Stocks, Buying Selling (Newbie asking for help) (in Off-topic)
April 28 2005 3:21 PM EDT
Ok, just wanted to buy some stocks in a company, and wanted to know the easiest/cheapest way to go about doing that? I'm not looking to invest a lot here, just a couple hundred, so cheapness is big for me :) Only thing is I've never bought stocks, so I'm kinda a fish out of water here, so any help is apreciated.
Go buy some penny shares, I don't think you're ready for the blue-chip companies yet. You should have at least a couple of thousand that you really don't need/want before you start on those big boys... Wish I had :)
I don't want to discourage you, but umm.. the CB community might not be the best place to ask this kind of question. ;)
I was in a investment club in high school. It's not as complex as it first seems. Might wanna go check out some articles at http://fool.com/ and stuff like that. And if you have tons of money go find a respected stock broker to do business with. If you are confident in your skills and wanna save money, try a online stock broker.
April 28 2005 3:30 PM EDT
Will, I did just want to throw it into a company that I would think is considered a "penny stock". As for this not being the right place to ask, you might be right, but I get the feeling that a decent amount of "wealthy" individuals play, and the community here is great...so I figured one or two of those individuals would know some of the more easy/cheap ways to buy a couple stocks :)
Yeah actually I hesititated to say "this might not be the right place" because of the known wealthy people who DO play this game ;)
You need to open an account with a brokerage firm. Both Ameritrade and E*Trade are good and have pretty cheap trades (about $10 per trade). Compare to $20~$50 per trade at some of the larger full-service brokers.
If you want to invest and trade in stocks you really should educate yourself before using real money. I really like The Motley Fool as a place to learn about stocks and trading.
April 28 2005 3:44 PM EDT
If you've got *any* debt (except for maybe a house note), I suggest you use the money to pay that off first. Sound crazy? If you have credit card debt (for example) but decide to invest x amount of money in stocks instead of paying off the debt, that's basically the same thing as using your credit card to buy the stocks. Ewwww. As if the stocks weren't a big enough risk already (particularly with an unproven company like you're considering), you're now paying 18% (ok, realistically, 12-25% based on your CC) or so for that investment. Which will pretty much eat up any profit, even if your stock performs better than most do. The stock market itself gives an average rate of return around 12% a year (long term) from what I understand. So even if you were doing better at 15% return (which would be pretty amazing) you're still losing 3% on that 18% credit card, etc...You get the picture :)
If you're still interested in finding out more, I suggest you pick up a book (or three) by the Motley Fool guys. Go to Amazon and type in Motley Fool and you'll find several that are great, such as The Motley Fool You Have More Than You Think : The Foolish Guide To Personal Finance, The Motley Fool Investment Guide : How The Fool Beats Wall Streets Wise Men And How You Can Too and The Motley Fools Rule Breakers Rule Makers : The Foolish Guide To Picking Stocks. Or better yet, check out their website at www.fool.com -- they're a couple of guys who used to work on Wall Street, but decided to educate the vast public. Another great link (who will give you more advice along the lines of the first paragraph) is www.daveramsey.com -- He's got great money advice and a radio show you can listen to online or call in with questions, etc.
Hope this helps....
April 28 2005 3:46 PM EDT
I agree with all of the cautions above but I should mention sharebuilder.com. They are really geared towards smaller investors. You can invest any amount of money (ie. buy fractional shares) in most publicly traded stocks and if you schedule your purchases ahead of time, they only cost 4 or 5 dollars a share.
As for which stocks to buy, I wouldn't ask cb....
April 28 2005 3:54 PM EDT
I have used E-TRADE (it works well), and I will second the use of index funds. If you think you can consistently beat the market by choosing specific stocks, you are likely fooling yourself. Go buy a lottery ticket.
Also, see if you can find an investment club in your area. It is nice to talk with other people, and I learned a ton in the years I spent in a club (mostly from colonel).
Indexing and patience will get you far. Lack of either could mean trouble (though not too bad if you are only investing a small amount of money).
April 28 2005 3:55 PM EDT
woops, I meant 4 or 5 dollars per purchase order, not per share.
April 28 2005 3:56 PM EDT
On a humorous note, you could read Kurt Vonnegut's The Sirens of Titan, where a character amasses a "huge fortune through his mechanical use of the Bible as a source of information for investing in the stock market."
April 28 2005 4:01 PM EDT
The way things have been lately for me and my friends, I'd put my money in the stock market before a bank account. We get burned by banks all the time. Albeit usually because we hang out with stupid people. People who like to commit fraud.
On the subject of stock market vs. banks, it would be remiss to not point out Government Savings Bonds. As long as you can afford to keep the money in for over a year, they return a better rate of interest than bank accounts, and (even though stocks have the *potential* of a higher rate of return) are safer than the stock market. The more popular ones even have a variable rate of interest on top of a set rate of interest that adjusts for inflation in the economy. The main drawbacks are that the withdrawal penalty will be more than the interest earned if you cash the bond in within a year, and if you cash it before the maturity date then the last X months worth of interest are removed. Also, I've been told that bonds cannot be counted as assets when attempting to get a loan.
April 28 2005 4:15 PM EDT
Thanks everyone will go do some reading now...but looks like I may end up using sharebuilder :)
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