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I would like to begin learning to invest in stocks...how do I begin?
I do not have much money to start with, maybe 500 dollars and that is being generous.
What is the best book to read?
What is the best info to follow (prefer reading versus tv if possible)
How do I learn?
What company can I invest with?
How do I become successful with stocks?
Thanks so much for your help!
- 1 decade agoFavorite Answer
You might want to read Jim Cramer's Real Money (in bookstores). It's a bit advanced but there is some good advice in it.
I suggest following Warren Buffett since he is the world's greatest investor. Be careful though because his company buys stocks that the media says are Buffett purchases, and he also buys mostly preferred stock which is different than common stock (regular kind you see on charts and stuff). But he has been buying BNI Burlington Northern common stock lately and a lot of it, so I suggest that.
The Intelligent Investor is a book by Ben Grahmn and is Warren Buffett's favorite book on investing. It is a classic, although it may be a bit hard to read or over your head. You can get a more modern version with commentary too. The original was written in 1947 or so.
If you're interested in learning about when to buy in the short term, candlestick charts show the volume of buys and sells, and give patterns that can help predict short term market movements.
As for long term, you want stocks that are well known brands that are strong. It's also good to find stocks that have had consistent and growing dividends for decades such as JNJ (Johnson and Johnson) and PG (Procter and Gamble). Dividend growth stocks (stocks that increase their dividends consistently) are good because if you buy them for a certain price and they consistently increase the dividend, then you will get a higher and higher percentage of that initial price that you paid. For example, if you bought JNJ 20 years ago, you would be making 30% in dividends off of that money.
The stocks you want to invest in depends on how risk averse you are. If you want to have consistent dividends, then JNJ or PG are for you (although PG has been going down a bit lately, which makes me want to buy it in a while!)
If you want to be more risky, you can invest in solid companies that are "cyclical" or follow the business cycle. These are financials, autos etc. They are down a lot now in the recession, but may recover well when the economy recovers. But be very careful in financials and autos now because the governement may decide to nationalize some of them, which basically means the government buys them and the shareholders all go to zero. They may issue new stock, but all previous stock holders will forever be at zero. Bank of America and Citigroup may be nationalized although no one knows at this point. The safest financials appear to be Wells Fargo or JPMorgan. The government is deciding now what to do with GM, Ford, and Chrysler, so wait to see what happens with that. Out of those three, Ford seems to be doing the best. Having said this, I think there are better and safer investments out there than autos and banks.
Since you don't know much about stocks, you might want to diversify even though it's only $500. That way you won't lose it if you make the wrong decision. So buy one or two shares of a few stocks that sound good to you and see how it goes. But don't get scared if they fall - we are still in a recession. You must be patient. Long term buys are more successful than short term ones.
Keep in mind that buying and selling stocks have commission fees. If you buy through Scottrade, it is $7 a trade. If you want a full service broker (who basically tells you how to invest) it can be as much as 1% or more. I'd advise not going with that, it's too much money.
Look at Yahoo Finance or Google Finance to see statistics for a stock and the price chart history, as well as the current stock price.
Stocks with low PEGs are the best (if they are low that means that you are not paying too much for them and they also have good growth potential). A PEG under 1 is recommended, but there are some good quality stocks that are above 1 such as JNJ.
I'd advise investing in dividend stocks versus non-dividend paying stocks. Stocks without dividends are assumed to be such high growth stocks (such as Google) that they will reinvest the money to grow more instead of paying you a dividend. Historically though, dividend paying stocks end up with better returns for the investor since you get the dividend and any stock upside percentage.
Some sites that are good are TheStreet.com, the forbes .com, morningstar.com
There are so many concepts in stock investing and unfortunately I have yet to find a place that has it all in one place.
- 1 decade ago
If you are serious to invest, you can google for HSFX Asset Management and start making consistent profits!
- Anonymous1 decade ago
Put that money in a savings account until you understand stocks.