what is the best strategy for investing for a first time investor?

Answer 1

Investment analysis is enormously complicated. Extremely sophisticated mathematical models are applied that smart people apply to analyze stocks, futures, derivatives (options), interest rates, swaps, commodities, etc. (from stochastic differential equations, stochastic optimal control, sophisticated modifications to the Black-Scholes partial differential equation, etc)

Whatever you do, don't go out on your own judgement thinking that you are smart enough to outsmart or outwit other investors. I would not suggest analyzing companies and investing on what you think "looks" good. Because almost certainly someone else has a better understanding of that stock than you, and you may be on the losing end of a buy or sell.

Investing is very risky and you should not invest any money that you cannot afford to lose. However investing is something that usually has very nice long term consequences.

It is a good idea to have several stocks in a portfolio, but mathematicians have found optimal combinations of different stocks to put into a portfolio in order to give the optimal balance between expected profits and minimized risk. The S&P 500 is a combination of many stocks that is very close to this optimal balance and is where I would personally put money.

Highly respected Mutual Funds are usually good. Make sure you understand the tax laws associated with investment. You can most likely defer taxes by investing properly helping you to save even more money from tax breaks.

Answer 2

some screenwriter.....

anyway don't listen to that 14 year old. Here is some real advice. For new investores ALWAYS start out with a investment broker. Sure you will pay on the commissions but the advice you get from from them is worth it. Build up steady once a month or every three months will do just fine. Stay away from Forex or options diversify is a must and do not overload in one particular stock/fund whatever (no more than 20% of your total portfolio in any one holding) then when you have enough invested and feel comfortable enough move out on your own good luck

Answer 3

Investments are always based on the age group you belong to. If you are a young guy with good risk taking abilities one can always advise you to get into derivatives or futures(Commodity).
If you are willing to gain and lose in the same way, you can probably look into these.
As a starter I don't expect you to get into these intricacies instead invest in good stable securities in cash segment. It is always quite safe if you look into stocks like biocon which did not move along with other stocks in the segment. Go with small amount being a starter, dint go aggressively and when you are investing look very very deeply the movement of stocks in the previous months.

Settle in the cash segment first, -gain confidence and then enter futures or commodities market. Unless you have a good knowlege there is no meaning in losing, its only losing, only luck has to help you out here

Advise you to be a careful investor instead of being aggressive and losing thousands of rupees without any reason.
Anyway a good dealer will always be the right person for you to advise

Happy new year and enjoy investing

Answer 4

Nobody cares more about your money than you.Investing is extremly risky for I have lost a bit of money.That being said Your education is the utmost importance. Next to that, is rigorous discipline, you have to have a plan and stick to it!As for a more direct answer, I really cannot say, there are many different strategies depending on your investment style.(i.e.aggresive ,conservative,growth,your age and your goals.)I personally spent the money with investools, and I can say it was the best money I ever spent. I knew nothing going into it, but I sure had the desire.I can honestly say I spent almost all of my hard earned money paying for it, but, I will also say it was the best thing I could have done.They actually teach YOU how to make money,not some guaranteed get rich software.Being in your shoes not to long ago that is the best strategy I could give you.Best Wishes.

Answer 5

Personally, I don't think it's necessary to go through an investment advisor, but I think the choice has to do with basic personality factors -- how much work you're willing to put into learning about finance, how confident you feel in your own judgment, how conservative you are about risk, etc. I would suggest first reading a good general book on personal finance (like Kobliner's _Get a Financial Life_), so that you can make your investment decisions in the context of your whole financial picture (your debt, your insurance, etc.). Then go on to read at least a book or two about basic investing that covers most of the possibilities (stocks, bonds, mutual funds, commodities, etc.).

I started out by buying a few quite conservative mutual funds (mostly index funds) and have since branched out, putting relatively small amounts of money in somewhat riskier funds (including international) and some individual stocks. I decide what to buy based on pretty simple internet research (Morningstar.com is an excellent source for mutual funds), I stick to very established and well-documented investments and I only buy things that I expect to hold for a least a year or so. If I wanted to do a lot of trading or have the bulk of my money in individual stocks rather than funds, I think I would be more inclined to use an investment advisor.

One final thought: my personal instinct about investing is kind of like my instinct about dieting: I mistrust the people who say that there's a single magic bullet or who promise absurdly successful results with no pain.

Answer 6

gregory_d... Has it right.

Buy and Hold
Broad market with no load mutual funds and or EFT's (like vanguard VTI)

Contrary to what others have said it's not risky if you have a broad market long term (5 to 30 years) buy and hold mentality. It's more risky to not invest as you are guaranteed to lose 2 to 4% a year to inflation.

you don't need to get in to trading or commodities or any of that other stuff unless you want to spend a lot of time learning the ropes.

You also don't need a broker if you do follow the buy and hold broad market strategy. A discount on-line broker will do fine.

Answer 7

Concerning investments in projects: If there are loses til profit, I would take 100% giving back %'s at profit intervals and performance. If you are key investor, you want to take full advantages of loses for tax credits. That's why I tell my clients always listen out to potential investors , even if they say they want 100%. But this isn't always the case. It depends on what the investment is and all about.

Answer 8

Before you spend any money, make guidelines for yourself and never deviate from them. Investing can quickly become gambling, and if you're undisciplined, you'll become the fool and his money quickly and part company.

Here are some of my guidelines:

I set a monthly budget for paying bills and eating and stuff and I never use any of that money to invest.

I set aside $5000 for emergencies in a 3% money market and never touch it. When I draw on it for an emergency, I pay it back.

I set aside other amounts for savings for retirement and for my son's future college and never touch it. All of them are in risk-free accounts earning humble interest rates.

If there's anything left over, that's my play money. I chose an amount and put it in an Ameritrade account, and when it's gone, it's gone. I have to earn the right to put more in from my family's sources.

(Day trading with an Ameritrade or Scott Trade account is a waste of time until you're able to put a minimum of $5000 into your account. The trading fees are just high enough that you'll never gain enough for the fun to be worthwhile.)

Answer 9

The SP500 (SPY) has beaten most mutual funds over a long period.

Buy and hold. Most daytraders are broke in 2 years.

Buy what you know/use.

Buy ETFs rather than a single stock. You are automatically more diversified when you do.

Look for future growth potential and not what a company has done in the past.

Answer 10

The best strategy is to play safe before you make a move - which means learn everything you can about the subject before you empty your piggy-bank to make that first investment.... these are the best sites for this:
http://www.fool.com (US site, but sound advice for elsewhere)
http://www.fool.co.uk (UK version of above)
http://quote.fool.co.uk (for researching UK stocks before buying)
http://www.investopedia.com
http://www.everyinvestor.co.uk

If you choose the stock market as the way you want to invest, it's often recommended to practise first with either a fantasy stock portfolio at somewhere like http://www.bullbearings.co.uk or http://www.simustock.com or set up a portfolio via yahoo finance and treat it like you were doing it for real.
When you're ready to do the stockmarket for real, the safest way is probably to use a SHAREBUILDER style account from either http://www.sharebuilder.com (US original) or http://www.halifax.co.uk/sharebuilder (UK licensed franchise) and do a spot of long term investing on established companies that pay out a a large dividend (Which you then put towards buying more stock in that company, so you're entitled to more dividend next time it's paid out).
Examples of companies on the UK stock exchange that fit this description include
Halifax/Bank of Scotland (HBOS.L)
Royal Bank of Scotland (RBS.L)
Severn-Trent Water (SVT.L)
British-American Tobacco (BATS.L)
KELDA Group (KEL.L)

The other safe investing option is government bonds, e.g. UK premium bonds (uk residents only), or US savings bonds
http://www.nsandi.com (UK bonds)
http://www.savingsbonds.gov (US savings bonds)

Finally, always keep tabs on what the money in your bank account is doing......... and whether or not your getting a good deal on it (e.g. interest rates compared to others & when they pay it out, etc)......... try to spot a few tricks to better use them to your advantage, for instance here's one I'm itching to test out:
I've got a UK current account with a £1,200 overdraft limit......... and I also have a Savings account with the same bank which pays an annual interest rate of 4.5%.. now when you think about it, 4.5% of £1 (my current savings account balance) is £0.04... which means when they pay out the balance would go from £1.00 to £1.04 (£1.00 + 104.5%). Now.... if you have £1,000 in that same savings account, and the interest rate is 4.5% £1,000 + 104.5% = £1,045 (which means you've earned £45 for doing nothing). Once you've earned the interest, shift the £1,000 borrowed from the overdraft on the current account back to the current account before you get charged too much interest on borrowing the money (about £4 a month if what I'm currently being charged for being £210 overdrawn is anything to go by).