How to get started at stocks and investing?
Posted by admin in Finance Saturday, 10 December 2011 08:05 5 Comments
I’m 17, and realize that investing is a very good way to have wealth in the future. I know it isn’t a instant source of money and that it takes time, but I’d rather have money when I’m 40 then never.
So how do I get started?
Right now, stay out of securities, and even bonds.
Bullion, resources, real estate, (Mining?Timber REITs etc.).
Best thing to do is read books on investing. Go to your local library
and read books and magazines on the subject.
Or you can take the simple way and invest in mutual funds. At your
young age you should be able to take on much risk in your investments.
Most mutual fund companies require a $2500 buy in. There are a couple
that will let you start with $50 a month (American Century) Talk to a
company rep. who will be glad to help you get started. If you have an
earned income, use your investments with a Roth IRA.
The stock market has become a sucker game. Enormous corruption was uncovered early in the 2000s but our then-president insisted no reform was necessary. So stock brokerages and corporate executives do insider trading, manipulate prices, and stock brokerages deliberately sell their clients stocks they know are bad so they can bet against them. The market plays up to big institutional investors, not small individual investors.
So the best, safest way to invest in the stock market is mutual funds. These funds are managed by ‘experts’ who are rated by how much the fund actually goes up over the years.
So my advice. Go to a good no-commission brokerage (like Charles Schwab). Open an account. Its like a bank account. Start putting money into this account, and then when you buy stocks they have the money there ready to go, and when you sell them the money goes back into the account. The account is even better than a bank account because it does actually pay some interest.
Ask if they have any literature on mutual funds. Which they do. A ton of it! Every fund has a sheet that shows how well it’s done over the last year, the last five years, ten years, etc. So you can rate them pretty simply by how well they’ve done. There are many different kinds of mutual funds, based on stocks and bonds, concentrating on ‘segments’ like technology, transportation, communications, foreign, etc.etc. The best idea is to get a variety of things because some go down and some go up. For instance, when stocks go down, bonds go up, so you should have some of both. Some funds concentrate on ‘growth’, and are higher risk. Others concentrate on ‘safety’ and are more stable. And some go by dividends, for people who are living off their stock income.
KEEP TRACK OF EVERY TRANSACTION! Very important. You have to declare them for tax purposes. If you make money on the stock market you have to pay quarterly estimated taxes. In other words, you don’t wait to the end of the year like you do with wage income, because there is no automatic withholding as there is with wage income. At the end of the year you have to fill out a form with everything you bought or sold, what you paid, what you got for it, how much you made or lost.
NEVER EVER EVER EVER listen to a stock broker’s recommendation of what stock to buy. They recommend stocks that are good for THEM. THEY make money whether the stock they sold you goes up or down. This is why a no-commission brokerage is so important. The stock market has become more and more de-regulated and it’s really a jungle out there. It’s not even illegal for them to sell you a crappy stock and make money off you.
A good strategy is something called ‘income averaging’. Suppose you put $100/month into your account to buy some particular mutual fund. The price of the fund goes up and down, hopefully mostly up, but sometimes down. When it goes down actually that’s good because it means that month you can buy more shares for your $100. Over time it will only go up. When you’re 40 you have a LOT of this stuff and it’s worth a lot of money. The problem is that you have a transaction every month, so you bought 5 shares at this price, 10 shares at this price, 3 shares at this price, etc. etc. and it gets to be a real hassle to fill out the paperwork when you sell it. But hopefully you sell it only once. 8^)
You should also max out on your IRA. And look into a Roth IRA (which works a little differently). The cool thing about an IRA is that you don’t pay any taxes on your gains so long as you keep the money in the market. You pay only when you take the money out, and the idea is that then you’re in a lower tax bracket (retired) so you pay less in tax.
you need to be at-least 18 as far as i know
note
can use scottrade Choose “Referred by a friend” and enter Coupon Code ZKJY0395 for three free trades (for sure) might get 7 depend on when you use this coupon
You need to consider first your investment goals, time horizon, and risk tolerance. Without knowing those things you can’t invest intelligently. However what might suit you might not for someone else, and vice versa – there is no one size fits all for investing.
Then you should read some good beginner books that explain things so you can understand. Try reading Investing for Dummies and Mutual Funds For Dummies – they are probably in your local library and will help you immensely.
If you choose a fund make sure get it at a place that doesn’t rip you off – no loads, no high expense ratios, and no ripoff 12b-1 fees. Look at Vanguard, TR Price, or Charles Schwab for starters.