What about making extra income from stocks?

Question

I just posted this question because I am concerned about my friend : http://answers.yahoo.com/question/index;_ylt=AqyonWkUwH1524waoLBVrEzsy6IX?qid=20070102115726AA9cQXZ

I know stocks are a risky business and I probably didn't explain my question correctly, what I meant to ask was about having an extra income from stocks, of course I understand she will have to fail sometimes until she gets it right but her husband has a very steady job and they have security. Is it actually possible to make an extra income? or does she have to be certified to trade a couple of stocks a week?

Answer 1

well its possible but for newbies NOT recommended. Most experts say you need at least 10K of reserve income to offset any losses you WILL suffer in the market. If they have the money well ok but chances are they don't so DONT DO IT!

now then lets take this to reality level. say a stock has a divedend In fact I'll use one of mine XLK .13491 meaning for every share you have you get an additional .13 cents for each share. Lets say you need 800 a month to live on to get that level you will need 6,153 shares of XLK at 23.38 a share you need in the neighborhood of $143,876 dollars. Chances are you don't have it.

Now the second approach is day trading may work and again may not each trade is a brokers commission Lets just say scottrade at $7 a trade. So lets use the XLK example again. Back in October it was around $21 a share the 23.38 price is the december 31st close price to buy. so 2.38 gain (not including the divedend) so if you buy 100 shares of it you will pay 2107 then when you sell it for $23.23 which is the last closing price to SELL. you will walk out with 2,323.00-7.00=2,316 for a net gain of $209.00 counting the commissions.

Now there is a thing called penny stocks but there is NO guarantee you can sell it at the price it is listed.

This is why I do not day trade. I hold my investments for a period of time see what happens. some days you can make a lot others you will lose a lot.

Answer 2

I had a couple thousand several years ago that I traded and remembering buying my wife of the time a nice fur coat for Christmas on some profits. Although the next year she kicked me out of the house, she was awful proud of that coat. We'd get an occassional dividend check and it bought us steak dinners and a movie.

I didn't have to be certified, although I can't trade the naked options with my broker today like I did back then at another brokerage. Darned right it is risky, the way some folks trade, but I didn't really bet the farm or expect it to pay the rent. Never risk more than you can afford to lose--and if it is losing, get the heck out of it (the stock position, commonly called cutting one's losses). If you are going to treat stocks as a crap shoot, you will have more fun shooting craps. But if you are putting money on things that for some reason appear appreciable, then it is no more risky than some other diversion like hunting or buying old cars to fix up, and likely less expensive.

Answer 3

I talk about how to do this on my blog: gmoolah.blogspot.com. I make 30% of my income on stocks based on 5-10% of my principle as monthly income, with 30 min. a day of work. I use a stock/option strategy. It's not for novices and it's a bit of a mind bender. I've taught it to friends but it takes a while to get the swing of it. She can check it out. Go to november archives and click november archives. Read post 'Creating Investment Cashflow Part I: the covered call'. I think that parts #1-2 are in December. She'll have to search. And yes, she is very likely to lose while learning. I had a year of solid losses while learning to trade many different strategies. I didn't start using this strategy until a couple of years ago but decided on it due to risk, return, and time required to do it.

Good luck

Answer 4

Many people are doing this and making good money. I wouldn't say it's gambling because gambling is all about chance. With stocks, you have to analyze the company and know when to buy and sell. Unlike gambling, trading actually takes a lot of skill and knowledge. To answer your question, yes.. it is possible to earn a living from trading. Tell her to check out http://ibooyah.com for some investment ideas. She might learn a few tips here and there at http://ibooyah.com.

Answer 5

You dont have to be certified to trade in stocks but you have to be disciplined to select good stocks and study quite a bit of technical analisys to know when to buy and sell.

Have you considered trading in FOREX (international currency exchange) instead of stocks?

With Stock trading with $500 to start with, you can trade on one stock out of 10,000 possible choices and if it goes up by pennies you make a little money but you pay trade commissions.

In forex, the same $500.00 lets you trade $50,000 worth of currency and only 5 major currency pairs to choose from and no trading commissions.

I am making about 20% per month trading forex. There is even software available that does all the trading for you and allows you to collect the profits even when your not there. You can even try it free for a month before you risk a cent of your own money.

For more information go to www.huttoinvestmentgroup.com and check it out.

Answer 6

No: Actively managed portfolios have been shown to do worse than the market. Therefore, a well diversified portfolio is the best way to go. However, stocks are great for retirement planning bc you're thinking long term and aren't worried about short term fluctuations. No you don't have to certified to trade stocks. Just go to e-trade.