Stocks...how do you invest?

Question

How and when should you invest in stocks? And, what stocks are good?
And when (age range) and how much should you contribute to your 401 K?

I don't know anything about this stuff...any information is greatly
appreciated.

By the way: I'm a 25 year old female. I do contribute to my 401 but, I've never been involved in the stock market.

Answer 1

I congratulate you for your excellent financial efforts. 25 and investing in your retirement is superb, marvelous.
a) Stocks sell in units of 100. Odd numbers cost more.
b) Buying and selling stocks both cost money.
c) There are more tools than time to discern which stocks. Vector Vest is a quick, fairly helpful shot. Yahoo Finance, Fidelity Investments, all have good information and can point you to more.
d) The average person cannot track or desire to track the tsunmi of information in the market and guess trends/economic rates, etc. As a result, Mutual Funds fill the niche. There are "sector" funds - if you have a hot feeling for Utilities - and Company size funds as well as Value/Growth/Mixed. Again = on-line education can help. I've found mutuals to be safer. For instance, I may not read tha Pfitzer's new drug has cleared the FDA for a week - if at all. Meanwhile the market has reacted w/in the hour. My mutual fund handles that for me....mutual funds. The adage about all the eggs in 1 basket still holds.
e) Long winded today, whew. The rule of thumb is 3 months of salary/income first. This is saved in a "liquid" or easily accessible account such as a cd. CDs can be laddered, i.e. one due in 6 mo. anotherr 1 yr., 18 mo. etc.
f) After you have the basic amount, go for the investing. I've used both Fidelity and Smith-Barney and would give positive feedback.
g) You are too young to go w/ an annuity. Tuck away the knowledge that should you purchase one three or so decades from now...never annuitize the annuity.
Sorry to take so long.

Answer 2

I'm 61 and I've been to the school of hard knocks in the stock market. But some general rules are: (1) Diversify. Never trust any one company, or even two. You should own about seven to ten good companies. (2) Make a notebook and follow your ten favorite stocks each day on the web. Yahoo has this service for free. Just type in the symbol (DOW for Dow Chemical, X for United States Steel, etc.) and see what it closed at yesterday, and what it is doing today. There's a place to do that on the Yahoo home page. When possible, you want to buy low and sell high.(3) Look at the chart. What was United Technologies yesterday? Last week? 3 months ago? (4) Does the company pay a good dividend? If yes, and if the price has been stable, you probably won't go wrong if you own it for a number of years. (5) Remember...You can pick any stock almost as good as a high-paid broker can. I'm really angry about years of advice that was simply wrong. Now I trust myself and I use an on-line (meaning cheap) brokerage firm. (6) Any investor must be ready to absorb an occasional horror story: Either you did NOT buy a stock when you should have; or you BOUGHT one and promply lost $500. You don't want it to happen - but it will many times during your career. (7) Are you employed? A Roth IRA or a regular IRA is right for you. The fun part about IRAs is that you can have a capital gain and you never have to pay USA until you actually take some profits when you are about 59.5 years of age. (Oh, remember that the world may end before you hit age 59, so be sure to spend a good portion of your non-invest money to enjoy life NOW. When the Mexicans or Arabs own America, the laws may change drastically and you could lose all your money. So live a little for today, too.)
To summarize...if you will invest ten to 15 percent out of each paycheck, and if the world holds together for the next 35 years, you could easily be a millionaire when you are sixty. (I'm not, but I was dumber than you are for too many years.) It's always a gamble and there will be some hard knocks, but a good combo of stocks in your portfolio for that many years should make you somewhat wealthy when you are older.
One more thing: When the news media is moaning about terrible times in the markets, you should BUY several well-known names. When the media is gushing about the HOT, HOT, HOT times on Wall Street, you should be bailing out of your best stocks. (People who sold their NASDAQ stocks in January, 2000, when the techs were "on fire," did extremely well. People who hung on...lost as much as 50% when the crash came in March of that year.)
Right now? I'd say there are some pretty good bargains in the Dow Jones Industrials. Some advisors say that autumn, 2006, will be a generally "up" time on Wall Street.
Hope this helped you.

Answer 3

OMG, I was going to skip this question, but there was some bad info there, I had to post. First, I’ll answer your question, then at the bottom I’ll tell you some of the errors in other posts.

Congratulations on getting started at a young age. It’ll help you more than you know!

How to invest depends on what you already know. We'll assume that you're beginning.

A good primer is How to Make Money in Stocks by William O'Neil. You can get it cheap just about anywhere. It’s widely available new or used.

Another good one is one of Jim Cramer's books.

But books will only get you so far. At some point, you'll also want to get at least a little training. There are some great education companies if you want to make the investment. Investools.com or optionetics.com are both very good companies as is tmitchell.com

For free, you can start by visiting thestreet.com. That'll get you a pretty good primer so at least you'll understand what the markets are and what a stock is, etc. If you get a chance, watch Mad Money on CNBC. Don't trade any of his picks. Just use the show to get you to understand some basics and get a feel for the market itself.

Next, subscribe to something like investorsbusiness daily or something like that that can help you identify good stocks.

Do a quick search (at the top of the page) on ROTH IRAs. You’ll want to put some money in there.

Once you understand stocks, go to 888options.com. It's a website that'll help you understand options (what they do, how they work, etc). You don't need to trade them, but the more you know, the more you'll see how options can really be the safest way to invest (once you're educated).

As you get more advanced, you might want a technical analysis book like Murphy's Visual Investor or A Technical Analysis Course by Meyer.

If it's discipline (which is crucial to successful trading), probably Trading in the Zone by Mark Douglas or Mastering the Trade by John Carter

I know that’s a LOT to absorb. Just take it one step at a time for now. Start slow, then as you figure things out, move out of mutual funds into ETFs and/or stocks.

Congrats again on getting started. If you have any questions, please let me know.

Hope this helps!



Ok, as for those other answers,

O Stocks are mainly risky if you don’t know what you’re doing. At this point, it’s risky for you, but hopefully eventually it won’t be.

O For 401K’s the max is around $15,000. for a ROTH IRA, it’s $4000. You should have both if you can afford it.

O Stocks can be picked. Just like life though, there’s never 100% certainty. Anyone who tells you they’ve never lost money and has traded for a while is lying. But you can most definitely pick stocks.

Just to show you. Here’s a couple of stocks you can watch from now until year end. Don't buy them, just watch them. AAPL, HUM, MS, KSS. (Apple, Humana, Morgan Stanley, and Kohls Dept store) That’s four stocks in four sectors for ya. Let me know how they do. 26Sep2006

Answer 4

Warren Buffet does not believe in market timing. And when it comes to a true investment, timing the market shouldn't matter. True investments are about growth. Simply put, it is about buying and watching.

Trading stocks is a different animal as rapid fire buying and selling is involved. It is based on catalysts such as politics, product releases, lawsuits, analysts meetings, conferences, and earnings reports.

There's a million and one ways to be involved with investing, from 401Ks to aggressive emerging market mutual funds, flipping options, and shorting (betting a stock will go down).

The Stocks for Dummies is a start to quickly get a grasp of understanding the technicalities and concepts. Jim Cramer has a book out that has good info, and he shares his experiences both good and bad. Jim is not the know-all tell-all of stocks as there are many great players out there. Thumb through all the books as Barnes or Borders. There's also the magazines like Forbes and Fortune that have good info, as well as Trader Monthly.

There are a few things that cannot be learned in a book, but only by actually trading real money. The emotion of making a ton is incredible, and losing a ton is an incredible emotion experience. Hypothetical this and that with monopoly money is cute, but having real money on the line is when you find out what kind of stomach you have.

Take a step back and see what kind of personality you have. It might be risk adverse, risk favorable, or somewhere in the middle.

Also find sectors and industries that interest you. Investing in companies that are in alcohol, tobacco, and firearms might be completely against your code of ethics. If you like retail and fashion, there's a place for you. Tech, financial, automotive, tires, steel, dish washers, toys, children's stuff, whatever. I prefer to learn about the industries that interest me and staying up to date about what is going, who is releasing what, who picked up which new designer, future concepts going out 5 years from now. Then I make my own decision, and don't ignorantly take a stock pick from some analyst, who might have it all wrong. I might have it all wrong myself.

Warren Buffet also doesn't invest in areas he didn't understand.

I too am 25, began investing at 18 with a couple hundred bucks, saved more and started trading a little over a year ago. I have a couple true investments, and do not count anything out. All options are kept on the table from equities, of course, derivatives, ETFs, shorting, bonds, it doesn't matter. As the market moves money is being made, might as well be part of it. I'm not rich, but I'm working on it. I am writing this in the middle of the trading day because my day is slightly in the red and has gone sideways. Lunch and answers...is great!

Answer 5

No age is too soon to start and research the stocks you may buy and don't just buy and hold. Buy and homework. Get jim cramer's book and give it a read. for $15 it is a easy read and great way to approach the market.

401k I say start as early as you can invest in it and don't go beyond your company's match policy. That is free money from the company they are investing in your plan for you. If you aren't at the top of what the company is matching you are effectively throwing away free money.

At your age I say take up to the company match and start putting other money aside for life's not so little neccessities (buying a house, starting a family, wedding, student loans etc) You may be able to take a loan from your 401k for your down payment on your first house.

Look at the blend of funds that your 401k has to offer and split it up diversify, some growth funds, value and more secure funds should be a part of your mix. Starting early is the advantage to retiring rich or barely getting by. You can't truly catch up once you are older.

Go quit reading these answers and get started NOW!!

Answer 6

You can open up an account with an online brokerage firm (E*Trade, Fidelity, etc.). Once that is set up, you can buy stocks from A (Agilent) to YHOO (Yahoo).

That's the million dollar question - which stocks are good. If I knew that, I wouldn't be here ;-) But my general rule - which has done me quite well is the following: be greedy when others are fearful, and be fearful when others are greedy. It's a cute way of saying "buy stocks when people are selling bargains...and sell to those people when irrational exuberance sets in".

401k question - the earlier that you can contribute, the better. If you can maximize your contributions now (you're 30+ years away from retirement), go for it. The maximum is $15K per year in 2006. Contributing a dollar now is equivalent to stashing away 10-15 dollars when you're close to retirement. Don't forget about Roth IRA's either, they're a fabulous tool.

Answer 7

You should contribute the as much as possible to your 401k. i think the limit this year is $4000. Its a tax deductible contribution. You shouldn't invest in stocks unless you are out of debt and can accept the fact u may lose the money. "Getting Started in Stocks" is a GREAT book to get you knowledgeable about investing. But don't buy anything until you are educated. Many websites give free stats about the stock to help you select them. My favorite is cnbc.com. Definitely read that book though, it is easy to read and has a lot of information so you can get started.

To invest in stocks, you select a broker like etrade.com or firsttrade, or more traditional brokers like charles schwab or merill lynch, fill out their application, put some money in an account, and pay them a commission to make your stock purchases for you. You can also buy stock from a clearinghouse who works closely with the individual companies selling their stock, or you can buy it directly from the company, but that is more complicated. Within your 401k, you can buy stocks and mutual funds, etc also and make them a part of your retirement protfolio.

Answer 8

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/4ed13

Answer 9

first you have to find out what investment company you're 401k is in. try to take control of it also. find out what fund you or your company selected (change it if its not doing so well). You have to research on its risks level, etc. money market is very safe.

Stock is very risky right now. if you find out about a great new booming company that you would like to invest in..then it is already too late. I think only the insider would know when is a good time to buy stocks before the public know. Stock will help you generate some returns but too little of an amount to help your porfolio or passive income to make a drastic change. therefore, it is some what pointless to invest.

Answer 10

I even have thought approximately this and the 1st undertaking i would not do is broadcast that I gained the lottery. i might very quietly do what i mandatory to do to declare the winnings (with the help of making use of attorney etc.) and hire somebody to assist me properly cope with the money. Then i might safeguard my instantaneous relatives...quietly and discreetly. i might provide to my popular charities and reasons interior an identical way. in case you have somebody assisting you cope with and develop you funds you might have the means to hang directly to it so which you would be able to proceed to income others as you like. that's approximately self-discipline and investment. i think of maximum lottery winners bypass broke because of the fact they commence residing the existence of the rich and in call for devoid of being prudent approximately investment or spending. i assume being too beneficiant performs a factor in this besides. i think of the secret's to maintain it quiet and function somebody aid you deal with the money.