topic Re: Stocks? Investing? in Personal Finance

Stocks? Investing?

Anonymous — Wed, 21 Feb 2018 14:46:18 GMT

Could someone please tell me about Stocks and Investing?? I am a newbie with all of this... maybe some links to make me understand this?

Thanks

Re: Stocks? Investing?

Anonymous — Wed, 21 Feb 2018 15:03:28 GMT

Hi CreditChick. Welcome to the forums!

You are moving the right direction, which is to take steps at understanding the basics of investing and retirement planning. Understanding the basics of any field (basketball, cooking, physics, whatever) takes some time, so you should plan to spend a lot of time at first just reading basic solid introductions to the field. You should resolve to take months of this "learning" time before you take any action.

A good place to start is an easy booklet by William Bernstein (an expert in the field with no special agenda and certainly nothing he wants to sell you). That pamphlett is entitled IF YOU CAN and it is easy to download for free. It is targeted at young investors. Once you have mastered that (take at least a few weeks) you may want to move on to his longer book THE INVESTOR'S MANIFESTO (also written for beginners).

You may wish to visit the Bogleheads website, which has a lot of good resources.

Re: Stocks? Investing?

Anonymous — Wed, 21 Feb 2018 15:17:05 GMT

Thanks so much!!

Re: Stocks? Investing?

wa3more — Wed, 21 Feb 2018 18:36:06 GMT

keep it simple, start with index funds. You most likely won't do well with individual stocks.

Re: Stocks? Investing?

Kree — Wed, 21 Feb 2018 20:07:59 GMT

Warren Buffet has a lot of sage advice. I think the one thing he says that almost everyone can agree on is "For long term investment index funds are safe and provide good returns." Mathmatically that has been correct over as long of a period as I can think of. But, nothing in the past ever predicts the future.

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 03:05:42 GMT

Regarding investing in index funds. Do you need several thousand dollars to get started? I’m looking to put a few hundred dollars a month towards some funds. I recently started contributing to a Roth IRA and I’m in the process of getting information to contribute more to my 401k ..that my employer offers. However I’d like to start investing, what I can, in either index funds or maybe even some stocks. However it seems you need thousands upfront, to get started.. rather than a few hundred. As you can tell, I’m also new to the investment world and learning slowly. Any insight appreciated or references. I have read Bernstein’s E book and I am starting on some of his “homework”. Thanks

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 03:46:39 GMT

Buy low, sell high.

Easy peazy, except I am bad at it.

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 04:25:48 GMT

How old are you ? You have any debt ? You have any other cash in cash of emergency ?

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 12:54:36 GMT

Im 38, late start I know. Thats the main reason I want to diversify. I do have a 3 month emergency fund in savings. I know it should be 6 months but Ive been in my trade for 16 years and have never missed more than 2 months of work. (Union Electrician- IBEW) I do not have any debt. I use my CC's for rewards or cash back and pay in full each month. AZEO. I do not qualify for contributing to an HSA, I have a low deductible health insurance plan. Interested in index funds, mutual funds, or maybe even stocks. Looking for something less risky though, more long term where I can co tribute a few hundred dollars a month too.

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 13:28:29 GMT

And sorry to Hijack your thread creditchick, but it looked dead and maybe we both will get some helpful info.

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 17:28:44 GMT

@Anonymouswrote:
Hi CreditChick. Welcome to the forums!

You are moving the right direction, which is to take steps at understanding the basics of investing and retirement planning. Understanding the basics of any field (basketball, cooking, physics, whatever) takes some time, so you should plan to spend a lot of time at first just reading basic solid introductions to the field. You should resolve to take months of this "learning" time before you take any action.

A good place to start is an easy booklet by William Bernstein (an expert in the field with no special agenda and certainly nothing he wants to sell you). That pamphlett is entitled IF YOU CAN and it is easy to download for free. It is targeted at young investors. Once you have mastered that (take at least a few weeks) you may want to move on to his longer book THE INVESTOR'S MANIFESTO (also written for beginners).

You may wish to visit the Bogleheads website, which has a lot of good resources.

I read the William Bernstein pamphlet and am working on the reading assignments now. Loving The Millionaire Next Door.

Re: Stocks? Investing?

Kree — Wed, 28 Feb 2018 18:54:00 GMT

@Anonymouswrote:
Regarding investing in index funds. Do you need several thousand dollars to get started? I’m looking to put a few hundred dollars a month towards some funds. I recently started contributing to a Roth IRA and I’m in the process of getting information to contribute more to my 401k ..that my employer offers. However I’d like to start investing, what I can, in either index funds or maybe even some stocks. However it seems you need thousands upfront, to get started.. rather than a few hundred. As you can tell, I’m also new to the investment world and learning slowly. Any insight appreciated or references. I have read Bernstein’s E book and I am starting on some of his “homework”. Thanks

For small budget investing, many people suggest "drip funds". These are company stock purchase programs with no/low trading fees and automatic dividend reinvestment. A 8 dollar trading fee on a 100 dollar buy is greater than a year's average growth, so if you don't have thousands to begin I would recommend looking at options like this.

Re: Stocks? Investing?

Anonymous — Wed, 28 Feb 2018 20:12:11 GMT

@Anonymouswrote:
Im 38, late start I know. Thats the main reason I want to diversify. I do have a 3 month emergency fund in savings. I know it should be 6 months but Ive been in my trade for 16 years and have never missed more than 2 months of work. (Union Electrician- IBEW) I do not have any debt. I use my CC's for rewards or cash back and pay in full each month. AZEO. I do not qualify for contributing to an HSA, I have a low deductible health insurance plan. Interested in index funds, mutual funds, or maybe even stocks. Looking for something less risky though, more long term where I can co tribute a few hundred dollars a month too.

I think the simplest solution is to save up $1000. That's all Vanguard requires as an initial investment. They also have a minimum for certain funds, but again their Target funds have low expenses, are well reviewed, and require only 1k as an initial investment. (Weekly additions of small amounts after that are fine.) Then you can spend several months learning more about investment and eventually can move your money into other funds when you know more about what you are doing.

Re: Stocks? Investing?

wasCB14 — Wed, 28 Feb 2018 20:16:55 GMT

@Kreewrote:
@Anonymouswrote:
Regarding investing in index funds. Do you need several thousand dollars to get started? I’m looking to put a few hundred dollars a month towards some funds. I recently started contributing to a Roth IRA and I’m in the process of getting information to contribute more to my 401k ..that my employer offers. However I’d like to start investing, what I can, in either index funds or maybe even some stocks. However it seems you need thousands upfront, to get started.. rather than a few hundred. As you can tell, I’m also new to the investment world and learning slowly. Any insight appreciated or references. I have read Bernstein’s E book and I am starting on some of his “homework”. Thanks
For small budget investing, many people suggest "drip funds". These are company stock purchase programs with no/low trading fees and automatic dividend reinvestment. A 8 dollar trading fee on a 100 dollar buy is greater than a year's average growth, so if you don't have thousands to begin I would recommend looking at options like this.

If someone's portfolio is small enough that he or she is considering a $100 position in something, that person is better off in index funds or commission-free ETFs. Individual stocks only become sensible once someone has a portfolio well into five figures. What's the point of putting lots of time into research if it only generates a few dollars more?

I'm personally not a fan of automatic dividend reinvestment (at least for individual stocks). I like to get cash and have control over what and when I buy, and how much I pay. That said, my portfolio is large and concentrated enough that a $5 fee is a very small part of the average dividend I receive.

Re: Stocks? Investing?

Anonymous — Thu, 01 Mar 2018 00:11:26 GMT

I agree that index funds are best. A good global index fund is best so you get overseas growth. I would reinvest dividends in any stock investment. Dividends represent a large portion of equity returns and the compounding over time can result in a large amount of money.

OP, you are 38 but better than 58. You have a quarter century or more to save. You have no debt and stable profession so you are in good position. I have friends who are my age ,55 plus, who woke up one day and said ....I don’t have anything saved ? Sad and common

Re: Stocks? Investing?

wasCB14 — Thu, 01 Mar 2018 02:10:51 GMT

I'd also caution that while I don't have a crystal ball, valuations for US stocks are currently fairly high by most metrics. Being diversified and keeping your costs low won't be much consolation if the market falls and you start losing money.

Re: Stocks? Investing?

Anonymous — Thu, 01 Mar 2018 02:23:55 GMT

Was brings up a great point about current valuations. OP should dollar cost after each month because no one has a crystal ball. I think valuations are high as well and equities will probably provide below after returns in next 5 years or so. Markets revert to mean

take current s & p earnings and compound at a growth rate of maybe 4 % and put an average multiple on it. Shows zero return for 10 years if I remember correctly.

Re: Stocks? Investing?

Anonymous — Thu, 01 Mar 2018 02:24:59 GMT

Meant below average returns. Dumb iPad ...

Re: Stocks? Investing?

wasCB14 — Thu, 01 Mar 2018 02:44:46 GMT

@Anonymouswrote:
Was brings up a great point about current valuations. OP should dollar cost (average) each month because no one has a crystal ball. I think valuations are high as well and equities will probably provide below (average) returns in next 5 years or so. Markets revert to mean

take current s & p earnings and compound at a growth rate of maybe 4 % and put an average multiple on it. Shows zero return for 10 years if I remember correctly.

Historically, dollar cost averaging isn't usually a good strategy. Stocks usually go up, so by the time the last dollar of the inital sum is invested, the first dollar has already earned a healthy return. Usually it's best to invest all at once. At current valuations, though, DCA might be reasonable.

But it's also reasonable to just stay in cash while learning. I'm not going to say someone else should rush to buy an index of US stocks (even via DCA) when I've recently sold my US index positions for being overvalued. I'm not all cash or anything, but my portfolio has a lot in the way of out-of-favor companies (most notably class A malls).

Re: Stocks? Investing?

Anonymous — Thu, 01 Mar 2018 02:48:28 GMT

I agree good points. I’m mostly in cash.