This is embarrasing, but I know little, and am looking for good beginner stock advice

[jmoney1]

HI, I would love to start making money work by investing in stocks. However, I know very little about the process ( how to find an agent, broker, how to read the dow, how to know what is a good buy or when to sell,).

-Basically I would love to read material that would really increase my understanding about this. Can you any good books that really break down stock and investing for a novice? I really appreciate this!

[disneysteve]

First, make sure that everything else is in order before you start investing.

1. Do you have an emergency fund?
2. Are you debt-free or at least have a manageable amount of debt with a solid plan in place to repay it?

If the answer to both of those is yes, getting started investing is certainly not a bad idea. You need to identify your investing goals. Are we talking about your retirement account or is this money you are saving for some other purpose. The goal for the money helps determine how it should be invested. If you are investing in the stock market, it should be money that you won't be touching for at least 5-10 years.

The best way to get diversification at a low cost is to use mutual funds, particularly index funds, or ETFs (exchange traded funds). Esecially ETFs allow for a small investment with broad diversification. There are several companies that offer fee-free ETFs so there are no costs to buying. I know Schwab and Vanguard do. I'm sure there are others as well.

The best route is to set up an automatic investment plan where you invest a set amount every month and don't have to think about it or make any decisions. Just get it started and then let it go, adding to your holdings month after month after month. When prices are low, you'll buy more shares. When prices are high, you'll buy fewer shares, but over time, it will average out. This is called dollar cost averaging and is a method most advisers recommend.

[JulieAlbright]

Go to your library and see what they have relating to John Bogle (Vanguard) and Warren Buffett.

[jmoney1]

First, make sure that everything else is in order before you start investing.

1. Do you have an emergency fund?
2. Are you debt-free or at least have a manageable amount of debt with a solid plan in place to repay it?

If the answer to both of those is yes, getting started investing is certainly not a bad idea. You need to identify your investing goals. Are we talking about your retirement account or is this money you are saving for some other purpose. The goal for the money helps determine how it should be invested. If you are investing in the stock market, it should be money that you won't be touching for at least 5-10 years.

The best way to get diversification at a low cost is to use mutual funds, particularly index funds, or ETFs (exchange traded funds). Esecially ETFs allow for a small investment with broad diversification. There are several companies that offer fee-free ETFs so there are no costs to buying. I know Schwab and Vanguard do. I'm sure there are others as well.

The best route is to set up an automatic investment plan where you invest a set amount every month and don't have to think about it or make any decisions. Just get it started and then let it go, adding to your holdings month after month after month. When prices are low, you'll buy more shares. When prices are high, you'll buy fewer shares, but over time, it will average out. This is called dollar cost averaging and is a method most advisers recommend.

Thanks very much! I do have over $1,000 for emergency. The only debt that I have is student loans which will be effective after two years, so now i'm just paying interest on that. And I have about $20,000 I want to invest in a stock account that will be used for a future mortgage down payment. But again, I am so new at this, I basically have to learn how to read the dow, the best times to buy and sell stock, etc... within the next week or so. I really appreciate your advice it really is helping! The the ETF what you are describing when you say that you can have it all done automatically?

Go to your library and see what they have relating to John Bogle (Vanguard) and Warren Buffett.

Thank you.

[disneysteve]

will be used for a future mortgage down payment.

What's your timeline here? If you are going to invest in the market, you should be prepared to leave the money alone for 5-10 years.

I basically have to learn how to read the dow, the best times to buy and sell stock,

No you don't need to learn those things at all. You aren't going to buy and sell stock. You are going to INVEST in mutual funds or exchange traded funds. I'd recommend going somewhere like Vanguard.com and putting together a very simple portfolio. You have enough money to meet their $3,000/fund minimum so you can do something like 70% in their Total Stock Market index fund (VTSMX), 20% in their Total International Stock index fund (VGTSX), and maybe 10% in their Short Term Bond Index fund (VBISX) if you want some fixed-income exposure. Each of those funds also has a corresponding ETF if you'd rather go that route.

The best time to invest is now, when you have the money and are ready to invest. Don't worry about what the market is doing. Ignore the talking heads on CNBC and talk radio. Don't become a trader; become an investor.

[feh]

I basically have to learn how to read the dow, the best times to buy and sell stock, etc... within the next week or so.

I suggest you slow down. Why the rush?

You need to educate yourself before doing this and answer a couple questions:

• when will you need the money you're investing?
• what is your risk tolerance?

I suggest you start here: http://www.bogleheads.org/wiki/Bogle...g_start-up_kit

[snafu]

jmoney, there is a huge difference between people who invest in the stock market and those referred to as gamblers. Before you take any action, think about how you'll feel if you lost most of your $20K start-up funds. Individuals who are successful day traders are few in numbers and most often play with someone else's money.

It's a huge learning curve and you been given great advice to start slowly, perhaps with a low cost, terrific record of success like Vanguard Index Fund. Many of us began with this route and after our initial investment arranged automatic, monthly sums to transfer from our bank to our Vanguard account. I suggest looking at DCA Dollar Cost Averaging. It gave us time to learn all the things you outlined.

[jmoney1]

I suggest you slow down. Why the rush?

You need to educate yourself before doing this and answer a couple questions:

• when will you need the money you're investing?
• what is your risk tolerance?

Thanks, the money is just sitting around until I can use it for a downpayment, which should be in 1-2 years. That isn't much time to get must interest off of 40,000, but I know it shouldn't just be sitting around. Im torn between investing in Ge interest plus (which is not fdic insured) , or investing in a stock that can give at least 2% interest. But again, I have not the slightest idea of where to begin with stocks. All of you have been so helpful and have given me things to look up and investigate.

[jmoney1]

jmoney, there is a huge difference between people who invest in the stock market and those referred to as gamblers. Before you take any action, think about how you'll feel if you lost most of your $20K start-up funds. Individuals who are successful day traders are few in numbers and most often play with someone else's money.

It's a huge learning curve and you been given great advice to start slowly, perhaps with a low cost, terrific record of success like Vanguard Index Fund. Many of us began with this route and after our initial investment arranged automatic, monthly sums to transfer from our bank to our Vanguard account. I suggest looking at DCA Dollar Cost Averaging. It gave us time to learn all the things you outlined.

This is so very helpful! Can't be more thankful for the great advice.

[jmoney1]

What's your timeline here? If you are going to invest in the market, you should be prepared to leave the money alone for 5-10 years.


No you don't need to learn those things at all. You aren't going to buy and sell stock. You are going to INVEST in mutual funds or exchange traded funds. I'd recommend going somewhere like Vanguard.com and putting together a very simple portfolio. You have enough money to meet their $3,000/fund minimum so you can do something like 70% in their Total Stock Market index fund (VTSMX), 20% in their Total International Stock index fund (VGTSX), and maybe 10% in their Short Term Bond Index fund (VBISX) if you want some fixed-income exposure. Each of those funds also has a corresponding ETF if you'd rather go that route.

The best time to invest is now, when you have the money and are ready to invest. Don't worry about what the market is doing. Ignore the talking heads on CNBC and talk radio. Don't become a trader; become an investor.

I will need the money pretty much in the next two years for a downpayment. And yes I do want to be an investor not a trader for the most part, at least at this time. Thank you.

[disneysteve]

I will need the money pretty much in the next two years for a downpayment.

In that case, absolutely do not invest it in the stock market. You don't have nearly enough time to ride out the ups and downs of the market. You don't want to put in 40K only to find you have just 30K when you need it. You want a money market or maybe a CD if you find a good rate.

[jmoney1]

In that case, absolutely do not invest it in the stock market. You don't have nearly enough time to ride out the ups and downs of the market. You don't want to put in 40K only to find you have just 30K when you need it. You want a money market or maybe a CD if you find a good rate.

Yes I notice that GE has a money Market that pays .9% interest. It is fdic insured, however, it also has a Ge Interest-plus account that pays over 1% interest, its not fdic insured.

-With money markets do you advise just sticking with your credit union/bank, or shopping around online for money markets to invest i? how do you know if they are trustworthy?

[feh]

In that case, absolutely do not invest it in the stock market. You don't have nearly enough time to ride out the ups and downs of the market. You don't want to put in 40K only to find you have just 30K when you need it. You want a money market or maybe a CD if you find a good rate.

I agree w/ Steve. Put the money in a CD or online savings account. The difference in interest rate between the two will be pretty small.

[disneysteve]

Yes I notice that GE has a money Market that pays .9% interest. It is fdic insured, however, it also has a Ge Interest-plus account that pays over 1% interest, its not fdic insured.

Personally, I go for the highest rate. I'm not particularly concerned about FDIC coverage but that's my own comfort level. If you want to be extra safe, the difference between a couple of tenths of a percent in interest will be less than $200 over 2 years so not a big spread.

[ZZZ]

Personally, I go for the highest rate. I'm not particularly concerned about FDIC coverage but that's my own comfort level. If you want to be extra safe, the difference between a couple of tenths of a percent in interest will be less than $200 over 2 years so not a big spread.

I agree. The market should only be used if you have at least 5-10 years before you need the money.

Also, make sure you have a large enough emergency fund to supply at least 6 months of expenses. Things happen, job loss, wrecks, etc. Personally, $1000 is really low number. Make sure you have enough set aside that you can easily access in case something goes downhill.