Novice in the Stock Market

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Assuming the neophyte can gather enough lucre to invest in the market, what should be the first step? Can a small amount of money be worth the playing? Of course, one must study , but which papers are most essential, and can they be pointed out on the web? A dummy wants to know.

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If you havnt studied investing in the stockmarket extensivly I'd give direct investment a miss edgar. Instead look to managed investment funds. I think you may call these "mutuals"

Here is one I use personally. http://www.perpetual.com.au/default.htm

You can invest across a range of options which of course reduces your exposure to risk. Initial investments are as low as 2 - 5,000 dollars.

The other thing I feel the need to say is that if you do not have a 10 - 15 year window then you should consider less risky forms of investment such as fixed interest.

I'm sure there are similar funds in your area but your first prot of call should be an investment advisor.

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edgar, start playing here www.investopedia.com (go to stock simulator)
a bit, and learn by doing. The stock simulator will let you have $ 100,000
to invest any way you want to. The quotes are real time and commission
is anywhere from $19.99 to $29.99. At investopedia you also can read
up on various companies and compare charts and stock history.

It's quite entertaining!

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Quote:

The other thing I feel the need to say is that if you do not have a 10 - 15 year window then you should consider less risky forms of investment such as fixed interest.

yes , it's difficult to make any SURE money in a shorter timespan buying shares directly .
even in a mutual fund you should really count on about ten years before there MIGHT be a reasonable profit - and remember :
THE PERFORMANCE OF THE PAST IS NOT NECESSARILY AN INDICATOR OF FUTURE PERFORMANCE !

while i have made a bit of money in the stock market and mutual funds over the last thirty years , it's just to give as a little extra to our pension - certainly would not give us enough to retire on .

until we had some money in GUARANTEED investments , such as GIC'S (investment certificates guaranteed by the canada deposit corporation - there must be something similar in the U.S. , i'm sure) we did not risk any of our money in the stockmarket .

sure , some people have had very good returns in the stockmarkets , BUT MANY HAVE ALSO LOST THEIR SHIRTS (and even houses : read ENRON , sub-prime mortgage market) .
hbg

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Novice in the Stock Market. Syn - Sheep.

Good advice, so far. If you can rig it to where the fund(s) and/or interest bearing instruments are sheltered by either Roth or conventional IRA, so much the better.

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Two words: Index Funds.

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DrewDad wrote:

Two words: Index Funds.

I can live with that.

Ps You missed Rio Tinto by abiout a week. The way mininig stocks are looking, I think theres another year or two in them. So BHP would be a good bet not for capital gain just for income from dividends.

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My apologies for not getting back sooner. I wanted to give enough time for those in the know to mull the pros and cons. I think the market is not for me. Just looking for ways to make something off of my 401k, after I quit my present job. It's not that much money, in the scheme of things. Still about half of a year to ponder.

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edgar :
just happenend to look at your a2k bio - and while you are a bit younger than i am , i doubt that you want to get involved in any even moderately risky investment .
if you can get 4 to 5 , perhaps 6 % in a secure investment , you'll probably be doing as good as taking a run at anything risky now .
you know the old saying about the sparrow in the hand being better than the swallow on the roof - or something like it :wink:
take care and enjoy life - it's the best dividend you can earn :wink: - and - so far - tax-free !
hbg

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CalamityJane wrote:

edgar, start playing here www.investopedia.com (go to stock simulator)
a bit, and learn by doing. The stock simulator will let you have $ 100,000
to invest any way you want to. The quotes are real time and commission
is anywhere from $19.99 to $29.99. At investopedia you also can read
up on various companies and compare charts and stock history.

It's quite entertaining!

I plan to play the game, starting on my Thanksgiving vacation. Thanks CJ.

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Hi everybody! I'd like to give this thread a bump because I have a lot of questions too.

I'm 41, have some extra cash in savings, a 401k, and some CD's. I'm a single mom of two and would like to invest for both my retirement and some college expenses. I currently own about $5000.00 worth of stock in about 6 companies just because I wanted something to stash away and watch. Some have done well and some are stinkers.(Damn why didn't I buy Apple at $74.00)

What do you look for in a stock? What is P/E ratio? I've been looking at past performance and dividend returns and ratings on msn.com.

Comments???

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martybarker- There is a lot to buying a stock. I like to check out the P/E, and the dividend track record. (I only buy stocks that throw off a dividend). Also, it is useful to see what the principals of the company are being paid, and their own personal transactions of the stock. A quick perusal of some of the news stories over time concerning the company can say volumes.

I am very leery of analysts' ratings, although I do take them into consideration, in totality.

Right now the market is in flux, to say the least. My best advice to you is if you have researched the company, and believe that it is a stable one, hang tight, and don't let the day to day fluctuations get to you.[

Here is an explanation of the P/E ratio.

http://www.investopedia.com/terms/p/price-earningsratio.asp

This site is a good place to learn some stuff about investing.
http://www.investopedia.com/

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I never have much luck with investments. I once invested heavily in cotton floral bonnets, but the government went and cancelled easter that year.

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here is some free advice from WARREN BUFFET - some of it even about investing !

if you don't want to read all his quotes , just read these two :

Quote:

Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
Warren Buffett

Only when the tide goes out do you discover who's been swimming naked.
Warren Buffett

he was recently interviewed on CNBC and - as usually - asked how he become so successfull .
his answers were pretty straightforward and simple . he said : "i was lucky to have been born at the right time and i was lucky to have picked some good stocks " . he said that he felt neither qualified nor comfortable to give advice to others on how to pick stocks that might do well in the future .
hbg

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I just added investopedia to my favorites. I'm sure I'll have more questions later but I'm going to get busy reading.

Thanks

So far Coca-cola has been my favorite but I plan on just holding on to it and possibly passing it down to the kids.

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A small investor can also purchase shares directly from some companies by setting up dividend reinvestment programs (DRiPs). You open an account with the company and purchase share directly from the company (bypassing brokerage fees), dividends are directly reinvested in partial shares.

http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_5.htm

One advantage to these accounts is that you can make small investments over time ($50 is a normal minimum) and not have to purchase blocks of stock.

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A small investor can also purchase shares directly from some companies by setting up dividend reinvestment programs (DRiPs). You open an account with the company and purchase share directly from the company (bypassing brokerage fees), dividends are directly reinvested in partial shares.

that's what i did about 35 years ago . i bought 100 shares of a canadian bank and essentially forgot about it - i let the dividends buy more shares . it sure beat any mutual fund investment i ever did .
you do need to be patient though . it's awfully tempting to sell on a profit and you have to ride it out - sometimes for more than a year - when the stock takes a beating !
PATIENCE , PATIENCE !
hbg

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I set up DRiPs with Moterola, Exxon (now ExxonMobil), McDonald's, Tribune, and Intel about 15 years ago. I started with a single share of each and then sent in $50/month for about 5 years. Then I let them sit. Moterola has been a roller-coaster stock but the rest of them have done well. At the time a new investor could join NAIC and they would do the initial purchase/transfer so that you could get a single share without paying a brokerage fee. I'm not sure if such a group still exists.

There are also investment clubs that encourage new investors to join. The club makes purchase decisions and the monthly 'dues' are pooled to have greater buying power.

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Be sure, before you invest in anything, to clean up any debt you may have outstanding now. Paying off Credit Cards, Cars, (even most mortgages) is more valuable in the short or long run.

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Novice in the Stock Market

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