Investing for Dummies!!!!!

Check out ShareBuilder. They have some plans for low fees where you can invest a set amount monthly.

Ric Edelman also has some good advice.

 

I would stay away from penny stocks. That isn't investing, it's speculation. Nothing wrong with that if you are playing with money you can afford to lose, but you are up against people who trade them for a living. The odds aren't in your favor.

 

I saw this post the other day, and I'm interested too, cause the last investment person I spoke to years ago was tryin to push Enron on me!

Here is a good place to start (I don't know how to clean up the link to make it look neater):

http://finance.yahoo.com/education/begin_investing

Good lucks ta ya, and when you become rich - come back and hook us up!

 

Good to see you around again Armondo

 

Thanks Gib! - and a HOWDY DO to you too

Been in Italy (where I'm originally from), for the last year, and I'm home now!..OH YEAH.

 

When you're a dummy, it's usually good NOT to invest.
Anyway, you're probably not one so I'd drop the US market that's a bit overinflated in just about everything right now and go for other countries.
Try buying real estate in a country like Ukraine or Bulgaria.
Right now, prices are really low but those countries will get better for sure as they're joining the EU and all.
Just my 0.02 USD...

Jim

 

Haha, so true is the first sentence of your post, laughing I am

I know I wouldn't turn over a dime unless I was sure where it was going, what it was gonna do, and how much moola I was gonna get back in return....and that's why it is smart to learn everything you can about investing before you drop a penny.

Know what's funny - you're the 4th person that's said recently that the US market is out, and to start investing overseas. I dunno much about the market right now, but I have seen that there's good bargains to be had with real estate, and somebody elsewhere said it's good to get into medicine and tech overseas.

 

Friend sent this link, and it has alotta info that Yahoo didn't.

http://www.smartmoney.com/university/Investing101/ he said don't be scared of the word 'university'...it's some really good info.

Happy reeding

 

Do you want to be an active investor or a passive investor?

Active: Get a subscription to Investor's Business Daily with the free book, "How to Make Money In Stocks" by Bill O'Neill.

Passive: Research mutual funds. Find an advisor at a discount brokerage who will help you fill out a Risk Assessment Profile, which will help you determine what kind of funds you should hold in a portfolio.

 

Have you thought about DRIP's? you can do it through sharebuilder, you can also go directly through the companies. do an internet search on drips. its a dividend reinvesment plan, you buy a share of stock from a company you like, then all dividends are reinvested buying more stock, and yes sometimes you get part of a share others more than a share depending on price. Motley fool has some free advice too you can look into.

suzie

 

I don't know if this post will find you, but I haven't checked in this forum for a while, but...on to answer your question!

Investing is really part of "Financial Management", and the best advice I can give you is to make sure you cover the basics first. So, here goes....

1) Make sure you are investing fully in any employer sponsored 401K/retirement plan. Make sure you are at least maxing out on matching contributions. (Yes, this is boring, but it is the soundest advice). Review the investment options in your 401K plan, and use the planning tools most companies have. Choose a "middle of the road" investment, look for 4-5 "stars" from a Morningstar rating. We'll get back to your 401K investments later.

2) Emergency Savings: as quickly as you can, save an amount that is equal to 6 months of living expenses. The rule of thumb is 3-6 months, but I highly recommend 6 months expenses as a minimum. (Do not forego any 401K contributions for this though). Keep this fund in a "liquid" account, savings, money market, SHORT term CDs (no longer than 90 days). An emergency fund is critical for all the "life" issues, loss of job, unexpected medical bills, house/car repairs, etc.

3) Insurance Coverage: (again, boring but critical!) make sure you have adequate medical, dental, and disability insurance. Review any homeowner/renter's policies, as well as your auto insurance.

4) Educate yourself: Subscribe to Money Magazine and Kiplinger's now. Later on you'll want to read other publications, but start with the basics. These magazines also have on line tools and resources which are wonderful.

5) Make a Plan: What do you "want to make money" for? Think about your goals, short term, long term, etc. Do your best to "quantify: these goals, i.e. NOT "I want to buy a house", but "I WILL purchase a house with a market price of $250K-$400K, and I WILL have $25K as a down payment by "XY DATE". Work this out in general details, you have to know "what" you're investing for. At this point, I don't think you want to get with a financial planner yet, but...maybe. Let's keep going.

6) Start saving "investment funds": Once you've done all the above, and your finances can support it, start "saving (in a separate account) the amount you will feel comfortable investing with to start. (I'll say $5K-$10K). Do NOT mix this with your emergency fund, or any other "savings".

7) Ready to "Invest", assess your acceptable level of risk: Okay, let's say you've done ALL the above, now let's start. If you have your plan done, you also need to assess your tolerance for risk. Investing is a risk, and there are a wide array of risks out there.

So, let's go back to your 401K...I'll assume you've been monitoring it, if not, then realize you need investments that are on "autopilot". If you have been monitoring, then you now have a feel for risk and performance. How did your "picks" do, and how did you "feel" when they went down?

8) "Invest"! I recommend you start out with some of the investments in your 401K as a foundation. I highly recommend starting off investing in mutual funds, and get a feel for the market sectors and industries first. Get a bit more aggressive in your direct mutual fund purchases, you can always bail out if they start to tank. You may want to try an assormant of "index funds", these have only "market risk", and are a good way to get a feel for market movements.

9) AutoInvest: If you've settled on "picks" of mutual funds that are hitting returns you're satisfied with, set up an automatic purchase program. Steady additions are one of the greatest secrets to building wealth.

10) DON'T GET GREEDY! Perhaps the best advice I can give, we had a saying in the market; "Bulls make money, bears makemoney, but pigs get slaughtered". Steady accumulation is the best practice long term. Believe me, you will hear plenty of "cocktail party" stories about huge killings, but they never tell about the BIGGER losses they took!

11) Stocks: after a while of moitoring your mutual funds, dig in to see the individual stocks that comprise them, and evaluate performance. The problem with direct stock purchases is the risk, it takes a sizable account to be able to spread the risk across a portfolio. But, after a while, you may find stocks you "believe in", play "make believe" for a while, set up a pretend account with X shares of ABC, Y shares of DEF, etc. See how you do. You can do this by setting up a watch list on Money Magazine website.

I know this may not be what you had in mind for advice, and believe me this is only the tip of the iceberg! Hope this helps, any other questions, please prompt me in the credit talk forum to jump over here.

 

I agree completely, it is your money, be the final judge of what you do with it. As for my advice, I was licensed in the securities industry, and owned my own securities business.

 

Good advice.

I used to be licensed in the securities industry, too, but didn't own my own securities business. I owned a business in accounting.

 

Hmmm very interesting reading!

I have a few questions though? Y'all know me, I am always full of questions...

I know I don't save near what I should & from reading the above I need to work on steps 1-5.

Ok so, I am the breadwinner for a family of 5, hubby is disabled although he does some carpentry work sporadically depending on how he is getting around. Any funds he makes from that usually goes towards tools or supplies I don't count on him to contribute to the monthly expenses although if he comes into a good paying countertop job he will give me part of it which I usually try to stick into savings. But he makes my life easier, watches the kids, gets them to & from school, gets the groceries, keeps the cars & house in good shape etc etc We are in the process of trying to get disability for him as his physical condition is declining and the medical expenses are rising.

I am employed technically as "part time" but I work "full time" hours, I also work nights. I do this because the pay is better than a fulltime rate. Also night shift differentials are good. In order to go "fulltime" I would have to take a significant pay cut & work a few more hours per week to do it. If I went fulltime my pay every 2 weeks would drop about 500.00. In order to get work insurance (which is cruddy) & a 401 K with miminal employer contricution would prob drop me another 300-400 dollars. Unfortunatly I can't do that & pay the bills too.

So this is what I have:

50K a year income
an emergency fund trying to grow at Penfed
A savings fund "set aside" in my checking acct for misc stuff that comes up.
3 funds with Edward D Jones for my kids that I try to contribute to every month.
An IRA with NASA just starting. I plan to contribute every month to that.
I carry a medical & dental policy on the kids, which is pricey in itself.
I am part Choctaw and have a CIDB card so I can get medical & dental there if I need to, kids are eligible too. Downside is the facilities are 3-4 hours away.
I have a strict budget in which everything from kids clothes to vacation is budgeted. I try to keep household expenses down.

Step 1 401 K: Any advice on this since I can't get the 401 K at work? I've asked my employer to consider offering part timers some kind of benefits.
I like my job (most of the time) & it's only 30 minutes from home. To work anywhere else would be longer commute & stress on old car.

Step 2 Emergency funds: I have established and am working on.

Step 3 Insurance: I have medical & dental on kids, we also have access to medical & dental through our Indian heritage. I don't have job based insurance.

Step 4 Education: Working on that lol!

Step 5 Goals : Just mainly kid/retirement issues for me. We just bought a house and I plan to save for a car.

I wish I had alot of extra funds to save with and maybye invest with but I don't.

What to do with someone like me? Am I hopeless? Sorry for the length ><

Tegleg

 

If your employer won't allow you to contribute to the 401(K) plan, your next best bet is an IRA. Your husband can get a spousal IRA as well, even if he doesn't work.

Get a Roth IRA as opposed to the regular IRA, if you can afford to do so. That means you contribute after-tax dollars, but there are no taxes when you take the money out at retirement, even on the growth. You don't get the deduction for your contributions now, though. And, if you withdraw before you are 59-1/2, there are still penalties.

Keep your emergency fund, aim for 6-12 months worth of expenses. Some advisors say 3-6 months, but since your husband is disabled, you can't rely on him filling the gap.

But also try to contribute something to your IRA each month. You could do o it like I did my 401(K). Each year, when I got a raise, I put about half of it into my 401(K) plan. In other words, if I got a 4% raise, I put 2% into the 401(K). I still got a little raise, and I never missed the contributions.

If you can, have the IRA contributions taken from your pay or from your bank account every month.

 

Thank you Hedwig! I really thought maybye I was a lost cause.

So it sounds as if I should prob put as much as I can into my roth IRA I will be opening soon after I get the emergency fund built up. Maybye if my hubby gets disabilty we can open him one and contribute out of his monthly checks.

Going to be interesting to try to get the emergency savings built up but it sounds as if that should be my higher priority, after that is done I can siphon those funds into my IRA.

I am very frugal already but am working on ways to be more so, hopefully I can take any overtime etc and put it directly into the emergency fund.

I had a reason to put the emergency fund with Penfed, it won't be easy to access it =)))

It's so hard to do when your money just doesn't stretch that far. But I have found, where there is a will to do something a way can be found.

Just wanted to check if I was on the right path.

Thanks for the advice, it is appreciated.

Thank you,
Tegleg

 

It sounds like you're on the right track. But when you feel that you are doing pretty well with the emergency fund, try to put some each month into the IRA as well. Let the compound interest work for you.

There are a lot of ways to save, but it sounds like you're doing a lot of them already. If you haven't canceled your newspaper and magazines, think about doing that. You can go to the library and read.

Cable can also often be canceled or cut back to a lesser service. Take lunches instead of buying. Eat at home instead of eating out.

These are just a few of my favorites. I'm sure you can come up with some as well.

 

Teg,

Make sure you're taking all the income tax benefits you can also. Saved taxes is "found money". Per your information you should be paying very little taxes, with your income, mortgage deductions and medical bills. Check out some tax preparation software, or visit the IRS website for some free/lowcost on line services. You may be overlooking some savings! FYI, if you discover you "shorted yourself within the last three years, you can file amended returns, and you will get the extra refund with interest.

Hedwig listed some very good advice, I have to second that the emergency fund should be the top priority. Along that "emergency route", you should add to your "To Do" list applying for a Home Equity Line of Credit" when you feel your credit is strong enough, and you have sufficient equity in the new home. This HELOC should be looked at as "emergency credit" only, and adjunct to an emergency savings fund.

It sounds like you have a lot of the basics in place, and in process. Just stick to the plan. Saving may be easier if you use an automatic withdrawal/deposit feature. But save something, no matter how small, it will build.

 

Biz, thank you as always. I plan to investigate the deduction route when I file this year, I think I may invest into some tax prep software or even consult a tax professional to see which route I should take.

I hadn't done it before because we were renting but since I have a mortgage now it may be an option. Plus we have several med/dental expenses we have had to pay over the year. Hubby's back, dental & daughter's newly diagnosed Psoriasis we have to take her to a specialist for.

Ok the HELOC, we got the mortgage 5/07, 85K and it is 6 monthes old now.

1. When will it be feasible for us to apply for a HELOC? After a certain number of payments?
2. Can we apply for a HELOC and not use it? How does that work? Is it like a credit line that is availible and you just don't use it?

My credit is climbing but in all honestly I think I will need about a year more to have my credit where I want it & let my accts age.

I see the purpose for it. It's to use only in a emergency.
The emergency fund is gonna be fun, it's the start if a new year & with the savings we put down on the house and using the Christmas fund my checking acct is fairly dismal atm. All that is left in savings is 100 in my penfed emergency acct, the kids funds & about 400 set aside in checking for kiddo clothes ( the hooligans insist on growing out of thier clothes, I budget all year round for summer/winter clothes & shoes for them). But all credit cards are 0 balance except the Carecredit and we are current in everything.

We aren't in any trouble but it really makes me nervous not having the emergency acct built up further. Guess it is just going to take time. Our income tax refund, after I pay off Carecredit is going in there. Our car is old and can spring fun on us at anytime, I am praying we can hold it together for one more year.

I need to clone myself lol

Tegleg