Ultimate Newby!

**dumdum** Mon May 15, 2006 5:54 am

Ultimate Newby!
I would like to be able to manage stocks online but don't know how much I would need to get started or which company would be the best to start with. I know very little about the stock market, but I would like my money to work for me instead of me for it. I am 36 yrs. old and I hope that I haven't waited too late to see the benefit. Any information or advice from this site would be greatly appreciated. My screen name says it all, but I hope to change that in the future.

**Calcium21** Mon May 15, 2006 8:06 am

dumdum,

My input. I joined a couple of months ago. I am 49, and still learning.

BIRTP is my core portfolio. I have purchased only the EXTREMELY FAVORABLE recommendations, over time, on fairly equal $ basis. I hold until advised to Sell. I Sell ASAP when advised.

This works well for me. I plan to reinvest increases, and add to portfolio over time, as I am able. I hope to eventually have significant cash-flow/income from BIRTP.

**RT Wolf** Mon May 15, 2006 11:36 am

There are indeed a number of fabulous stock picking services out there (this one and Fool.com come to mind).

You need to figure out what kind of investor you are and what sort of risk you're willing to handle.

For most people starting in investing, I recommend a core portfolio of index funds (or excellent mutual funds) with between 5-10% of their money in individual stocks. You may balance your portfolio as you see fit, but that works well for most people starting out. This is especially helpful if you don't have a few thousand dollars to take positions in individual stocks. Some index funds and mutual funds can let you join with as little as 500 dollars minimum investment. You can get more information about this stuff by asking aroud.

We here practice a form of investing called "value investing" which has been demonstrated to be very successful. It requires patience, independance and the will to go against the crowd. You can find more information about this, again, by searching.

You said you are 36, it is not too late for you to see the benefit, depending on your financial goals. Fool.com has good advice on planning your retirement if you don't have a solid plan right now. If you have kids, I would highly recommend setting aside a small amoutn of money for them and investing it. Depending on how old they are, they may see the most benefits in the form of having their education paid for or a small amount of money to start their life with, maybe buy a house or take a trip (not that you can't do any of those things, either :p).

One of the keys to making money on the stock market is to be consistant. You don't need millions of dollars and you don't need a phd in economics. What you do need is patience and perseverance. Keep putting money in year-in, year-out and you'll be sitting on a sizable nestegg. Arrange to have at least 10% (or more) of your paycheque to be automatically transferred into a savings account or investing account. Then transfer that money into your investment vehicle of choice (like I said, I recommend index funds and the occasional mutual fund).

You can get more information from these books:
One Up on Wallstreet by Peter Lynch
The Intelligent Investor by Benjamin Graham
The Automatic Millionaire by Don't remember (this is a personal finance book)

For any more questions, don't hesitate to ask. I've tried to give you a quick overview of the main points, but I can clarify or expand on anything.

**RT Wolf** Mon May 15, 2006 11:44 am

Oh, a few more things:

1. Don't buy on a "hot tip" without doing your research first.
2. Most mutual funds don't even match the market, so you need to be very selective in picking mutual funds.
3. Very few people can garuntee you over 11% a year over the long-term (so the 20%, 50%ters are out). So, if someone says they can, do your research carefully. Most of the time, it's a scam.
4. When you buy a company's stock, you become part-owner of the company. Think like an owner and you'll be fine.
5. Always buy with a "margin of safety". It is a central concept in value investing, and with good reason. Essentially, you are looking for something that's undervalued (a dollar for fifty cents). But you want it to be significantly undervalued in case something is truly wrong (that you did not know about or foresee) or your valutation is off. So, you don't wanna buy dollars for 95 cents because that does not give you enough of a margin of safety. Usually a 25-30% margin of safety is used by value investors.
Another way to explain this is if you're going to drive your 3 ton car across a bridge rated for 3.2 tons. That's not a bet you want to take, you'd be much happier if it was actually rated for 4 or 5 tons.

**CrossProfit** Fri May 19, 2006 4:46 am

Ultimate newby!
Spend 20 minutes reading through this site. You do not have to register to read and you get everything you need to know for getting started - including an updated listing of online brokers.

http://www.crossprofit.com

CrossProfit