stock questions

[gustongroves]

I am glad to provide you the information regarding stock market. There are some companies who are giving free trail accounts. So, for a beginner like you and me it would be of great help. I always suggest you to opt for long term investments to get benefited. Check this website for more information shortcuttoprofits.com

Mutual fund is a pool of money collected from different individuals. The collected amount would be diversified to different investments such as shares, insurance etc.

[cicy33]

I have been continuing to research stocks and the "rules" as it were in dealing with them. We have yet to buy a single stock as neither of us wants to go into this blind. I do not yet understand margin call exactly. nor exactly what happens when you sell a stock or for that matter buy one! I guess if someone could explain very basically to me what happens it would help. For example, I buy 5 stocks of yahoo for $20. in 3 months it raises to $35 and I decide to sell (THis is hypothetical) can anyone explain the process? I have for the record learned the difference between a bid and ask price!

[Like2Plan]

I have been continuing to research stocks and the "rules" as it were in dealing with them. We have yet to buy a single stock as neither of us wants to go into this blind. I do not yet understand margin call exactly. nor exactly what happens when you sell a stock or for that matter buy one! I guess if someone could explain very basically to me what happens it would help. For example, I buy 5 stocks of yahoo for $20. in 3 months it raises to $35 and I decide to sell (THis is hypothetical) can anyone explain the process? I have for the record learned the difference between a bid and ask price!

What is your risk tolerance?

[jIM_Ohio]

I have always used market orders- meaning I get the market price for the stock on the buy and on the sell- makes the transactions go smoothly.

Place a market order to buy $100 of yahoo stock on 1/7
if it goes to $35 on 1/10, on 1/11 you could place a market order to sell all shares of yahoo stock. You may or may not get the $35 price based on what the market is trading on that day.

Margin is only needed if you borrow money to buy stock. For example if you wanted to buy $500 of yahoo but only had $400 available, you could buy on margin. A margin call means the broker wants all $500 now (in simplistic terms).

I have never bought on margin.

[minnie1928]

Your initial post said your SO wanted to buy stock to 'see what happens' which sounds like visitors to Las Vegas putting money in a slot machine, to see what happens.

I kind of followed this philosophy a few months ago. I opened up a tradeking account and bought 3 different stocks over 3 months. I paid $4.95 per trade. I thought it would be a good learning experience, which is really hasn't been in the way that I thought it would. Basically whatever you need to learn you can do via the internet and books. However, now that I own these 3 stocks I pay much more attention to the markets and how different things affect each one.

I also only invested in each stock what I was willing to lose (about $250 each). So far I've done really well on 2 and not so well on the other. But all told I haven't lost any money yet...

[cicy33]

For this situation pretty good. Not sure after that. first would have to build money. so I would have to say that for the first year I would want to try to buy and sell stocks conservatively. I realize that is not a guarantee but do feel that if I am careful I can perhaps build a little in a year and then be able to do a little more aggressive investing.

Basically we have a goal that we want to make money beyond our savings account. we earn 4% with our bank which isn't bad, but we aren't going to get rich saving that is for sure! I did a little program online and if we save $500 a month for 4 years with a $4000 investment we will make $2600 interest. That to me is a joke. That is barely 650 per year. For this venture we are looking to make more immediate money. Like in the next couple of years. Not 20 years. I would like to retire ideally in 4 years, realistically in 9. So 401K is not the area for this practice. not saying there won't be a long term saving as well, but for this moment I am focusing on other areas as well.

[jIM_Ohio]

For this situation pretty good. Not sure after that. first would have to build money. so I would have to say that for the first year I would want to try to buy and sell stocks conservatively. I realize that is not a guarantee but do feel that if I am careful I can perhaps build a little in a year and then be able to do a little more aggressive investing.

Basically we have a goal that we want to make money beyond our savings account. we earn 4% with our bank which isn't bad, but we aren't going to get rich saving that is for sure! I did a little program online and if we save $500 a month for 4 years with a $4000 investment we will make $2600 interest. That to me is a joke. That is barely 650 per year. For this venture we are looking to make more immediate money. Like in the next couple of years. Not 20 years. I would like to retire ideally in 4 years, realistically in 9. So 401K is not the area for this practice. not saying there won't be a long term saving as well, but for this moment I am focusing on other areas as well.

I want to retire in 4 years and invest close to 30k per year... How much do you expect to need to retire? How old are you now? How much is saved already?

$500/mo for 48 months is $24,000. 4% interest on that is $960. What is the $2600 you refer to?

If you invest in stocks and follow this path

so I would have to say that for the first year I would want to try to buy and sell stocks conservatively. I realize that is not a guarantee but do feel that if I am careful I can perhaps build a little in a year and then be able to do a little more aggressive investing.

How do you buy and sell conservatively?

[cicy33]

I want to retire in 4 years and invest close to 30k per year... How much do you expect to need to retire? How old are you now? How much is saved already?

$500/mo for 48 months is $24,000. 4% interest on that is $960. What is the $2600 you refer to?

If you invest in stocks and follow this path


How do you buy and sell conservatively?

We are starting with a $4000 lump sum. I used a savings account calculator. it was on whatsthecost.com very cool site! they showed that at then end of the 4 years I would earn $2600 interest. here is what I did:

Regular Savings Details
How much do you plan to save per month? $500
Are you going to increase this amount each year? % (percent increase per year)
Is there an inital lump sum? $4000
What is the interest rate? 4% Net PA
How many years will you save for?4 years


The calculator doesn't currently take tax into consideration. For best results on what your post-tax earnings will be, enter your Net interest rate. If you're a higher rate tax payer, then you may have additional tax to pay on savings.

As tax on savings is currently charged at 20%, your net interest rate can be calculated from your gross interest rate as net = gross * 0.80. - For example, if you know your gross interest rate is 5%, your net rate will be 4%

The Bottom Line
The bottom line, is that at the end of this savings plan, you'll have $30,679.20 in your savings account


that is to me a small amount to wait around 4 years for

[cicy33]

If you invest in stocks and follow this path


How do you buy and sell conservatively?

I have no idea at this moment, hence my research. However, I am fairly smart person and do believe that it is possible if one is very careful and methodical that it can be done. I am not jumping into anything. I have not bought anything yet. I am reading anything I can get my hands on and have already learned about some scams. I will only buy or sell with a well known or reputable trading company whether online or b&m. I am open to suggestions of who others use. Mutual funds will not make me rich. They will be good to have as a side retirement but I am looking for something that will at least make some money faster than a savings account. True, there is risk and one can lose. but there is also a possibility, a very real possibility one can win.

[jIM_Ohio]

Without a clear goal or plan, I predict failure... I still cannot figure out your calculator above...

you have only ran numbers, that is a far cry from a sound plan.

[cicy33]

Without a clear goal or plan, I predict failure... I still cannot figure out your calculator above...

you have only ran numbers, that is a far cry from a sound plan.

I cut and pasted the calculator from whatsthecost.com go there and you can use it yourself. I didn't personally run the numbers, I just inputted the info and their system ran it. The numbers I used are not a plan, I think you are misunderstanding. I was only pointing out that a savings account is not a way to make money. It is actually a very bad idea to increase your bottom line unless you are not touching the money for 50 years, which I don't have.

I do have a plan that is in constant motion at this moment. The first point in my plan is to research to understand this area. Until that is done, I cannot move to the next area which is implementing. How exactly is that not clear? So my goal here was to ask questions and try to understand how this works. But one thing I have noticed is that when people like me try to understand this area, I get round about answers or statements like the one above. And it is not just here, even on the net, it isn't the easiest information to get simply put. I find the stock area confusing because I have not ever been involved with it. So, now I am trying to understand. If I am wrong and it is not a good area to get into and make money even slowly then I will figure it out partly due to research and partly due to buying stocks. But for me when I do I would only buy small amounts to see how it goes at first to see if I am understanding the system. If so then I could move up. If I still am not fully getting it then I could go back to researching the process more. I don't expect to be rich from this but I would like to see if it can go anywhere.

[Investing First Steps]

While you may feel like people are being "unhelpful" they really are trying to help by pointing out some common "misconceptions" people have about the markets before they get involved. I think the biggest three that are standing out to me are:

1.) You want to get into the market because you want to get a better "interest rate" than a CD.
2.) You want that better interest rate because you want to retire sooner than later.
3.) You plan to avoid risk by being smart and conservative.

The problems these ideas present to people with a bit more experience:

While over time the stock market has returned more than typical savings rates, that is just that over time. So saying you want to get into the market because you're in a hurry to invest is working against the safest way to get into the market, slowly and over time.

Secondly, there is quite simply no way to avoid risk in the market. If there were then it wouldn't return as well.

If you started investing 4 years ago you are probably down considerably. Even if you used a conservative strategy, even if you were very smart. Your goals of limiting risk while getting into the stock market because you want "faster returns" sound contradictory. While there are ways to make money in the markets, they are generally over long periods of time and with a constant application of strategy. Jumping in because you want to retire sooner than later and figuring you'll be safe because you'll be smarter than everyone sounds like a recipe for disaster.

[jIM_Ohio]

I cut and pasted the calculator from whatsthecost.com go there and you can use it yourself. I didn't personally run the numbers, I just inputted the info and their system ran it. The numbers I used are not a plan, I think you are misunderstanding. I was only pointing out that a savings account is not a way to make money. It is actually a very bad idea to increase your bottom line unless you are not touching the money for 50 years, which I don't have.

I do have a plan that is in constant motion at this moment. The first point in my plan is to research to understand this area. Until that is done, I cannot move to the next area which is implementing. How exactly is that not clear? So my goal here was to ask questions and try to understand how this works. But one thing I have noticed is that when people like me try to understand this area, I get round about answers or statements like the one above. And it is not just here, even on the net, it isn't the easiest information to get simply put. I find the stock area confusing because I have not ever been involved with it. So, now I am trying to understand. If I am wrong and it is not a good area to get into and make money even slowly then I will figure it out partly due to research and partly due to buying stocks. But for me when I do I would only buy small amounts to see how it goes at first to see if I am understanding the system. If so then I could move up. If I still am not fully getting it then I could go back to researching the process more. I don't expect to be rich from this but I would like to see if it can go anywhere.

I think you are presenting your information a little at a time, which makes advice jump around.

What are you trying to accomplish? (list the goal, not how you plan on accomplishing it). For best planning, it is best to have one goal which supercedes others.

Might be
1) retire at age XX
2) to get a higher return than the market
3) to beat the return on a savings account
4) maximize income
5) minimize taxes
or something else...

What is your goal?

Also list what you have saved already, how old you are and when you plan to access (withdraw) the money.

[Seeker]

We are starting with a $4000 lump sum. I used a savings account calculator. it was on whatsthecost.com very cool site! they showed that at then end of the 4 years I would earn $2600 interest. here is what I did:

Regular Savings Details
How much do you plan to save per month? $500
Are you going to increase this amount each year? % (percent increase per year)
Is there an inital lump sum? $4000
What is the interest rate? 4% Net PA
How many years will you save for?4 years


The calculator doesn't currently take tax into consideration. For best results on what your post-tax earnings will be, enter your Net interest rate. If you're a higher rate tax payer, then you may have additional tax to pay on savings.

As tax on savings is currently charged at 20%, your net interest rate can be calculated from your gross interest rate as net = gross * 0.80. - For example, if you know your gross interest rate is 5%, your net rate will be 4%

The Bottom Line
The bottom line, is that at the end of this savings plan, you'll have $30,679.20 in your savings account


that is to me a small amount to wait around 4 years for

Cicy33 is in early 40's (according to public profile).

According to the above calcs, they are "inventing $4000 lump sum, adding 500 per month, planning on earning 4% return and coming out with the 30K number.

4 years is not a long term amount of time. Cicy seems to be planning some use for the 4k lump sum at the end of 4 years.... and doing something then. Shouldn't be for retirement since born in '67 means that s/he will be in mid-40's at that time and if that's the only amount of money there is to work with, then it would not be sufficient.

I get the impression that this is "play" money? But there needs to be a realization that 4% would go rapidly either up or down in this economy at this point in time. There are absolutely no guarantees in the stock market... and Cicy that is why everyone is "preaching" mutual funds.... pooling your money and lettthing the real managers manage it because that's what they are paid to do.

People suggest Vanguard, Fidelity, and Rowe.... because they have the lowest costs and their success is often better than a single person trying to predict the market.

[cicy33]

I agree that it seems that I am posting information a little at a time. But not really, my total interest all along has been to gain more education on how to buy stocks as an individual. I am aware that it will not be easy to learn and I am aware that it is a risky venture. This is the reason I have asked questions. For me being told what I "should" do is not helping. I guess my confusion is that I want to learn something and I ask specific questions I would like an answer. if it is available I mean. By learning I will be able to decide if it is a bad idea. By not being open and honest with me I am unable to make an educated decision. It is like a child trying to learn a lesson. If the parent avoids the issue to protect the child, the child does not learn the right way, chances are bad decisions are made instead of educated ones. You know what I mean? I have always tried to make decisions based upon research and education. The savings point was not about having that specific amount of money in 4 years. I just wanted to know what I would have. Well, basically no matter what I do, earning 4% with these numbers will not do anything special for me. I would like to show something for my time in 4 years. I would be saving more each year than I would earn in interest in the total four years. So, for me that is a wasteful way to do it. As I stated in the beginning, I actually have little love for the stock market. I was willing to open my mind on behalf of my SO and do a little theoretical work. I was just trying to break it down so that I could understand the process better. That is all. and for the record, I still don't have a lot of faith in the stock market. But I was willing to consider it. As far as mutual funds go or whatever, I can make just as much interest at my checking account. We get 4% interest. So, while I do intend on a savings for actual retirement (and yes I would love a younger retirment) but for this sake we will say real age retirement 65, I am also looking to see what I can do to increase income and possibly either work for myself earning money or retire early. I am simply exploring options.