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Let's Talk Stocks and Bonds ....
Topic Started: Jan 26 2004, 05:31 PM (216 Views)
Wichita
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The Adminstrator wRench
Go ahead - tell me all about it. :whistle: :whistle:

Seriously ...

I have reached the point that I have enough saved for either a short vacation to Vegas or a foray into the stock market. The second choice seems more sensible. (In other words, I can afford to lose it.)

I just don't know how to get started. A couple family members have investment counselors, but they all talk about losing more money with the counselor than on their own.

So who has advice for me?
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doctortobe
Speak softly, and carry a 57 megaton stick!
Well, today is your lucky day! I just opened an account with my family's stock broker less then an hour ago!

A few rules of thumb to remember is:

1. The riskier the venture, the more money you can make, and the bigger chance there is to fail. The safest thing you could do is put your money in the bank in a savings account, but you won't get much in return. On the other hand, if you were to invest in the economic "virgin territory" of foreign markets, you could make a mint if the businesses succeed, or lose it all if they fail. Most likely you want something in the middle of that.

2. Mutual funds are your best bet at earning money. Investment companies choose companies that have shown positive growth in the past decade or so and put your money into them. If a couple companies lose money, hopefully that will be offset by the growth of the other companies.

The mutual fund I invested in is called Templeton Growth A. They have done a great job in predicting the ebbs and flows of the market and have averaged 13.83% growth since its inception. There were only two noticeable downturns in the last 15 years. Both of them lasting about a year. However, by the time the year was over, the loss had been made up and new profit made.

Of course, you shouldn't take stock advice from strangers on the Internet. You need to get in touch with a respectable company for advice and to handle your money.
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Swidden
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Adm. Gadfly-at-large; Provisional wRench-fly at large
^^^
Yep, don't listen to just anybody! Good to hear you're planning ahead Doctor. I've had a few irons in this fire for years...

The best advice I ever got, though, was to not try timing the markets. Hold on for the long haul (not that one should watch an investment dwindle down to zero). Annually I review the various mutual fund ratings in different magazine outlets. I've had a subscription to Forbes for nearly 15 years. I read their columnists more than the "big" articles.

Link: Forbes.com

Link: Forbes.com/funds

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doctortobe
Speak softly, and carry a 57 megaton stick!
Good point. The great thing about the stock markets is the fact that, on average, they have increased by 11% each year. If you just keep your money in a diverse fund, then you will probably earn a profit, just not as MUCH of a profit as you would by trying to play the market.
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Wichita
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The Adminstrator wRench
Due to the fact that I can't keep a jo .... errrrr, continually am on the lookout for ways to better myself, I have a couple of minor pension funds in addition to the one that am hoping will keep me in food in my old age. They were places I worked long enough to get into the pension, but not long enough that they wanted to continue to administer it.

The first I put into as conservative a place as I could find. The yield has been small, but consistent. The second I got a little crazier with - the guy who set if up kept pushing me to move the other one as well. Fortunately I never did, because that one lost ALL the accrued interest in one quarter (Ok, and a bit of my original investment). It's rebounded now, but really is only doing slightly better than the first investment.
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ImpulseEngine
Admiral
An important principle in investing is diversification. That means investing in a combination of some fairly safe, some moderately risky, and some risky areas. It also means investing in different industries. The idea is that if a particular sector of the market does poorly, hopefully other sectors you invested in will make up for it. Since most of us don't have millions of dollars to play with, that's where mutual funds can help. They will do a lot of the diversification for you. But even there, if you have enough money to invest, it is wise to invest in at least a couple of mutual funds that focus on different industries.
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Hoss
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Don't make me use my bare hands on you.
I hear that dot-coms are good. :lol:

In addition to stocks or mutual funds, there are index 'stocks' that you can invest in that track a particular index. For instance QQQ is based on the performance of the NASDAQ. You can also track the Fortune 500 and so on.

Read some books. Just not any from that guy on the TV commercials wearing a suit with question marks all over it. ;)

There is a great deal of potential in the international funds but dangerous things can happen. In 1998 there was the "Asian Flu" in which the economies of the far east were in trouble, but here it was just flying along swimmingly. Currently one could argue that the reverse has happened. The Asian markets are looking good and our is starting to look better.

I intend to liquidate my assets and risk them in a high-stakes poker tournament.
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Swidden
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Adm. Gadfly-at-large; Provisional wRench-fly at large
^^^
Does this mean you'll be turning up on a cable network? If so, I recommend you wear an article of clothing promoting this website...
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Hoss
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Don't make me use my bare hands on you.
I'll just be wearing my "I'm with stupid->" Tee-shirt.
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Admiralbill_gomec
UberAdmiral
Swidden
Jan 28 2004, 01:58 AM
^^^
Yep, don't listen to just anybody! Good to hear you're planning ahead Doctor. I've had a few irons in this fire for years...

The best advice I ever got, though, was to not try timing the markets. Hold on for the long haul (not that one should watch an investment dwindle down to zero). Annually I review the various mutual fund ratings in different magazine outlets. I've had a subscription to Forbes for nearly 15 years. I read their columnists more than the "big" articles.

Link: Forbes.com

Link: Forbes.com/funds

According to Ben Stein, you can time the markets!

He even has a book out, entitled, Yes, You Can Time the Market!

Sadly, though, I don't think you can "Win Ben Stein's Money" any longer.

"Bueller? Bueller? Buelllller?"
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somerled
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Admiral MacDonald RN
Posted Image

My magic mirror is very foggy these days, as are my tea cups (missus buys tea bags now), and as is my crystal ball.
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JGSL
Lieutenant
Hey, you know what strange about stocks... they are totally dependent on speculation. You can have a company with great performance, but the public may not find them all that valuable so it is worthless, but you might have a company that is running themselves in the ground or with no real assests... such as the yahoo had no real assets... and it may be skyrocketing through the roof.

Your better to trade commodities, they atleast are dependent on the crop or good.
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anon_persona
Lieutenant Junior Grade
Stocks are in general governed by NPV analysis of dividend yields. The dot-com thing was the power of the idiot [with money]. Glad I never touched the stuff.

You need to tell us more about yourseld: age, gender, family status, and total investment capacity before we can really get down to it. Here's a primer:

If you have less than 6k I'd stick with FDIC insured CDs. If you are investing for less than 8 years (8 years + is my view of the "long term") stick with the CDs, money managers, and high grade bonds. They are low-to-no risk but get a better return than mere savings accounts.

If you have over 6k and are willing to invest for the long haul I'd suggest the Index Vanguard 500 fund. It covers mid-to-large cap, is well diversified, and outperforms all others save some Fidelity funds (which I would say are a bit more risky). Vanguard has a philosophy is minimalism insofar as management of your money, meaning they have the lowest overheads.

If you have much more then 20k I would consider investing in something the S&P 500 doesn't cover (Vanguard Index 500 "indexes" the S&P 500), specifically low cap, international, and liabilities. I would go with 80-95% in the Index fund and 20% in other coverages so long as you have over 20k to invest in the first place.

Personally I am primarily in the Vanguard Index 500 fund, with minor holdings in commercial paper, higher-risk bonds (don't do this unless you're a professional), and some specific small caps. I use CDs and a mixture of insured and uninsured money market accounts for my short-term money. I'm an Econ and Finance double major.

The reason we need to know more about you is: younger age has a much higher risk tolerance. Within 10 years of retirement you should only have play money in anything even semi-risky. If you're 18 you shouldn't have any money. If you're 30 and single you should be in real estate, and if you're 30 and married you need the plan I'm following (Ironically I'm 23 and single, but I like to hope ... er pretend. Let's be realistic ; ). Also, the amount of money you have to invest is a huge factor, as it's tough to split up 5k into different accounts when each transaction has a percentage fee, whereas this fee is less significant next to the increase in diversification gained by breaking up larger dollar amounts.
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