Post: #1

I plan to start investing pretty soon in the stock market but i haven't a clue as to what to invest in and how. I know there are bonds, stocks, mutual funds, but i'm no expert and i plan to do this through my bank or a firm who specializes in investing. Which would be a better match for me? Any tips for a beginner would be greatly appreciated.

Post: #2

I wouldn't be in a rush to invest your money.

I think you should just be reading and reading.

Most funds can't beat the averages, so unless you know what you are doing, don't go into stuff just yet. I am not saying this to make light of your limited knowledge, just trying to protect you.

Also, markets are at highs right now, so don't bet it all just yet.

Go to motley fool or seekingalpha. There are some stock threads on RVF. Just type in stocks and search and you should be able to find them.

But don't buy all the bs you are told - protect your capital. And just find a broker with low costs per transaction or do it online.

I would read and then make small investments as you get comfortable.

Post: #3

A funds inability to beat averages isn't down to lack of knowledge, it's down to investment mandates, position sizes and risk management.

JB, the first thing you have to determine is what your goals are out of investing, and you have to get an in depth understanding of what actually is 'risk'.

SSS is right about brokerage, transaction frictions can make a big difference in overall portfolio performance.

Post: #4

I'm just saving for now as almost all the worlds markets are pretty damn high.
I will just wait for a stock market crash before throwing any money back into the market.

Post: #5

(04-02-2014 10:21 PM)J.B Wrote:  I plan to start investing pretty soon in the stock market but i haven't a clue as to what to invest in and how. I know there are bonds, stocks, mutual funds, but i'm no expert and i plan to do this through my bank or a firm who specializes in investing. Which would be a better match for me? Any tips for a beginner would be greatly appreciated.

If you are a beginner the best thing for you to do is to dollar cost average your money into a low fee index fund (Vanguard, etc). You can set up an account online in a few minutes. Some popular names to consider optionshouse, TD Ameritrade, Charles Schwab.

You will beat 80% of fund managers over a 20yr period. Honestly, don't try to play the market. The majority of retail investors dramatically under perform the market when they try to trade stocks.

Furthermore, don't waste money on actively managed mutual funds either, which charge high fees (1-2% per year plus load). Most of them cant beat the SP 500 after fees.

Post: #6

What books would richer, more seasoned investors recommend for guys who are not yet in the market?

Post: #7

(04-03-2014 01:24 AM)Switch Wrote:  What books would richer, more seasoned investors recommend for guys who are not yet in the market?

Honestly there's no point if you follow Flavius's advice above.

If you really want to you can read The Intelligent Investor by Benjamin Graham or Stocks for the Long Run by Jeremy Siegel.

Post: #8

I second Flavius' suggestion. Well managed vanguard funds average 10% per annum. Why not place a larger portion of yojr available capital in that whilst learning with your smaller portion of capital?

Post: #9

The most important thing is to never invest money you can't afford to lose. Have a certain amount of your savings set aside for actual savings and a certain amount for gambling - because that's what it ultimately is.

Post: #10

If you're new to investing, I'd check out the Motley Fool and Morningstar websites. They have lots of articles for people who are getting their feet wet in the investing world (and more experienced people). They address things like active vs. passive investing, efficient market theory, the importance of compounding, dividends, and other ABCs of investing.

Post: #11

Thanks for the insight guys, i appreciate it! I was actually thinking of doing something similar to saving some money and let it accrue compound interest and "gamble" with a smaller amount in either stocks or penny stocks, which i need to look into more. I need to look into Vanguard though, it seems more practical.

Post: #12

(04-03-2014 12:52 AM)spalex Wrote:  I'm just saving for now as almost all the worlds markets are pretty damn high.
I will just wait for a stock market crash before throwing any money back into the market.

Take a look at Inverse ETFs and short selling (learn the risks FIRST). I've been doing a lot of reading into betting against the market. It's incredible how crafty these finance kids are.

Post: #13

I bought my first rental property in 2006 and don't regret that. The value wobbled in the 2008 crisis, but now it's pretty much back to its 2006 value. Plus rents go up over time, hopefully in step with inflation. Just buy in good places - the UK has an epic housing crisis for example. Each time my tenants move out, it takes me a maximum of 7 days to find new ones.

I'm a big fan of covered call funds - they yield 6-7% right now but you don't get so much capital growth. But they chuck out steady dividends. Schroeder Income Maximizer is the best known.

Asia is cheap now - but it could get cheaper. Still, at least some other schmuck has lost the first 20% or so from the peak valuations.

The UK and Europe are good for high yielding stocks.

I've got quite a bit in Zopa the P2P lending platform. It yields ~5% but it doesn't have government guarantees like bank savings accounts do.

In all honesty though, if you look at the performance of my investments I might as well have chucked everything in an ultra cheap tracker.

Post: #14

(04-03-2014 01:17 AM)Flavius Aetius Wrote:  If you are a beginner the best thing for you to do is to dollar cost average your money into a low fee index fund (Vanguard, etc). You can set up an account online in a few minutes. Some popular names to consider optionshouse, TD Ameritrade, Charles Schwab.

You will beat 80% of fund managers over a 20yr period. Honestly, don't try to play the market. The majority of retail investors dramatically under perform the market when they try to trade stocks.

Furthermore, don't waste money on actively managed mutual funds either, which charge high fees (1-2% per year plus load). Most of them cant beat the SP 500 after fees.

Always, look at expense ratios. The universe of mutual funds is huge and you can absolutely build a good portfolio without paying too much in mgmt fees. I use an S&P index, Nasdaq Index, and a couple different dividend-heavy funds. ETFs are really useful as well. You still need to look at their expenses, that's just part of the due diligence.

If you're mixing funds/ETFs and individual stocks, be wary of over exposure. Especially with the mega caps like AAPL, you probably already own a lot in an index fund so you take on more risk by investing directly in the stock.

To the point about not investing what you can't afford to lose, I have a personal rule that I won't put in more than 5% of my portfolio into any one investment. All the stories about Enron employees losing their shirts were people who put their entire 401K into Enron stock. That's the worst kind of non-diversification, you lose your job and your retirement money in one shot.

Post: #15

(04-03-2014 11:03 AM)frenchie Wrote:  

(04-03-2014 12:52 AM)spalex Wrote:  I'm just saving for now as almost all the worlds markets are pretty damn high.
I will just wait for a stock market crash before throwing any money back into the market.

Take a look at Inverse ETFs and short selling (learn the risks FIRST). I've been doing a lot of reading into betting against the market. It's incredible how crafty these finance kids are.

Can be useful, but I'd never recommend shorting to a beginner.

Post: #16

Id advise investing in yourself. As in start your own business so you control the fate of your cash.

Remember each dollar is like a soldier and has just as much value as a human life. You wouldnt blindly throw a couple humans into the wild and hope they survives and thrive (multiply) so why would you do the same with your cash?

Call me an armchair economist (wait.....) but I would suggest investing that cash into something you can see every day. The simplest thing is gold but id rather buy a trailer and put it a ways out from Bakken or Fort Mcmurray and rent it too cash flush oilmen making 7k a month and happy to pay 800$ a month to sleep on a couch.

The stock market is a dangerous place for the beginner and not made for instant returns unless you pump and dump. But I dont think your Jim Cramer.....My point being....buy an ATM and let it break even for you in 3 months then expand till you have respectable cash flow. I can expand on how to do this further but a simple google search will suffice.

Besides owning a business is a very attractive trait to a woman (think independence, self sufficiency, success, APLHA). Nothing better than putting a girl off because of "business" but it actually being business (putting cheddar in your wallet) instead of just running standard delayed text game.

Read Aaron Clarey (Captain Capitalist) he has a blog and some excellent books to help flesh out your knowledge on the topics of wealth.

Post: #17

Read WestCoast's post.

DCA SPY.

Post: #18

Start by maxing your 401k contributions, then invest in SPY when it dips.

Post: #19

(04-02-2014 11:53 PM)samsamsam Wrote:  I think you should just be reading and reading.
I would read and then make small investments as you get comfortable.

Since we're on the topic, what are the top books we should read on the subject? I have read 4-hour workweek, Millionaire Mind, but still want to check out Millionaire Next Door and 7 Habits of Highly Effective People. Any famous ones newbies like us should require?
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