cash out the Roth. There will be absolutely no taxes taken out.
Anyway, look into them...I plan on investing in one this year.
Also read: The Intelligent Investor.
“By far the best book on investing ever written.” (Warren Buffett ) And I personally agree, although it can be a dry read.
http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661
Contributions to a Roth IRA are not tax deductible....however when you finally retire and you cash out the Roth. There will be absolutely no taxes taken out.
Anyway, look into them...I plan on investing in one this year.
Also read: The Intelligent Investor.
“By far the best book on investing ever written.” (Warren Buffett ) And I personally agree, although it can be a dry read.
http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661
Last edited:
TheShaun
Bejeweled
Forget mutual funds and their high MERs. Learn about long-term index investing with ETFs, and enjoy the low MERs.
I agree with everything you said except for the part about mutual funds. These guys tend to shave off between 2 and 4 percent of your investment in management fees, which they collect in various ways to throw you off (ie. Some take an upfront fee, some have fees for getting your money out, almost all yearly management fees some have allvof the above, some have a strange combination o f the abov and something else which you won't understand).
The fees part is actually not the problem. The problem is that the vast majority of these guys tend not to beat the market (and they still take your fees!).
The diversification approach is essentially the idea that if you buy enough stuff the gains and losses will balance out to a return that is superior to safer instruments, like t-bills, because you are taking a higher risk. Generally this is the best approach that a newb can take who wants to make some long term investments.
The cheapest way to do this effectively is to buy etfs which stands for exchange traded funds. It's like a mutual fund but there's no voodoo involved so they can't charge you such a high price. Basically, they try to mimic the returns of a given market. Some focus on emerging markets ( these tend to have higher growth potential) and sone are specific indices (Dow, lse, s&ptsx, etc).
Remember, picking the right mutual fund means you have to pick the right fund manager which you almost certainly know less about than you know aboutbpicking the right companies.
Go for an ETF. Read ben graham's book the intelligent investor (go for the original, not the thick version with notations if you can't handle too much dry material). Once you've read that you can either read Grahams other book abut fundamental analysis of companies I think it's called security analysis or something like that or you can email me and I'll give you the name of a good textbook, which will give you a good basis for understanding what people like Kramer are saying.
I like what someone else said about paying off debts first. That is true.
It really is important that you read a textbook before you start listening to people's advice. Of course, that doesn't mean you shouldn't take my advice... Or ben Grahams.. He's the father of value investing which is the only method I know of that can generate cinsistent long term returns,
There is no "get rich quick" in investing... Unless you learn enough that you can convince other people to let you investvtHeir money, in that case yu win every time!
Good luck. Ask if y need more info. I have a bachelors with honors in finance and I'm writing my level one Cfa in a week. Also know a bunch about valuation and corporate finance,etc.
Edward jones will turn you into a used car (stock/bond) salesman. Get out of there once y get ur CFO and get a job at a bank. Of course some used car salesmen do quite well for themselves...
Cheers!
The fees part is actually not the problem. The problem is that the vast majority of these guys tend not to beat the market (and they still take your fees!).
The diversification approach is essentially the idea that if you buy enough stuff the gains and losses will balance out to a return that is superior to safer instruments, like t-bills, because you are taking a higher risk. Generally this is the best approach that a newb can take who wants to make some long term investments.
The cheapest way to do this effectively is to buy etfs which stands for exchange traded funds. It's like a mutual fund but there's no voodoo involved so they can't charge you such a high price. Basically, they try to mimic the returns of a given market. Some focus on emerging markets ( these tend to have higher growth potential) and sone are specific indices (Dow, lse, s&ptsx, etc).
Remember, picking the right mutual fund means you have to pick the right fund manager which you almost certainly know less about than you know aboutbpicking the right companies.
Go for an ETF. Read ben graham's book the intelligent investor (go for the original, not the thick version with notations if you can't handle too much dry material). Once you've read that you can either read Grahams other book abut fundamental analysis of companies I think it's called security analysis or something like that or you can email me and I'll give you the name of a good textbook, which will give you a good basis for understanding what people like Kramer are saying.
I like what someone else said about paying off debts first. That is true.
It really is important that you read a textbook before you start listening to people's advice. Of course, that doesn't mean you shouldn't take my advice... Or ben Grahams.. He's the father of value investing which is the only method I know of that can generate cinsistent long term returns,
There is no "get rich quick" in investing... Unless you learn enough that you can convince other people to let you investvtHeir money, in that case yu win every time!
Good luck. Ask if y need more info. I have a bachelors with honors in finance and I'm writing my level one Cfa in a week. Also know a bunch about valuation and corporate finance,etc.
Edward jones will turn you into a used car (stock/bond) salesman. Get out of there once y get ur CFO and get a job at a bank. Of course some used car salesmen do quite well for themselves...
Cheers!
BTW, I learned several years ago that an investment counselor has no edge. They'll just help you screw up. I can do that on my own and not pay their fees.
Invest in pumpkins around mid November, sell on October 31st. That is about the best I can offer.
Much could be said. I am not qualified to speak, so just take this as a random comments. IMO you need should have at least $20K, preferably 50K to start investing in individual stocks, since you should diversify across at least 10 stocks or more. If you just had $5K you would be taking very small positions and having larger transaction costs. So assuming you are starting at near $0 I would recommended a lost cost index fund to start with until you built up your account. In the meantime you can educate yourself and decide whether you want to be a technical investor (trader), value investor, growth, etc. And learn how to read a 10-K and always be leery of the possibility that a company might be cooking the books for a few years before bad things get exposed.
There is a lot of info on the web if you are looking to gain insights. A few sites that come to mind, there are certainly more/better out there:
Oaktree Capital Memos (Howard Marks)
Berkshire Hathaway Inc. - Buffet's letters to shareholders
Bill Gross' Outlook
There is a lot of info on the web if you are looking to gain insights. A few sites that come to mind, there are certainly more/better out there:
Oaktree Capital Memos (Howard Marks)
Berkshire Hathaway Inc. - Buffet's letters to shareholders
Bill Gross' Outlook
I don't want to sound impolite, but this is not an appropriate assumption anymore. Up until the crash of 2008, most advisors still used 8% as an annual return assumption, based on how the market had performed over the past 50 years or so.
The decade of the 0's demonstrated the fallacy of this assumption. Most investors who started with with high equity allocations in 1999 would have seen their portfolio have a return that would have either been negative or barely returning to normal in 2010. Two recessions and the market meltdown of 2007-2008 erased ten years of growth for many investors.
The old 8% return thesis isn't valid anymore. The retirement world has shifted its emphasis from the power of investing to grow assets to the need to invest more. That is, it's important to invest as much as possible to build up the portfolio to compensate for returns that are unlikely to return 8% annually averaged out over many years. Indeed, most economists and market watchers believe that we're unlikely to ever experience a boom market like we had from 1992- to mid 2000 again, which accounted for most of the growth that created the 8% assumption in the first place.
This doesn't negate the value of investing or the need to invest more aggressively in stocks while one is younger and has the time to ride out the various market cycles that will come along over time. It just means that the old arguments are no longer valid.
Last edited:
Get a hold of Gerald Loeb's The Battle For Investment Survival. The rest is details.
