Does it cost money to set up a stock market account online and also what stock's should i buy with $2000?

Question

Dont know many st. markt. terms but i was thinking of investing in either Pepsi, General Electric, Coca Cola or the IRS. Im thinking of leaving it there for anywhere from 4-10 years. How much money can i make (i.e. after 4 years, after 5 years, 6 years, etc.)? Also, what is better, getting dividends every 3 months, or not dividends at all (in other words what will make you more money in the end when i sell all the stocks)? And do you have to pay taxes on this stuff, i've heard different things, also how big will the taxes be (estimate please)? How much do these companies pay in interest per year (so like 5%, 6% or something)? And also does it cost money to set up a stock market account online and if so what are some good sites to do it on and what would the cost be if any? Also i am thinking of putting in anywhere from $600-$1000 every year into these companies how much do think i can get? What are some good stocks that pay 15%/year, how risky are they? How many stock's could i buy?

Answer 1

Is it a good idea to get investment advise from strangers whose qualifications and motives are unknown to you?

Read some good books on investing. Take the time you need to fully understand the market and the risks.

Thinking you'll get 15% every year will lead you to a financial train wreck.

Your questions are great. Your interest is great. Take the time to learn before you make some serious mistakes.

BTW: Some of the answers you received already are dead wrong;
ROTH IRA's are tax free for all earnings (it's funded with after tax money)
FOREX is the last place for a beginner. 95% of those people that try FOREX lose most to all of their accounts.
BE VERY CAREFUL
Consider Yourself Warned

Answer 2

It depends on what service you go through; however, you will be hit with transaction fees regardless. If you want to do online trading, E-trade and Ameritrade are decent. Schwab if you want a full fledged service behind you. Its usually about $10 a transaction.

Alright, for your first question, "how much can I make in a given amount of time", use the rule of 72. Basically, divide 72 by the rate you expect and that will let you know how long it will take to double your money. For example, if you can get a 12% rate of return, in 6 years you will have $4000.

The second question really depends on your view of how the market works. I would avoid dividend paying stocks unless you absolutely need income. Primarily, this is because I would rather have the money reinvested for greater growth. If you get the option to take dividends, you might as well accept it though because everyone else will.

If my understanding is correct, you will pay a 15% fixed tax on dividends. Additionally, should you divest your stock, you will have to pay taxes on the growth. So, if you invested $2000 and took it out when it hit $4000, you would pay tax for the $2000 gain. I believe there is also a difference based on how long the stock has been invested (short term vs. long term gains).

I was told that a decent rate is about 6-8%. The S&P 500 index fund has been getting about 12% I think. At the other end of the spectrum, Warren Buffet gets 23%.

Regarding the "money into specific companies", "how many should I buy", and "risk"... I suggest you consider diversification. That is, one stock may go down, but on average, most will go up. So, if you buy a large number of stocks, you have less chance of losing money. Thats the point of mutual funds!

A 15% yield is pretty rare in the market and will depend on what you buy, when you buy it, and luck. Basically, stocks that have high returns also have high risk. If you can figure out how to minimize this risk, either by value investing or stop-loss orders or something else, your golden. However, 15% is not too realistic.

You can buy however many shares you can afford. Lets say you have $2000 and you want to by Coca-Cola, which is selling at $100. Then, you can only buy 20 shares.

Educate Educate Educate!!!

Answer 3

those are some great companies you got there - you wont go broke with them - however, your doubling up in the beverage sector - gotta pick one - coke or pepsi - cause they're the same thing essentially.

online brokers - scottrade.com, etrade.com, ameritrade.com and charles schwab are all good discount brokers online. it costs nothing to open an account online. all of these will charge you less than $10/trade

taxes - if you hold the stock for over one year, currently the capital gains tax is 15% - as are dividends. if you sell the stock within one year, the capital gains taxes are 35%. however, these can change depending on your income bracket. $2000 is a relatively small amount of money - i would look into an IRA - a regular one the taxes are deferred until you retire, in a Roth IRA the taxes aren't deferred. the difference is your tax will be determined by your taxable income when you cash it out. so make your sure your income is low when you do, that way your tax rate will be the lowest.

dividends - it'll be hard to find something with a yield of 5-6% in this market, and if you do - look closer, it might be suspect, but you can find good co's that yield that, but it'll take you a while.

your returns will depend on where you invest on the capitalization scale - the higher you are - the lower your returns will be, but the likelyhood of you losing EVERYTHING will be much, much lower. the lower you venture down the capitalization scale the higher your returns will be, but the likelyhood of you LOSING EVERY SINGLE PENNY IS MUCH, MUCH HIGHER. on average, for the market - expect 10%/year.

Answer 4

Here's a neat little trick you can use. 1. Find a well known stock which has been heading in an upward trend and usually beats market expectations at earnings announcement time. 2. Buy a position about 4 weeks before the next earnings announcement. 3. As the earnings announcement approaches more and more people will be taking positions which itself will cause the stock price to rise. 4. On earnings announcement day sell into the hungry buyers about 30 minutes after market opens. You'll have made a tidy profit and all those who bought on earnings announcement day will be left holding a loss wondering why the stock price dropped when the company actually beat expectations. Try it a couple of time using fake (no money) trades and when you have the hang of it do it for real. It works time and time again.

Answer 5

1

Answer 6

Invest in FOREX
http://www.mm-review.com/money/7.html

Answer 7

So you want to dump $ blindly into stock GRCO

Answer 8

Hi, just wanted to mention, I liked this discussion. very inspiring replies

Answer 9

Yeah it might be right