Stocks for Newbs

[RaschNuts]

So I just signed up with ING to make some investments in the market. I am a complete newb and was wondering if anyone has any pointers, tips, stock to look at.

I only put in $200 to start very minimal to test the waters. Might start adding $200 a month but we will see what happens.

Thanks in advance for any advice.

 

[AlohaStyle]

How about 43% of 1 share of Apple!

I don't get into financial advice with people, but do your own research on their website and other financial sites before you just start buying. Good luck to you... gotta start somewhere!

 

[RaschNuts]

How about 43% of 1 share of Apple!

we should do a "box split" on apple stock lol

 

[Skitalets]

Diversification is one of the most important concepts in investing -- it'll help you avoid losing your shirt if one or another company tanks. So with just a few hundred bucks invested, you need to spread that around a bunch of companies as cheaply as possible.

At the level you're at, I'd strongly recommend investing in an inexpensive exchange-traded fund (ETF) investing in an entire index. The iShares S&P 500 fund is a good option (ticker IVV). If you want international exposure, look for a fund that tracks the MSCI All-World index instead.

Once you're investing $5-10K, you can put a grand in each of 5-10 stocks and achieve decent diversification. (Academic studies show most of the improvement in returns from diversification can be achieved with that many positions, and you get diminishing returns beyond 15 stocks.)

I'll copy what I wrote elsewhere:

Sounds like you've learned two of the most important lessons about investing: 1) risk and reward are linked, it's nearly impossible to gain higher returns without taking on more risk, and 2) no one is right 100% of the time, great traders are right 60% of the time.

Be very wary of get-rich-quick schemes and you stand a good chance of becoming rich slowly, which is a pretty nice outcome!

 

[sofc]

I bought Nike stock. Figured I win every time I buy shoes.

 

[hdroadglide]

I bought Nike stock. Figured I win every time I buy shoes.

wow, that's like col. sanders buying stock in tyson chicken!

 

[esse]

hate to be a downer here, but i'd think transaction costs eat up any possibility of profit on $200. even at $4 dollars round trip, you'd need to make 2% to break even, and that's not even realistic commission and slipperage

 

[JNT]

hate to be a downer here, but i'd think transaction costs eat up any possibility of profit on $200. even at $4 dollars round trip, you'd need to make 2% to break even, and that's not even realistic commission and slipperage

Yea. Id keep depositing money till you atleast had a grand then look to buy something. Thats all I started with a year ago. Then through in stuff like overtime, tax returns, etc and its built up quite nicely.

[edit] Dont bother with penny stocks either. Its just poor gambling. My rule of thumb, is if the company doesnt profit, then dont bother. It only makes sense to not invest in a company that is losing money, unless you have the money to lose.

 

[Skitalets]

hate to be a downer here, but i'd think transaction costs eat up any possibility of profit on $200. even at $4 dollars round trip, you'd need to make 2% to break even, and that's not even realistic commission and slipperage

Several brokerage firms will let you invest in some basic ETFs free. That's the way to go to avoid this problem.

 

[CigarSaint]

Stick with Roth ira's unless you have tons of time to research what's hot. Think long term.

 

[JNT]

Buy a book called 'The Idiot Millionaire' by Derek Foster. Lots of good basic investing info in laymen s terms. quick read too. maybe a day or two. Decent info for a newb like me that has thus far panned out.

His basic strategy is slowly over the years investing in dividend paying companys in stuff you buy everyday. Kind of the model I go by, but I also like to gamble a little and buy into dividend paying stocks after they have taken a hit, and pray, and I mean pray, they get the upswing for quick profit.

If they dont, and beleive me, sometimes they don't, I still can sit content till the stock does recover, and still collect a decent dividend so my money is at least making cash for me.

VE, and SLF were recent thorns in my portfolio, that took a couple months to recover. I just jumped onboard CHRW. Fingers crossed.

 

[Xingpao]

Gotta agree with the etf advice but with the small amount you are starting with you might consider drips. For example open a scottrade account. Buy a few shares of coca cola then have them sent to you. Use them to open a drip with coke and do periodic purchases. Once you get comfortable with that then rinse and repeat with another drip friendly large cap. Before you know it youll have 4 or 5 going and dollar cost averaging and dividend reinvestments are your best friends. Not much different than what sharebuilder does except youll bring down your costs in the longterm by having done some work on your own. With a 200 initial investment and say 100 a month periodic monthly i cant imagine a better plan to learn from than exploring drips.

 

[zappaFREAK]

You can add significantly to your investment with dividend stocks. These stocks pay you each quarter a share of the profits. In some stocks you can reinvest the dividends and buy more shares of stock which helps grow your base stock amount. Good luck.