Starting to Invest

[Squilly]

I'm starting to invest into stocks. I put my first $500 into TD Ameritrade and doing my research. I know you guys aren't financial experts (at least most aren't) but looking for some advice, even minimal. I check MSN Money constantly, and everyone is saying Apple is a great buy right now. I'd be out of everything for a hit or miss company. Will their stock skyrocket or is it even worth buying one share?

[ucfgrad93]

I'd go for an index fund or ETF instead of buying just a single share of Apple. I personally invest in SPY, an ETF that tracks the S&P 500.

[stonyc]

No, there is no point to investing in a single share of Apple. You would need the stock price to rise ~$20-25 just to cover the possible fees and make a modest profit.

Since $500 is not enough to adequately diversify your portfolio to spread out the risk (unless you want to get in to penny or dollar stocks), you would be better off putting that money into a fund that tracks one of the major indexes. You'll get a measure of diversification that way.

As a beginning trader, you really don't want to try to "out-smart" the market... because you most likely won't.

[4JNA]

3rd the Index idea. watching sites like msn money, yahoo finance, etc are fine to keep up, but everything posted is past tense. by the time you read it, it's no longer actionable info. just my two cents.

for learning more, you might have a look HERE (fool.com) as they have lots of great articles on how/why/starting investing.

one of my investing heros is John Bogle, founder of Vanguard and the inventor more of less of index funds. he has written several books, find them and read them. small snippet;

In 1975, John Bogle presented an idea to the board of directors of the newly formed Vanguard Group -- create an extremely low-cost mutual fund that would not attempt to beat the returns of the stock market as measured by Standard & Poor's 500 index instead, it would attempt to mirror the index as closely as it could by buying each of the index's 500 stocks in amounts equal to the weightings within the index itself.

In his presentation to the Vanguard board, Bogle presented the historical data then available to him. In his account of The First Index Fund, Bogle writes:

"I projected the costs of managing an index fund to be 0.3% per year in operating expenses and 0.2% per year in transaction costs. Since fund annual costs at that time appeared to be about 2.0%, I concluded that an index fund should reasonably be expected to provide an annual return of +1.5% above a managed fund."

In the intervening years Bogle has proven to be even more correct about indexing than he had predicted he might be. Since then, the gap between the performance of the market and the performance of actively managed mutual funds taken as a whole has actually been significantly wider than the 1.5% theorized by Bogle in 1976. During the 1990s, the total shortfall between actively managed mutual funds and the market as measured by the S&P 500 has so far been a whopping 3.4% per year.

The differential between actively managed funds and passively managed index funds is very easily explicable. The difference does not come from the actively managed mutual funds being run by buffoons. Not at all. The stocks that mutual fund managers pick end up being more or less average performing stocks. Bogle analyzes the differential as being determined by four factors: costs, turnover, sector, and cash reserves.

i pick VOO over SPY, but it's all about the same at the end of the day. best of luck.

[4JNA]

the day you posted (1/21) was a holiday. the following day apple closed at $504 and change. the s&p closed at $1492 and change.

fast forward to today. apple closed at $450 and change and the s&p closed at $1494 and change after breaking the 1500 level for the first time since '07.

money effect;

appl - $500 (with a bit more for cost + trading fee) $512.95, now worth $450.50. net -$62.45 more or less.

voo - $68.27 close on 1/22. 500/68.27= 7 shares with a bit left over for a total of $486.84. now worth $478.87. net -$7.97

going forward, who knows. but the historical average still favors index funds. even Buffet Thinks So and i wouldn't want to bet against that guy.

happy investing, best of luck, and many (positive) returns.

[63dot]

With that money, diversify and not a single stock for your money. It would basically be fruitless to buy a share or two of Apple Inc.

There have been two things I have heard a lot:

diversify

invest for long term

and in last few years:

if you have a home it's for living in, not for investment

and BTW, http://forums.macrumors.com/showthread.php?t=1530827

[Squilly]

So far, I bought
Zagg
KKR
KR
SIRI

[heehee]

Originally Posted by Squilly

So far, I bought
Zagg
KKR
KR
SIRI

You spent 10% on commission?

[eric/]

No use, already tried suggesting a total market index fund with low fees/cost.

Response: the market was down the past 5 days

[ucfgrad93]

SPY is up $1.08 since I recommended it to you.

[spork183]

Originally Posted by Squilly

looking for some advice, even minimal. everyone is saying Apple is a great buy right now.

Actually, if you'd been selling apple short, you'd have made a killing the last couple of days...

[turtle777]

Buy dividend paying Blue Chip stocks.

Coke, Procter & Gamble, Exxon, Chevron, Johnson & Johnson, IBM, McDonalds etc...

Go to this website to find out about the dividend history of companies.
Chose those that have a long history, and that keep increasing their dividends.

http://www.dividendinvestor.com

This website is also good to see graphs of past dividend yields and payouts.

http://ycharts.com

-t

[JoshMKB24]

Its not about the price you buy it for, its the percentage you gain on each share. Especially when you are starting out small, its very important to remember that. Also, be prepared to lose all your money. You're essentially day trading, which can have rewards and is fun, but you can also lose everything........especially if you are going high risk/high reward.

[Squilly]

Originally Posted by heehee

You spent 10% on commission?

$10 on each purchase. Not commission.

----------

Originally Posted by spork183

Actually, if you'd been selling apple short, you'd have made a killing the last couple of days...

What? How? They went down.

[heehee]

Originally Posted by Squilly

$10 on each purchase. Not commission.

Its called commissions for stock trades. You need to gain an average of 20% just to break even if you trade like this and dont forget about taxes on gains.

[Squilly]

Originally Posted by heehee

Its called commissions for stock trades. You need to gain an average of 20% just to break even if you trade like this and dont forget about taxes on gains.

I wish it was 10%... I don't buy too many shares. $10 flat fee.

[heehee]

Originally Posted by Squilly

I wish it was 10%... I don't buy too many shares. $10 flat fee.

Thats my point. You are out $40 buying the stocks. Another $40 to sell them. Its not worth it for $460 worth of stocks.

[Squilly]

Originally Posted by heehee

Thats my point. You are out $40 buying the stocks. Another $40 to sell them. Its not worth it for $460 worth of stocks.

Bought $1000 worth.

[ucfgrad93]

Originally Posted by Squilly

What? How? They went down.

You need to educate yourself about investing.

http://www.investopedia.com/universi...#axzz2Ix97aM7i

[4JNA]

Originally Posted by heehee

You spent 10% on commission?

new customer, free trades for 30 days. yay new money...

Originally Posted by ucfgrad93

SPY is up $1.08 since I recommended it to you.

as is VOO. you can try to beat the index and you will loose. really. that was the point of my follow up post.

Originally Posted by spork183

Actually, if you'd been selling apple short, you'd have made a killing the last couple of days...

options are the way to go IF you know what you are doing AND have the capital. based on the OP, i've been writing cash covered puts on TD ameritrade for months. free money/income. also selling cash covered calls on several positions. people pay me money, i keep the money, invest in more of the same. awesome. not many providers will grant new money option provisions. it's a risk, you will loose LOTS of money if you don't know what you are doing, and i would not recommend this to ANYONE. i'f you don't have the money to loose, don't play. REALLY.

to start, go with index funds. build up your portfolio/amount. branch out in to income strategies. think 10-20 years into the future FTW. just my 2 cents, and the reason for the previous posts. think/act long term. 5 days/months won't matter much...

[ucfgrad93]

Originally Posted by 4JNA

new customer, free trades for 30 days. yay new money...



as is VOO. you can try to beat the index and you will loose. really. that was the point of my follow up post.



options are the way to go IF you know what you are doing AND have the capital. based on the OP, i've been writing cash covered puts on TD ameritrade for months. free money/income. also selling cash covered calls on several positions. people pay me money, i keep the money, invest in more of the same. awesome. not many providers will grant new money option provisions. it's a risk, you will loose LOTS of money if you don't know what you are doing, and i would not recommend this to ANYONE. i'f you don't have the money to loose, don't play. REALLY.

to start, go with index funds. build up your portfolio/amount. branch out in to income strategies. think 10-20 years into the future FTW. just my 2 cents, and the reason for the previous posts. think/act long term. 5 days/months won't matter much...

I love option trading. For a beginner like the OP, your advice about index funds is spot on.

[4JNA]

Originally Posted by ucfgrad93

...For ANYONE like the OP, your advice about index funds is spot on.

fixed that for ya!

everyone can be a Buffet if they invest every month in an Index Fund. 'Dollar Cost Averaging' is the phrase to remember. don't look at the cost, look at the overall benefit. (VANGUARD FTW).

REALLY... every month... every paycheck... put a little bit to work... retire comfortable... awesome!

[4JNA]

ok. thing is this, my parents are loony and didn't teach me a single thing about money, investments, life, anything... drat.

my dad's parents' (paternal grandparents) were awesome, they got out of farming and went into construction/rel-estate and rentals. they were not rich, but well to do based on today standards. my mom's parents' (maternal gradparents) were amazing, but working poor. taught me electician/plumbing/auto skills that i use to this day... you can make money by not spending money. i fix my own stuff and don't pay anyone to help. bonus.

my parents however were stupid. they invested nothing. they wasted all that had been left to them, and worse, lost all that could have been left to my kids. very dumb and frustrating. didn't want anything for me, just would have liked the kids to have a step up, college paid for, or somthing other than the dip-sheet parents wasting all that the previous two generations had gathered. just my two (now one) cents...

start early. invest every month. pick something you believe in, i'd recommend an index fund based on history and lot of REALLY smart people. get safe, get secure, don't wait for help from anyone. best of luck to all.

[stonyc]

Originally Posted by Squilly

So far, I bought
Zagg
KKR
KR
SIRI

OMG... I don't even... why...

$500 or $1000 is simply not enough to buy into 4 stocks and get a reasonable amount of diversification.

The fact that you had to ask what selling short was tells me, and everyone in this thread, that you are not prepared nor educated enough to even remotely come close to "beating the stock market". Even people with even better preparation and education than most of us in this thread fail more than they win...

You got good advice from multiple people, and you ignored every single point. I don't even... good luck, dude.

[Squilly]

Originally Posted by stonyc

OMG... I don't even... why...

$500 or $1000 is simply not enough to buy into 4 stocks and get a reasonable amount of diversification.

The fact that you had to ask what selling short was tells me, and everyone in this thread, that you are not prepared nor educated enough to even remotely come close to "beating the stock market". Even people with even better preparation and education than most of us in this thread fail more than they win...

You got good advice from multiple people, and you ignored every single point. I don't even... good luck, dude.

What? I know what selling short is...