[Akathisia]

I know there are some financially savvy Head-Fi'ers out there, so I wanted to get pointed in the right direction for getting started with online stock trading.

I'm interested in starting really small (really, really small), just to get a taste and kind of get my footing. I'm not made of money, but depending on the experience I might really get into investing and trading.

With how crazy the media makes the market out to be, is this something that is even viable right now?

So please, let me know if you web trade guru's want to help!

 

[breakfastchef]

Read everything you can get your hands on voraciously. Go online and Google your brains out about investing, risk, modern portfolio theory, investing styles, etc. The more you know the better your decisions may be. And, yes, the media is about hype and eraning advertising dollars.

Ways to make first steps vary greatly. If you have a retirement plan through work, talk with the folks that actually invest you money. Tap into the brokerage arm of you bank. There are a lot of folks that will talk to you free and try to earn your money. These folks will help you choose your risk tolerance, your understanding of investing and risk and may help you identify an investing style. Look at online brokers that also have physical offices in your home town. Beat on their doors with questions.

Two of my favoirite sources of information are Investors Business Daily (IBD) and Forbes. Every other month in Forbes, Ken Fisher - billionare money manager - writes a great article with a few stock picks. Also, get a copy of his book, The Only Three Questions That Count, as it is outstanding.

If you have an investing time horizon of greater than 20 years, you are making a good decision to learn to invest. Remember, investing is not only about owning equities. Investing can be in commodities, bonds, treasuries, real estate, etc. You need to look at your entire portfolio of worth (home, car, insurance, paychecks...) and figure out where you want to go and how to get there. That is where the experts can help.

 

[vagarach]

There is another thread about this that got a whole lot of replies from a variety of people, just look back a month or two it should be around there.

The market has been rather jumpy/reactionary for a while now, but in Canada at least it's getting more and more business as usual. Look at RIM, just two weeks ago they had that short outage and got hammered by the market, now the stock is doing superbly at $108!

Reading Forbes, reportonbusiness etc. is an easy way to start, just read the articles and you will be both getting a feel for things all while being exposed to acronyms, the typical phraseology, etc.

 

[Akathisia]

Very helpful breakfastchef. I am only 24, so I have a lot of time ahead of me, and I want to get the ball rolling (actively).

Excellent. I will check out that thread, but if any more people stop by with advice, please do tell.

There may be people who didn't catch that thread that have fresh perspectives.

 

[1911]

my advice for you(small investor) is to read as others have mentioned and set up a simulated portfolio of stocks to learn from. your actual money put into a mutual fund. there is no point of buying small amounts of stock as the transaction fees will eat you alive. park it into a low cost mutual fund until you reach a decent pile of money.

 

[vcoheda]

don't buy property - at least, not until next year.

 

[saint.panda]

Quote:

Originally Posted by 1911 /img/forum/go_quote.gif my advice for you(small investor) is to read as others have mentioned and set up a simulated portfolio of stocks to learn from. your actual money put into a mutual fund. there is no point of buying small amounts of stock as the transaction fees will eat you alive. park it into a low cost mutual fund until you reach a decent pile of money.

Listen to him.

 

[RYCeT]

I started on scottrade ($7/transaction) and $1500.00 of my money to get a taste on stock market. Best money I ever spend. IMHO, the best teacher is experience, just jump straight through, read a lot, follow the market and absorb the experience. Don't commit too much money in the beginning while you're learning.

 

[Lazarus Short]

Quote:

Originally Posted by 1911 /img/forum/go_quote.gif ...there is no point of buying small amounts of stock as the transaction fees will eat you alive.

The [yes, it's here, now] recession will eat you alive.

 

[Akathisia]

Quote:

Originally Posted by Lazarus Short /img/forum/go_quote.gif The [yes, it's here, now] recession will eat you alive.

Interesting, your the first person that stopped by and credited the recession (plus your in the area, so you get bonus points). Are you saying I should steer clear for a while?

 

[1911]

Quote:

Originally Posted by Lazarus Short /img/forum/go_quote.gif The [yes, it's here, now] recession will eat you alive.

ahhh...no you got it backwards....fear of the recession or fear in general is a good time to buy.....buy low sell high..it is hard to do but you will be rewarded...i have increased all my positions and whether it takes 1 year or 5 i can wait and then reap the rewards.

 

[Lazarus Short]

Quote:

Originally Posted by Akathisia /img/forum/go_quote.gif Interesting, your the first person that stopped by and credited the recession (plus your in the area, so you get bonus points). Are you saying I should steer clear for a while?

If you're interested in the short term, consider investing in such a way that you will do well if stocks crash. Things do not look good.

If you're interested in the long term, wait for stock prices to bottom, and buy, buy, buy. That's how the Big Boys do it, just make sure you have money to live on until stocks recover. Stock picking will need to be very careful, so you don't buy stock in corporations which will not survive to prosper again.

For me, I would not touch such an investment. Good luck in this - you will likely need it.

Laz

 

[ken36]

Market should bottom out soon.

 

[bada bing]

Timing the market, especially shorter term swings, is a fool's errand. The ultimate fool's errand is "day trading". The "market" is really the distilled consensus of millions of people who vote with their wallets by buying and selling. Most of these people have much better information, assets and experience. Trying to out "time" them will eventually eat your financial lunch as surely as repeatedly betting red at a roulette wheel.

The positive thing about being a small investor in the market is, in spite of the shorter term random "noise" that confounds "traders", the longer term direction has consistently been up - averages somewhere around 10% per year for decades now. Get in during times of uncertainty (like now) and ride the market for the long haul. If your time frame is less than 3-5 years, you would be statistically smarter to invest in interest bearing securities . For time frames less than 3-5 years there is a fairly significant chance your stocks will under perform bonds and could even loose value. If you are investing less than $100K, the only rational choice is mutual funds. Tax deferred investing, like retirement accounts, has a huge advantage over stock market investing in a taxable account.

The best advice I could give to someone starting out is:
1. Fully fund your retirement account(s) first. Leave the money in for it's intended purpose (retirement).
2. Concentrate on mutual funds - even exclusively
3. Never, ever buy a load fund or pay a commission for a mutual fund
4. Index funds should be the backbone of your portfolio
5. Never try to "time" the market. If you are trying to catch a swing you perceive as being of a shorter duration than 3-6 months, don't bother.

 

[jjhatfield]

I'm a bit of a Bogle-head when it comes to investing strategy.

Vanguard - Mutual funds, IRAs, ETFs, 401(k) plans, and more

The secret to good investing is that there is no secret. Just dollar-cost-average into a mutual fund based upon your desired risk level, and do so into funds with the lowest fees possible. There are a lot of good mutual fund companies (Fidelity and TIAA-Cref come to mind), but Vanguard has the lowest fees (usually none).

Choosing a risk level is something you can control, the overall stock market is something you cannot. Focus on what you can control. If you are young, put more money into stocks with perhaps a small amount in bonds.

I also highly recommend the Vanguard Target Retirement fund, which works especially well in a Roth IRA. Its a "set it and forget it" fund which gradually reduces the amount of risk you are exposed to as you get closer to your retirement age.

It is also a great idea to always keep six months living expenses in cash, preferably in a high yield online savings or money market, like Emigrant, GMAC, or any of the other dozens of options. I call this my "go to hell" fund, if I ever find myself in a position where I'm jobless for a while.