Relatively young investor

[LowKeyParticipant 702]

Looking for advice on how to invest in companies, not quite sure how to proceed at the moment

I get the concept of researching companies and such however I am not even in step 1 yet – I feel that researching should be step 2 when I actually know how to invest .

Suggestions would be greatly appreciated.

Thanks

LK~

Don't let defeat, defeat you; Let defeat be your greatest teacher.

[NioZenParticipant 856]

I’m of the opinion that markets are for trading, not investing, though any ‘wealth management’ types are going to tell you different. The markets have been so skewed by QE that any of those old approaches such as Benjamin Graham style value investing are just not going to work well. I just would not want any long term exposure at the moment.

But the number one thing you can do is start to educate yourself about the realities of investing.

The very worst thing you can do is shove your money in and hope that buy and hold still works. That type of market is long gone.

It’s hard to say what to hold at the moment. I’m in cash and PMs mostly, but tbh there are only bad choices and worse choices.

If you really want to throw some cash in, I would maybe still go Graham style value investing into companies with fixed assets, so at least you get some return on the dollar if the company implodes…

Start reading finance blogs to understand what you’re in for. http://www.zerohedge.com is one of my favourites, but have a look around as they can be sensationalist/click bait-ish (they have a blogroll on the side bar, some of those blogs are good and will lead to other sources).

Please be careful, the industry is built on taking money from the ill informed and there are many, many charlatans. Even big name banks are often full of s~~~, charging large fees for funds that underperform major indices. Infact, go and have a look at how some of the largest hedge funds have performed if you can find the data, and you’ll start to get the idea.

It’s a bad time, liquidity draining out of the markets, expectations of a larger correction ahead, housing bubbles, credit bubbles etc etc. Sit on your hands for a while maybe and see what happens, use the time to learn. Avoid tipsters, do your own homework.

If you ever find yourself wanting to follow a recommendation from CNBC Mad Money’s Jim Cramer, let me know so I can arrange for you to just PayPal the money to me instead of p~~~ing it away on his f~~~ing idiocy.

Hand on heart, brother to brother, best possible advice I could give you at the moment? Either commit some serious time, i.e at least a few years, to understanding what you are doing, full time, night after night, or find some better way to grow your capital. It’s an absolute casino now, the poker proverb applies more now than ever: “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

We only dream this bondage. Wake up and let it go. - Vivekananda

[ILiveAgainParticipant]

I got so lost in trying to figure it all out. One can go insane just researching.

The experts will constantly contradict themselves and one’s advice is anothers no no.

In the end I decided to go with reality.

If you can’t physically grab hold of it….. see it … feel it …. touch it … and in some cases … taste it …. then I won’t invest.

Anything involving paper … is just exactly that …. paper.

I went for property, gold, silver and invested in the only business I trust 100% with my money …… my own company.

If the s~~~ hits the fan ….. your paper invest will keep you warm for a while ….. as you throw it on the bonfire.

Just my 2c ….. but seek advice … from here ☺

[RoyDalParticipant]

Owning real estate and renting it did it for me.

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
by Robert T. Kiyosaki

I followed this advice, with modifications to match my personal circumstances. It’s still in print after all these years.

Regarding stocks, there is a cliche bandied about: 95% of people in the stock market lose their money. It’s the 5% who prey on them who make the bucks.

Society asks MGTOWs: Why are you not making more tax-slaves?

[NioZenParticipant 856]

RoyDal wrote:

Owning real estate and renting it did it for me.
Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!by Robert T. Kiyosaki
I followed this advice, with modifications to match my personal circumstances. It’s still in print after all these years.

This is probably pretty good advice, though I’ve never read the book I’ve seen it mentioned a lot. Probably about time I grabbed a copy. There are a few real estate speculators here on the boards, so plenty of advice if you need to reach out for info and encouragement. If (when) the housing bubble pops it’s going to be bargain basement time, then you’ll be glad you were holding cash.

RoyDal wrote:

Regarding stocks, there is a cliche bandied about: 95% of people in the stock market lose their money. It’s the 5% who prey on them who make the bucks.

This is pretty accurate in my experience. If you do not take this advice and act accordingly, some asshole just like me is going to come along and take the money out of your account and put it in my account. Because f~~~ you, that’s why. 😉

We only dream this bondage. Wake up and let it go. - Vivekananda

[AntaresParticipant 208]

As for how to invest, you open up a brokerage account, deposit money into it, then pick a stock to buy and push a button. That’s pretty much it.

As someone who is a very traditional investor, it’s probably hypocritical for me to say avoid investing in individual stocks when I do a lot of that, but I would look into low expense index funds to limit your risk exposure. While I’m probably the opposite of Lucifer in investing philosophy, I agree it’s not a great time to invest right now. I won’t say don’t invest at all, but I wouldn’t put a lot of money in, and expect it to go down a lot (for a while). Consider either dividend paying stocks with auto re-invest, or something like vanguard dividend growth (ETF).

Price is what you pay, value is what you get. -- Ben Graham

[AntaresParticipant 208]

That works both ways however, you also haven’t lost any money if the market goes down unless you sell. Also nothing has any real value until you try to sell it. Sell a house in a s~~~ real estate market, or try to pawn your wedding ring you paid $$$$$ for and you’ll see what I mean. Paper money isn’t so different either. Although I tend to lean more towards your mentality, which is why the only stocks I own pay dividends. It may go up or down, but it pays hard cash value. This is also true of rental properties.

Price is what you pay, value is what you get. -- Ben Graham

[TaxGuyParticipant]

Lowkey:

Google the Motley Fool CAPS. You can go there and set up a dummy portfolio of stocks and track it against the stock market. That’s a good way to have a pretend portfolio of stocks and see how you do.

The other posts on here are all good information. I also like dividend paying stocks with a DRIP (dividend re-investment plan) so you get the compounding of the dividend buying more shares. If you go back in time and look at the money made in the stock market, something like 75% of annualized returns has come from the company paying dividends.

I guess my real advice is to read a bunch, figure out what type of investing makes the most sense to you, and then decide how to pull the trigger. You have to invest more time into picking individual stocks, so that is certainly a factor. I think I’ve said this on every post like this, but if you have to paint it or feed it, it’s a job not an investment. I’m not advocating for one over the other, but understand the difference. You can sell a stock in seconds, but you can’t do that with a house.

The best advice I can give is to understand what you want out of your investment before you get in.

Order the good wine

[MattNYCParticipant 2329]

LowKey wrote:

Looking for advice on how to invest in companies, not quite sure how to proceed at the moment

Hey LowKey, the mechanics here are pretty straightforward. Let’s say you have $1,000 in your savings account at Chase bank for both of these options:

1) Buy stock through your bank, in this case Chase. To do this, you’d go to your local Chase branch, tell them you want to open up a brokerage account*. You’ll sign a bunch of forms, it’ll take 3-5 business days & the account’s ready to go. So when you login to chase.com you see you original savings account, and you see your brokerage account with $1,000. You can go to that brokerage account, click “BUY”, then enter in the ticker symbol of whatever you want.**

2) Buy stock through another company (brokerage firm), instead of your bank. To do this, you can open a brokerage account at eTrade, Vanguard, TDAmeritrade or wherever. Like #1 above, you’ll fill out some forms online, “sign” them online, and in a couple days you get an email notice from eTrade or whoever saying your account’s open. You can fund the account through an electronic-fund-transfer so eTrade will take the $1,000 from your Chase savings account (takes another couple business days), then you’ve got your live brokerage account @ eTrade/Vanguard/TDA, whoever. Online brokerage firms are generally better than brick-and-mortar banks regarding trading fees, but you’ll have to do your homework here – if you have a bunch of accounts/car loan/credit card with Chase they may do the trades for free.

Now that i’ve said all that, i’d actually recommend you don’t buy individual company stocks right out of the gate. That’s pretty close to gambling, unless you have a *lot* of time to devote to research. The generally smart way to focus your money is to figure out what your financial goals are, then plan accordingly. For example:

If i had a kid, 1 year old, and wanted to send him/her to college, i’d start saving now. I wouldn’t invest that $$$ in stocks, because they’re too risky and i know i’ll need the money in 17 years, when the kid turns 18 to start college. So i’d invest that into very safe investments, like government bonds; they don’t pay much, but they’re basically guaranteed. (Think “more risk = more potential for reward = more potential for loss.) Fortunately this isn’t where i am.

What i do want to do is buy property in latin america in ~10 years. If this put me at 65 years old, i’d invest with a relatively low amount of risk, since i don’t want to lose much (again, lower risk = relatively lower potential for reward = less potential for loss). However, in 10 years i’ll be mid-40s, so i can handle a lot more risk/potential for reward. So i’ll invest a lot every month, put it in relatively risky mutual funds, and hope for that larger reward over 10 years. But even if the market takes a s~~~ and i have to wait 5 years (until i’m around 50 years old) to buy my place in latam, that’s ok. I can handle that risk aok. But if i had a kid starting college, i’d be s~~~ out of luck.

Ok ok, enough of a novel – hopefully that made sense. Getting a bit late so i’m rambling; let me know if that helps.

*As opposed to a “retirement account”. Though i’d strongly recommend planning for retirement, per later in the post. The deal is, regular stock-trading-accounts (non-retirement) permit you to sell stocks, realize the gains, pay the capital gains taxes, then go buy a candy bar or whatever. If you did the same with a retirement account (before you get to retirement age) you’ll wind up paying a penalty. 🙁

**Beware: for most individual stock trades you’ll be charged somewhere between $5-20 per trade. So if you only have like $500, and Chase charges you $10 to buy that much WalMart stock, you’re taking a hit of 10/500 = 2% before you even buy the stock!!

[MadmanParticipant 772]

This guy’s website changed my life. http://www.mrmoneymustache.com/

It has pretty much everything you need to know.

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