how do I start buying stocks?

Question

can i really trust the online stocks? and what's the difference between a stock and mutual fund, and all the other kind of funds?
and the online stock ain't free, it charges from $4- 15 for every trade? and there's like contract for 60 cent, and real time trade for $15
can someone explaine those to me?

Answer 1

Don't do anything until you understand it much better. You should almost never buy individual stocks. You should buy mutual funds. These are collections of many stocks that are selected by a professional fund manager.

Go to morningstar.com and start reading.

You should also go to the library and check out the "investing for dummies" type books. They will give you a very good overview and answer your questions.

Answer 2

Go to the websites of some online brokers and pick one. You can sign up on line. They will take your bank info so you can transfer funds back and forth. They will send you 2 small deposits of different amounts for you to confirm back to them. That will assure everyone that all the bank acct info is correct.

They will mail you some information and there will be a contract to sign and return.

You can go to the website, acct # and password in hand, and give them an order to debit your bank account and credit your brokerage account. It will take about 3 days to be credited to your brokerage account. Likewise, if you sell a stock, it will take about 3 days for the $$ to be collected and placed back in your brokerage account and ready to use to purchase something else. Once it is in, you are ready to purchase.

Do your homework. Learn the differences and advantages of MARKET ORDERS and LIMIT ORDERS. There is a lot of info to digest that can be found on the broker's website.

Hopefully, you will have already done some of the homework previously mentioned by previous answerers.

When you buy stock, it is in one individual company. A mutual fund usually has a minimum $$ amount to get in but offers diversification so that all your fortune is not based upon the success or failure of just one company but a basket of many stocks. You are more likely to make $$ in mutual funds...but it won't be a big homerun. The big homeruns occur in indivual stocks but there are also the possibilities of strikeouts. Even professionals are only right about 60% of the time, but their winners more than offset their losers. Don't get emotionally glued to a stock...if it's a dog, sell it and look for a cheetah.

You need to assess your personal "risk tolerance" to help you decide which way to go or if you would sleep better allocating some of your $$ to mutual funds and some to individual stocks and how you would proportion it.

Stocks require study and homework--mutual funds just require $$ and much less study.

You can look at charts of performance for both stocks and mutual funds at Yahoo Finance and MSN Money. You can compare several on the same chart.

And they always say..."past performance is no guarantee of future success".

Even below average success is better than putting your $$ in a bank's savings account but you will need to keep some emergency $$ in something like that.

If you have debt, pay it off and your savings in interest that you don't have to pay will be "tax free" earnings.

Good luck!

Answer 3

For a newbie like you (no offense) you should go to a place in your area like a bank that has mutual funds. Tell them you want to learn about mutual funds. A salesperson will be happy to give you free advice. A mutual fund is when you invest some money to indirectly own a collection of stocks and bonds. That way you don't need to figure out which ones are good.

Answer 4

First buy "One Up On Wall Street" by Peter Lynch. Then make it a habit to follow business news. Watch Cramer but don't use what he says as gospel truth. Take his comments with a TABLESPOON of salt. Watch Squawk Box on CNBC before the opening. Listen to all the talking heads.

Trade "on paper" for AT LEAST six months. Yahoo's finance site has features that allow you to track stocks include the price you "bought" at so you can see the results of your picks. By trading "on paper" I mean you make picks and track them without actually doing to actual trade with real money. Take note of when you are right or wrong.

Then when you feel comfortable open up an account with eTrade, Scottrade, Ameritrade or one of the other online brokers. Oh by the way, only do this with money you can afford to lose. If you can't afford to lose the money or it's money you'll need, you're not ready to invest.

Lose money a few times until you get the hang of it. Then look at options trading.

Hope this helps.

Answer 5

You need to read 2 - 3 books on investing in Stocks & Mutual Funds. Take a year. Learn the basics. DON'T RUSH INTO THIS!

BTW: On-Line investing/trading is a great way to take your new knowlege and turn it into profits.

Answer 6

Yes. Run around your house 15 times, very very fast. Then go lie down.