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Help Me Win The Stock Markets
Slapnuts
Registered User regular
Registered User regular
Now that I'm a real adult with a good paying job I have a little extra cash every month. I've heard that because the market is shit right now, and because I'm 25 that I should be buying stocks. I already have a 401k through work so my retirement is being looked after. I'm currently looking to invest in shorter term things (5 to 20 year things, I'm not trying to make a million dollars in a month). Herein lies the rub. I know absolute fuck-nothing about the stock market or investing or any of that.
I'd like to have a broker or someone who can look after my stocks. I've got absolutely no idea how to do any of this. That said, I'm also not opposed to learning how to look after myself and my money. Is a broker the best way to go for someone like me?
Also, a few more questions. Is there a minimum amount of money I should have before I approach a broker or start buying stocks through something like eTrade? Is eTrade even the way to go? Is there a better site? Should I try to find someone local?
TL;DR: Help get me started investing my extra money every month.
I'd like to have a broker or someone who can look after my stocks. I've got absolutely no idea how to do any of this. That said, I'm also not opposed to learning how to look after myself and my money. Is a broker the best way to go for someone like me?
Also, a few more questions. Is there a minimum amount of money I should have before I approach a broker or start buying stocks through something like eTrade? Is eTrade even the way to go? Is there a better site? Should I try to find someone local?
TL;DR: Help get me started investing my extra money every month.
There are some acts so ruthless, some deeds so unpalatable, that only the Vlka Fenryka are capable of undertaking them. It's what we were bred for. It's the way we were designed. Without qualm or sentiment, without hesitation or whimsy. We take pride in being the only Astartes who will never, under any circumstances, refuse to strike on the Allfather's behalf, no matter what the target, no matter what the cause.
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To seriously make money in the short term, you need a good chunk of change. Do you own a house? Are you maxing your 401k?
Most people your age don't realize this, but you can take money out of your 401k for major life purchases, namely your first house. A house is also typically the most expensive thing a person can buy -- hence, maxing your 401k with the idea of utilizing it for both retirement AND buying a house is therefore a very solid investment.
If you're looking for stuff you can let sit for a while, earning returns, without earning megabucks and without a focus on retirement, you should probably talk to an investment broker at your bank. Do you have a bank that's at least regional, and not just a credit union? Most for-profit banks keep an investment broker on-staff for people like you. They may not offer you the most amazing deals, but yes, to seriously invest, you need to have someone do it for you. Otherwise, it becomes your job, and the returns on your time and the loss from fees means it's essentially a waste of time. ETrade can be fun but is a bad way to actually earn money.
But yeah, you typically want a lump sum *beyond* your regular savings in order to start. It should be money that you're OK losing 100% of. If you're not OK losing 100%, as in it would financially devastate you, you need something more low risk -- like CDs and so on. Or blue-chip stocks (older companies that produce physical products). Essentially "retirement grade" stuff, because that's low risk.
Do it now.
So, here's what you should do:
1) Go to Vanguard, Fidelity, whoever and open a Roth IRA. Well, depending on your income maybe a normal IRA but 9 times out of 10 you want a Roth IRA. Put some money into there, maybe one of those Target 2050 funds or something.
2) Let it sit for a long time. Buying and holding stocks is a tried-and-true strategy for ensuring pretty good investment growth. You'll beat 80% of all mutual funds.
3) Laugh at your idiot friends losing money playing the individual stock market.
The number of people who succeed in playing stocks is vastly outnumbered by the people who lose money. If you have any doubts whether or not you're any good with stocks, then you aren't any good.
Read A Random Walk Down Wall Street. Also, go to diehards.org for better advice.
I'm one of those "idiot friends losing [in my case, already lost] money playing the individual stock market." It's not fun being one of those, and I wouldn't recommend it to anyone.
And on a related note…now probably isn’t a great time to get into investing in anything other than Euros.
Are there any Canadians here with advice for someone with 3000ish (+200/month). My specific goal is to buy a house in 5 years. Minimum price for a 3 bedroom house here is $400,000 and I currently own a condo in which I have $39000 equity (going by tax assessed value, could be more) .
Gross household income is $82000
I'd go with a good balanced mutual fund instead. Roths are still a good idea, and I'd certainly look into one, but in 20 years you'll only be 45 and you won't really be able to touch that money (unless to buy a house).
Stick with mutual funds that are moderate risk given your time frame(On a scale of 1-5 think a 3). Invest heavily. And yes, avoid buying individual stocks. My family lost ~750,000USD by daytrading, so I'm speaking from bitter, personal experince. I'd still like to kick Lay in the balls until he bled to death.
Perhaps I can interest you in some of my wares.
T-bills (I'm sure the Canadian government offers them) and CDs are far more secure. If you think you might need the cash, you can do a CD ladder.
Yeah, it's why I said "most of these things," You can't take it out for wedding expenses, travel, a new car, money for a childs education etc.
That isn't really true.
Most large US companies earn income in several currencies, and even then if you live in the US you can't earn money in foreign currency; if you invest in European stocks you still buy with US dollars exchanged to Euros (bad for you) and sell for Euros exchanged to US dollars (good for you)...you don't come out ahead in any way. Also, betting on currency fluctuations is even more crazy than betting on random stocks.
Furthermore, the market is bad right now, which makes it a VERY GOOD time to invest in stocks. Buy low, sell high, right?
I thought you could, actually. I just thought the earnings can't be withdrawn. Someone should check me on that.
However, when it comes to long-term investing, there is no better well-diversified investment than the stock market. Historically, it has never been beaten over a 20-year period. Any 20-year period.
Which is why you should use mutual funds over single stocks - they are diversified, whereas single stocks are a single point of failure. Also, since you're a beginner, you should buy only into funds that have a decade of solid performance.
Here you go:
https://personal.vanguard.com/us/accounttypes/retirement/ATSRothIRADistContent.jsp
So outside of those distributions (I think there are a couple other qualified ones such as major medical expenses), you will get hit with taxes as well as the withdrawl penalty on your EARNINGS. So depending on how much money you have in the IRA, it could end up biting you if you keep taking money out. Obviously there is less risk of this the longer you have had the account open.
Well, anybody can diversify their portfolio, it's just a matter of doing research. But this guy doesn't know what he's doing, so it's probably best to stick with letting other people manage his money for him.
Also, I brought this whole "I don't know shit about what to do with my money" thing up during an editorial meeting at work and have been put in charge of creating a segment for my TV station's website. I'm already in contact with a financial advisor and will do the first segment tomorrow. So if anyone has any questions not answered here, I can sure as hell ask this guy. Thats free financial advice for anyone who wants it. I'm sure any question I get here will be better than anything our viewers will come up with.
It is a mutual fund. That I paid 200$ into a month. After 12 months it was worth almost $3000 The interest actually paid for my Christmas presents this year. Although I did have to pay a bit in taxes because of the withdrawal. Screw you capitol gains!
They have other less volatile funds as well and give free advice if you have an account.
T-bills are fantastic and are offered in Canada
USAA is only available to military members or children of USAA members, so he won't necessarily be able to do that. Mutual funds could still be a good idea though.
Of course, if you have short-term money, and invest it in riskier investments, it's very possible that not only will you not beat inflation, you'll end up with less than you started with.
I've never gotten into them, but they look like a good way to get into the equity shares of a company. Has some of the benefits of small-but-steady-contribution investing (like dollar-cost-averaging for mutual funds), and you can avoid broker fees.
Fool.com has some
good articles on the subject.
***Of course you shouldn't take individual equity recommendations too seriously without doing your own homework.***
That exchange should be stickied.
Market is bad != investing is good, because market is bad is often followed by market is worse.
At the moment is an extremely bad time to invest, because banks are refusing to lend to each other (or anyone else), and the chances of everyone else also investing at the moment is very low - that will likely equal: market is worse, which in turn = your money is less.
Yeah...my point was don't wait to put money into investments if you have a long time horizon. I clearly don't advocate market timing since I support buy-and-hold investing (see my first post in this thread). The person I was replying to was saying it's a bad time to invest in the stock market, which is myopic, when generally speaking even if the market gets worse in the short term it always goes up in the long term. In 20 years it'll be higher than today, hence buy low sell high. Sorry I wasn't clearer.
Also, your post is a common fallacy in investing and in fact has been proven historically false countless times, such as by economists like Burton Malkiel and Eugene Fama or the investment firm Vanguard. Google for the investment approach known as "technical analysis" and read any reasonable critique (from an economist, not from Joe the blogger) to see why there's no such thing as "momentum" in the stock market. No one can guess the market a month from now, so you might as well put some money in, forget about it, go play XBOX and then check it again in a couple of years.
Basically find a company that has always paid out dividends, throw a little money at it each month, and put your Dividends right back into the company. 20 years later, even the smallest investment has made you a lot of money.
Being 21 now, I'm looking at this as my long term plan. I'll have a huge head start, and by the time I'm 50, I should have a rather large chunk of change.
59 1/2
I only make 24k/year though so good luck