Ditto. To add to the conversation... invest in what you know. Since the original query was in learning to invest, here is a good way to start. Doesn't matter if your beginning bankroll is a few thousand dollars or hundreds of thousands of dollars. Pick 2 or 3 mutual funds if you only have a tiny amount to start with up to 4 or 5 if you have a bit more to spread it out. Diversification is one of the things you will learn as you become a better investor. By definition, a mutual fund is already providing you diversification as they are a basket of many different stocks so you don't need to worry about having a lot of different mutual funds in the beginning. If you have a long time horizon, a growth fund is a good choice. Keep your first buys to larger market cap companies in countries that are stable. As you learn more and branch out, there are many options with smaller cap funds, different regions being represented, commodities, specific industries etc. The choices are numerous. So to summarize for you: 1) Mutual funds are great first investment choices. Stick to what you know or the relatively safe blue-chip funds in stable countries. 2) Branch out as you learn more. Learn how to interpret macro-economic trends and tailor your mutual funds to what you interpret for future trends. 3) There comes a time when individual stocks jump out as you continue doing research and increasing your knowledge-base. Follow the same strategy as you enter the world of individual stocks. Begin with blue-chip larger cap companies you can understand. Branch out to others as your expertise increases. Good luck to you. The big thing is don't be afraid to get started. Don't try to time the market when your horizon is decades away. Keep putting away money, diversify as the balance grows and never invest beyond your experience level. Avoid the temptation to chase penny stocks due to manipulation. By the time you hear about them, the money has already been made. You will be giving the promoters the opportunity to sell and will be left "holding the bag" with an illiquid stock that is dropping and nobody wants once the campaign is over. Save the get rich quick stocks for your speculative, gambling money and never use your core funds for any stock not on a regulated exchange like NYSE, AMEX or NASDAQ.
Look for Index funds with less than .10% annual commissions first. Then look to see what the yearly, 3 year, and 5 year performance of the fund was. Next check to see what sector(s) your fund is invested in, and look for one that is diversified as possible. If you are feeling a little gutsy, try to find an index fund that is based in foreign markets or has a decent percentage (more than 15%) of its holding in foreign markets. It is typically these markets that will offer the highest rate of return for your risk. Lastly, before you invest check to make sure that you can meet the minimum initial purchase requirement that particular fund may have.
I totally agree with you I'm new to the investment world as well. I have only been here a short while, and have learned much. Still I have a very long way to go, and I to need help with terminology.
Mutual funds with no load are typically a better option than a front load "A" share class IMO. And stay away from the "B" share that charges a big fee on the back end if you sell. The best way to go for those with substantial assets is a managed money platform that charges a flat annual fee (typically no more than 1%) and holds "institutional" or "investor" shares. These allow you to get out whenever you want or need to without a big lump fee or penalty. If one of my favorite fund managers quits or dies, I may want to partially or fully exit the fund, and I don't want a penalty or to know I left a big upfront fee on the table.
Mutual funds? Stocks? Bonds? Interest bearing accounts? Gold/Silver? (Gold preferably). These are some of the investments that I would recommend for not only a "beginner" but for anyone. I believe that no one is truly a beginner in investing. An no one is really an expert in investing-nope, not even Buffet. Lol, I'm kidding, he is. The good thing about investments is that is it not far and wide, It is possible to know about practically all the ways to invest wisely. There isn't much new to know about investing as the main object of investing is to get a return or profit on your principal sum, that idea I believe, has been used and abused widely and not much is left to make out of it.
I started investing in stocks. At first I had only stocks paying dividends and then I gathered more of these stocks and when some of them was high I sold them.
I have been asking the same question and it seems to me that if your do not have too much money to invest then maybe we should just stay away from stock trading for a while until we Gt some starting capital I guess.
That is pretty much it, until we have capital we cannot invest, what can we do without money in the stock market? It's like wanting to play ball... with no ball.
If you have very little money at first, you'll need to keep fees, transaction costs, and taxes to a minimum. Buy and hold - whether it be an index fund or a single share of a few stocks. Forget about trading if your capital is limited.
