Discussion in 'Stock Market Education' started by SpaceGuy, May 23, 2014.
I am new to investing, and what would be the best advice you could give in one sentence?
Well, I don't think I could distill it down to one sentence. However, some general tips:
Study up. Don't limit yourself to one source. Read good fundamental books then branch out into sites and periodicals.
When considering an investment (stock, bond, mutual fund, ETF, etc.) do your homework. There are a ton of great resources on the web.
Know what your goal(s) is/are and develop a strategy to meet them.
Develop investing discipline and stick to it. Emotion, both fear and greed, can cloud your judgement.
On that note, don't get too down on short term losses. It happens. Granted, when the market really tanks, its hard to see things crater like that.
Contrarian investing can work, but ignore the loons.
Enjoy the fruits of your hard work.
Hope that helps.
Do your homework, keep your emotions in check, be patient, have realistic expectations, plan according to your own unique goals / timeframes / risk tolerances, be careful who you listen to, and learn to manage risk through diversification and the selection of quality investments.
When you say diversification, are you including bonds or just stocks? What do you think is a good split?
There are two things that I value above everything else.
1. Always know exactly what you are investing in.
I like how you put it...will put it into consideration when i start wading in the waters! Thank you.
Basically, don't put all of your eggs in one basket.
Even if you're only starting out with a few hundred bucks, I'd find at least 5-6 different investments in different industries and sectors to invest in. If you've got many thousands or more to invest, you probably want to find more. Better managed mutual funds are a good way for beginners and those who don't have the time or aptitude to get diversification.
As for a stock / bond split, that's a highly individual thing that can vary greatly from individual to individual.
More aggressive investors typically have less bond exposure, as do younger investors with longer time horizons, and investors who are not needing to generate income from their portfolios.
More conservative investors have traditionally tended to have more bond exposure, as do investors who are older and also investors needing income.
Benjamin Graham recommended anywhere from 25-75% of each in one's portfolio, depending upon how aggressive one is.
Keep in mind that not all bonds are the same by a long shot. You've got US Treasuries that have always been considered the safest, high grade corporate debt, lower grade corporate "junk" debt that pays much higher rates but is more volatile and carries more risk of default, plus emerging markets debt that also pays more interest but is riskier as well, etc.
Many more tactical and aggressive investors not needing to pull money out of their portfolios anytime soon are investing little to nothing in bonds these days since rates are so low and will eventually rise. When rates rise, current bond issues will see their market values decline. Longer term bonds and US treasuries will feel it the most. Of course bond issuers guarantee the return of full principal at maturity.
Another tip would be to look into sports betting. It's not a bad way of investing. But, you should test it out before investing. OR just make your picks and bet against them, you will likely do better that way until you learn the game.
Sports Handicapping is a profitable business to those that put in the work to learn it.
Is that you, Steve?
This is great advice to get started. I normally like to read everything I can and become as educated as I can before I jump into anything. I've been trying to become as knowledgeable as I can in this field before I consider any type of investing. This is a great site to do just that! Thanks!
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