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rxnarunner · Apr 10, 2009, 06:07 PM

I would like to invest just a little bit of money in the stock market. Not much at all. I know next to nothing about it. Any suggestions how to get started? Books, hands on?

morgaine300 · Apr 11, 2009, 12:45 AM

I think it would depend on your purpose in doing the investing. As for hands on, well, sometimes you just have to do it to learn. But rather than risk real money, you can always pretend invest. Or you can use real money if you can risk losing it all and don't care.

However, if you're seriously wanting to invest for the sake of investing, my opinion would be to go for mutual funds. You still have to pick the type of fund you want based on your purposes, but then the fund managers do the actual investing in the stocks (and/or bonds). They do all the work of deciding what to invest in, based on the purpose of that fund. Takes a lot of the work from you and they're professionals. And you still have the choice of whether it's stocks you really want, or even just a money market fund. And you can put this inside an IRA for the tax advantage.

An easy thing to do, if you want easy and just want one fund, is an S&P 500 Index fund. They're a dime a dozen (so to speak) and you can easily find one with no transaction or management fees.

You can take a class at a local college if they happen to have such a thing. (Or one of those adult night courses at the local high school or whatever.)

If you want to read up on them, I'm in the middle of reading Mutual Funds for Dummies. So far haven't learned much I don't already know, but I like Dummies books. :-) And I think it's a pretty good basic, easy-to-read book. It talks a bit about other stuff besides mutual funds (like whether you should even be investing to begin with), looking at risk, looking at time horizons, and therefore knowing what type of fund you might want, who some of the better companies are, etc. I'm not too far into it, but so far I like it.

The only other stuff I've read is Peter Lynch. Even though his Learn to Earn is supposed to be more of a beginning book, he might be a bit beyond a beginner. But you can try that one.

There's tons of stuff to be found on the web, but investing can be very opinionated. You could get a myriad of opinions here too. I personally think the mutual fund dummies book is a nice starting point.

I just think if you don't have a lot of money and can only really invest one place, an index fund is the easy way to go. That creates some diversification without you having to have enough money to invest in 20 different companies, not to mention the time to research them all.

Speaking of investing being opinionate, this is of course all just my opinion.

rxnarunner · Apr 11, 2009, 04:39 PM

Thank you very much for the advice. I was thinking of a "dummie" book. I have just recently opened up an IRA.

A class at a college might be the best option for me. I'm going to look up some of the options you gave me and see which ones work best for me.

Thanks for your time... its been a big help, I now have a starting point

earl237 · Apr 15, 2009, 01:31 PM

The Wall Street Journal has a lot of good information for investing in stocks and bonds. Now is a good time for beginners to invest in blue chip stocks because prices are so low. Some good websites that I use often are stockchase.com and stockhouse.ca

Warren Buffet and Derek Foster have very good advice on investing in stocks, so look up some of their books too.

rxnarunner · Apr 16, 2009, 11:03 AM

Thank you... my friend told me that it is a good time to start investing. Ill make a note of the authors you suggested.

Thanks again

ScottGem · Apr 16, 2009, 11:39 AM

You would be better off with a mutual fund. Mutual funds have stated objectives (i.e. short term growth, long term growth, income, etc.). You can see their track records and see the type of stocks they invest in.

Trying to invest in individual stocks, means you need to pay very close attention to the performance.

rxnarunner · Apr 16, 2009, 12:07 PM

I've just invested in an IRA at work? Are they the same as mutual funds?

morgaine300 · Apr 16, 2009, 01:40 PM

Originally Posted by rxnarunner

ive just invested in an IRA at work? are they the same as mutual funds?

No. Are you sure that isn't a 401K? Well, whatever... it's a retirement account.

Things like IRA's and 401K's aren't any one specific investment. It's like having a brokerage account, and then within that account, you decide what to invest in, which could be stocks, mutual funds, CD's, whatever. Except this account is for tax purposes, and with 401K's the employer may be contributing to it also. I've never had a 401K specifically so don't know much about them. When an employer does it, you may have little if any choice about it. I do have a small pension, which is deducted from my check and matched, and I have no choice about being in it, nor do I have a choice about what they do with it.

But I also have two IRA's, at two different places. Within the IRAs I can invest in anything I want. I prefer this over having one at, say, a bank, where you may have no choice over the investments, or it's limited. I'm not totally open with mine, but I can pretty much do what I want - watching out for certain fees that may apply in certain situations. My stuff is all in mutual funds, of my choosing. But I could put it in individual stocks or CD's, or even leave it in the extremely low-interest sweep account, which is like a "holding area" for any money not invested at the time.

A book on this stuff would explain all this in detail. Or well, if it's any good it will. :p

ScottGem · Apr 16, 2009, 02:39 PM

Its probably a 401K. The investments IN a 401K may be mutual finds, but a 401K itself is not a mutual fund.

amdeist · May 5, 2009, 07:12 PM

You might start by watching Mad Money and Fast Money on CNBC in the early evening. Then you can get on yahoofinance.com and get stock quotes by typing in the symbol, or if you don't know the symbol type in part of the name and it will bring up different options that you can left click your mouse and learn their information. You particularly want to go to Key Statistics to view the fundamentals of a stock. Whatever you do, don't use advice you see on television or sent in emails. If these people were that good, they wouldn't need to be on television or offering newsletters. They could implement their systems and become multimillionaires.

morgaine300 · May 5, 2009, 08:37 PM

Originally Posted by amdeist

Whatever you do, don't use advice you see on television or sent in emails. If these people were that good, they wouldn't need to be on television or offering newsletters. They could implement their systems and become multimillionaires.

LOL - good point. Only if that person were rich from investing would I pay attention to them. :D And even then, you have to consider what your own situation and goals are.

amdeist · May 5, 2009, 09:06 PM

Be careful to whom you pay attention. Loads of people, including myself did very well when the markets were in bull mode these past years since the crash of October 1987 and the recession in the early 90's. Anyone can pick stocks when they are going up. Now that we have been in a freefall, even those like Jim Cramer and Warren Buffett who made loads of money before have lost significant amounts. Most American companies are illiquid, i.e. they owe way more than they have in cash or revenue. If we have a protracted recession, many of these companies are going belly-up. Would you rather put your money on a family that manages their budget and pays their bills every month, or one who uses one credit card to pay interest on other credit cards?

rxnarunner · May 10, 2009, 08:41 AM

Does anyone have an opinion on savings bonds, treasury bills etc.

amdeist · May 10, 2009, 09:34 AM

Savings bonds, treasury bills and similar investments are relatively safe and sound, but if our stimulus package creates inflation, then having your money in low paying interest investments isn't a great idea. One investment analyst pointed out that the equities market (stocks) for the first time in almost 100 years has a better payout than treasury bonds, CDs, and other types of inevestments. Dow stocks like Merck (MRK)and El Dupont (DD) are paying 6.1 percent per year and 5.8 percent per year annualized dividend respectively. There are stocks in just about every industry paying good dividends and many with zero debt. Lorillard (LO) in the tobacco industry pays 5.6 percent dividend. Williams pipeline partners (WMZ) in the energy sector pays 6.9 percent dividend. Nutrisystem (NTRI) in the food industry pays 4.9 percent dividend. If you do a web search asking for high yield low risk stocks, you will find many others that might offer a better yield and safety for the future inflation that most analysts feel is coming.

slickone987 · May 10, 2009, 09:38 AM

Hands on is the best way through the Wall Street Journal. Spread your money around and don't invest too heavily in one particular company or industry looking for a quick return. It happens rarely.

pathisfer · May 10, 2009, 10:17 AM

I agree that it's probably a 401k that you've opened. Your company will have a plan administrator that offers mutual funds for that 401k and they should be able to provide a list of them for you to consider. If it is in fact an IRA you've opened and you are not investing in a 401k, I would seriously consider participating in the 401k first because usually a company will match your contribution by a certain percentage and that's giving away free money, really. If you have money left over from that (contribute up to what they match in the 401k), then open an IRA to supplement your retirement savings.

rxnarunner · May 14, 2009, 05:21 PM

I just want to say that I've come back to this question and read over all the advice again and again.

Big help, thank you all

excon · May 14, 2009, 05:31 PM

Hello rn:

If it was me, I'd jump off the deep end. You can open an account with an e-trade type of company, and read all the stuff they have on their site. Then, after you've done some of that, click... Trades are about $7.

Here's the answer to the question that you really want to know.. Once you buy that stock, will it got up or will it go down? Here's the answer. NOBODY KNOWS! And, it doesn't matter how many books you buy.

excon

anilreddy123 · Jun 17, 2009, 07:36 PM

If you really want to invest you are money in the market it's better to invest in the mutual funds bcoz the returns are good more over you are in safe position... in mutual funds the process goes in this way once you invest in the mutual funds the amount you paid will be kept in different company's by fund managers thats's way you are in alway's in safest position.;)

amdeist · Jun 17, 2009, 08:44 PM

Originally Posted by anilreddy123

if u really want to invest u r money in the market it's better to invest in the mutual funds bcoz the returns are good more over u r in safe position.........in mutual funds the process goes in dis way once u invest in the mutual funds the amount u paid will be kept in different company's by fund managers thats's way u r in alway's in safest position.;)

I am not sure investing in mutual funds is a safe bet. If, as I wrote in a book in 2004, the baby boomers decide that the stock market isn't a good place for secure retirement and they start exiting, mutual funds will get slaughtered. There are many very sound stocks that are in the world, not only the United States, and your first consideration should be finding some that are liquid, preferably no debt. Most of the companies owned by mutual funds are in debt up to their eyeballs, and if our economy doesn't recover soon, may be in the same boat as General Motors (GM), Chrysler, Lehman Bros, AIG, etc.