[Scarecr0w]

I have been thinking in entering the stock market. I'm a newbie so i would like some advice.
My idea is to just buy stocks, (forget about options , forex and other bullshit) now
what kind of stocks to buy? ETFs? the ones that pay dividends even if they are blue chips?
How much money would you use to start investing in the stock market?
thanks

[Atilla]

Go with the boring dollar-cost-averaging strategy with low-expense index funds. The vast majority of professionals fail to beat these funds.

There are funds you can get in for just $100. Just contribute each week. Dollar-cost-averaging gets you in toward the lower half by purchasing more shares toward the bottom, and fewer shares toward the top.

VTSMX is an example of an extremely low-cost fund that gives you exposure to the entire US stock market, including large cap, mid cap, and small cap, as well as growth and value stocks. There are funds with even lower expenses, so do your research.

[Dulceácido]

Atilla just told you to buy index mutual funds. I know you're talking about just buying stocks. Would that exclude mutual funds which consisted solely of stocks?

And, by the way, Atilla gave you some sound advice. It's one of the founding principals of Vanguard, a leading investment firm with a rock-solid reputation. Low costs = more money in your pocket. Low management (index funds) = more money in your pocket. Over time, those two things are very difficult to beat, even by the best investors/fund managers.

I kind of cringe to see where this thread will go... Ugh. Fucking finances... Always a battle between the EVIL of two LESSERS.

Kick back and watch the shit-show ensue.

[iknowexactly]

If you're young, I agree with the above. Hardly anyone can picks stocks that will go up.

However, when you're older Dividend Aristocrats, companies that have increased dividends for 25 years straight are a good bet for safety and a little growth. You should pick ones with good free cash flow so that dividends are sustainable. I like McDonalds because I believe that Walmart asses will keep growing.

(I feel bad about posting this, I feel there is widespread carbohydrate poisoning that is only partly due to people's refusal to listen. But this is reality now)

[RonnieB]

Great advice. Also I would add try to diversify your portfolio to include investments outside of the US. Using ETFs to gain expose or buying stocks in US companies who make most of their profits in foreign markets. You can also try and buy stocks direct through foreign stock markets (I am unsure about US tax laws and whether this is worth it) or there are foreign stocks listed on the US stock markets as American Depositary Receipts (ADR). Essentially an ADR stock means that you can buy the foreign stock in US dollars and it is listed on a US stock exchange. Lots of big companies are listed like this HSBC, Royal Dutch Shell, BHP etc.

In addition I would say also buy some bonds. There is a lot of debate over whether stock or bonds perform better over time. Some years stocks out perform, some years bonds out perform stocks. If you are going to diversify I would include them by either directly buying bonds or using some kind of bond mutual fund.

Watch out for fees when investing in mutual funds. A difference in 1% fees per year can make a huge difference in your long term returns. There are companies out there charging stupid fees. Also if you go through a broker they will charge a commission on top of the mutual fund manager fees. These fees can really fuck with your profits so try to go direct to the mutual fund rather than the broker route.

It's pretty hard to out perform the market but if you are interested in learning how to I would recommend a book called the Intelligent Investor by Benjamin Graham. Warren Buffett uses the style of investing from the book and says Benjamin Graham's ideas had a huge influence on him. The book shows you how to evaluate companies and look for undervalued stocks that will perform well over time.

Make millions, good luck!!

[RonnieB]

Hey Scarecr0w, in regard to you question about how much to invest it depends on how risky you want to be. I recommend starting out with a small portion of your money in it and learn the ropes first. And don't worry if you don't have heaps of cash to invest, just start out small and build up.

[Dulceácido]

(06-20-2013 03:38 PM)RonnieB Wrote:  

Hey Scarecr0w, in regard to you question about how much to invest it depends on how risky you want to be. I recommend starting out with a small portion of your money in it and learn the ropes first. And don't worry if you don't have heaps of cash to invest, just start out small and build up.

Agreed. Addition:

I would say, the answer to how much you want to invest would depend on your disposable income and what you want tied up in investments. In my personal case, I wish someone would've told me 15 years ago to drop all my disposable income (that wasn't spent on chicks and booze) into an index fund and contribute monthly, just letting it ride... Man, that would've been some solid advice.

My advice to you: whatever you can live without, for example, $300/month... Increase that by 10% and invest that. It will keep you from doing stupid shit with your disposable cash. The tendency is to underinvest, so compensate that with the +10% and stick to it like a motherfucking Spartan. When your income increases, continue to live comfortably within your means and avoid extravagant expenses (such as new cars) as long as you can, but don't live like a pauper either--that shit wears you out. Enjoy your youth, but realize, you are planning for a future of unending world conquests where you don't have to ask a single soul for shit. It'll be fun, even when you're "old." I promise.

[Matt3B]

Read a book called the Motley Fool Investment Guide.

[gsinplaya]

I'm a big believer that the next decade will be much better than the previous for equities so I think you are doing the right thing getting involved in the market.

I think it all comes down to the type of investor or trader you want to become.

If you want a totally hands off approach then the advice you have received already is rock solid. Monthly contributions into an Index Fund I believe will perform very well for you.

However that doesn't mean you should just throw money in the market and hope the advice being given by myself and others is correct.

I think the first step is identifying your risk tolerance, investment objectives and time frame. Are you a long-term investor looking to hold stocks over a long horizon or would you prefer to be an intermediate trend trader with a more hands on approach?

No matter what you decide I think it would be wise to know basic principles of technical analysis.This would allow you to follow the macro trend in the market for as long as it stays in tact.

Invest in educating yourself so that in the future you can create your own technical plan for navigating the market that allows you to properly ride these trends....but also allows you to develop risk management parameters to avoid major drawdowns on your account if the macro trend in the market was to break.

[T5_Income]

This is pretty sound advice on this thread so far.

Days like today for example will shake you up psychologically but one of my rules is to only buy stocks that pay dividends so you are earning some form of cashflow that can be DRIP'd at lower purchases prices when we run into a soft patch in the market.

My advice is similar to the other fellows;

Invest every pay day, a percentage of your wage you can afford split accordingly;

30%--- S&P 500 Index fund
20%----International Index Fund
10% ---REIT fund
40% ---Bonds ----------( Some may say 40% is too much to have in bonds for a young man, the way I balance out this risk is to include corporate preferred's and high yield bonds into the mix so of the 40% in bonds you could increase or decrease your risk based on your own investor profile by increasing/decreasing the percentage/duration of bond purchases or debentures, for example of your 40% have 60% in shorter term bonds, 20% junk bonds and 20% in corporate bonds or preferred shares)