Stock questions--beginner here?

Question

I'm 25 yrs. old and am interesting in a buying some stock for savings purposes.

My questions are:

1. What exactly do I lose if the stock fails?

2. How long does it take for a stock to grow say from 500 to 1000 dollars? Does it depend on the individual stock?

3. Where is a good place to start investing? (Both online and offline).

Thanks very much for all your help as it's much appreciated!

Answer 1

First of all, congratulations on getting started at a young age. It’ll help you more than you know! Be aware that there's a lot to learn, but don't let it overwhelm you.

1) You lose the difference in price of the stock from when you buy to when you sell, plus commissions. If you bought at $20 and sell for $10, you lose $10/share plus commissions.

2) Yes. It TOTALLY depends on the stock. Some stocks like GM have risen 50% since a few months ago. Others have dropped that much!

3) How to invest depends on what you already know. We'll assume that you're beginning since that's what you've said.

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).

I know that’s a LOT to absorb. Just take it one step at a time for now.

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

Hope this helps!

Answer 2

1. You do not loose anything as long as you do not sell it. Your loss is realized only when the stock is sold. However, it is not really a good idea to hold on to a loosing position too long or for too much of a fall.

2. depends on the stock. Some a matter of weeks, some a matter of years, some never.

3. A good place to start is to invest some time in reading some books on investing. A little education is a dangerous thing. More education is less dangerous. Go to your library and learn a little about investing before you do anything else. Fidelity is a good place. They have a ton of research material. They are not the cheapest however. Scottrade is among the least expensive. A full service broker will hardly give you the time of day unless you have a million dollars. You are not worth the effort, but they will be happy to take your money. That comment is in general. There are exceptions to that rule.

Answer 3

Sounds like you are looking into gambling, not investing. Reason being....
"2. How long does it take for a stock to grow say from 500 to 1000 dollars? Does it depend on the individual stock?"

Man, thats a 100% gain! Now that's greedy. Of course it can happen, but understand that someone who's asking a stupid question like that online will get eaten alive in the stock market. There are people out there waiting for you to invest 500 bucks in a stock so they sell and make the money.

This isn't monopoly. Lets say you invest $100 in a stock and you lose 50% on it. Do you realize that you would need a profit of 100% to break even? That kind of thing doesn't happen. Well it does, but it's like throwing up a Hail Mary Pass and completing it.

Start watching Cramer's Mad Money. Take heed in his recommedations but understand his one underlying lesson, "Bulls and Bears make money, Pigs get slaughtered."

For you I would recommend starting with the books. Read anything on stocks, you'll be better off than you are now.

Answer 4

A good place to start investing is Sharebuilder.com. You can buy stocks in any dollar amount and amount of shares you wish, you don't have to go thru a broker, and if you invest or choose the automatic investment program you can invest on the Tuesday of your choice (actually there's a Monday BEFORE the Tuesday of your choice deadline) for only $4. You can fund your investments by depositing money directly from your checking account into an interest bearing money market fund. Then when you buy or sell stock, it comes from or goes back into there. If you want to sell "realtime", it will cost you $15.95 per transaction. Go there and read and check it out. I recommend starting small and paying attention to how things work first.

You must read everything you can get your hands on before you invest in stocks and even then it can be risky. My advice is to make sure the stock of your choice pays dividends, so that if your stocks fall, it will even out some of the losses. There is an option to re-invest your dividends on Sharebuilder.com. Also if you have questions, there is a number to call to ask.

I would stick to investing in successful companies that you know are rock solid. Once you get your feet wet and understand what you are doing, you can progress from there.

Answer 5

You don't know what you're doing. Attend an invetment seminar, class, or checkout books from the library. Do not fall prey to investing scams - they are everywhere (including in answers you receive here). A good place to start investing is a financial advisor.

Answer 6

First, educate yourself on options and how to buy and sell stock. There are free seminars all the time, go to more than one. Take notes. Be careful! Star Trader is a good one today, but it can get expensive.

Answer 7

Well it looks you are a beginner. Just start readind this site and associated links on investing. Then start making your investment decisions cautiously:

http://preciousmetalsinvesting.blogspot.com

Answer 8

1 your money
2 it could be today or never
3 any place but walmart

Answer 9

1) Your Money.
2) It could be a day or a century.
3) TD Ameritrade.