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Where do I start with investments?

Discussion in 'Investing' started by Bridget Mallory, Jun 19, 2018.

  1. Bridget Mallory

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    Everybody knows that investing for the future is important, but not everybody knows how to go about it. Where do I start with investments? How much risk should I take?
     
  2. StockJock-e

    StockJock-e Brew Master
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    That is an answer that will be different for everybody.

    If you are a retired millionaire looking to put $3M into the markets to diversify away from $10M you already own in properties, the answer you will get is very different from somebody that has $1000.
     
    Onepoint272 likes this.
  3. T0rm3nted

    T0rm3nted Moderator
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    Like @StockJock-e mentioned, we will need to know a lot more in order to help steer you in the right direction.

    How old are you, what's your education and job situation look like, how much money do you have right now, how much money do you want to have by retirement, how risk-averse are you, etc.

    It's not a straight-forward answer, so if you can provide some more info, I'm sure quite a few people will be happy to help.
     
  4. Bridget Mallory

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    Thank you for your answers, I really appreciate it. I guess there are a lot of factors to consider to start an investment
     
  5. emmett kelly

    emmett kelly Well-Known Member

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    Buy mutual fund(s). Let the professionals do the investing for you.
     
  6. Brock Cartwright

    Brock Cartwright New Member

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    Hi there, Now-a-days many options are available for investment like investing in share and stock market, property and many more.
     
  7. Rahul Roy

    Rahul Roy New Member

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    As investing in the online commodity market can be frightening as a beginner, instead, one can learn some basic hot tips or just sit with any trading gurus in order to let them make sell or buy decisions in the online commodity market.
     
  8. TomB16

    TomB16 Active Member

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    I would opine that considering what risk is, is a good place to start. This is important to figure out so you can get a handle on the level of risk you are prepared to take.

    You also have to figure out if you are an investor or a trader/speculator. All of the self described investors I've seen on this site are actually trader/speculators. If your investment horizon is less than 5 years, you are a speculator.

    Consider Tesla. Extreme risk? Everyone except TomB would say yes. I would say no. Let's have a look.

    If you consider Tesla risky because you don't know what the price is going to do, you are a trader/speculator. I don't know what the stock price will do, either.

    I consider Tesla to be moderate risk because I find the company to be honest, very hard working, and smart. This combination of attributes are a winning combination in almost every case. When I find a company like this, I want to own it and I make a point of doing so. This is the case with Tesla.

    My blended cost on Tesla is $182/share. Yes, I considered selling when Tesla was over $385 in the summer of 2017. I was confident it was going to come down.

    Tesla is one of the best growth stocks of our era (but not the best) and a lot of people could see a tremendous trajectory for this company but, even by extreme growth company standards, the amount of speculative froth on the stock price was over the top in 2017.

    These days, people talk about Tesla as being wildly over-valued and they are wrong. I know this because I have valued the company, done some crude projections (the only projections possible), and come to the conclusion it's actually priced about right with the current comfort window of $300~350. Combine that price window with me wanting to own the company and it all works.

    I was able to hang on to the stock at $385 when I knew it was going to go down because I wanted to own the company. I was able to hold onto the stock when it dipped to the $250 level early this year because I wanted to own the company.

    When I bought in, I controlled the amount of money allocated to this position because it was speculative. I was prepared to lose that money.

    If you make decisions based on price, or based on fear of what the price will do, you are a trader/speculator/gambler. There's nothing morally wrong with that. If your decision is based on wanting to own the company, you are an investor.

    It's not difficult to value companies. This is the key to successful investing in stocks. If you can't do this or can't bother to learn, stick with GIC ladders, index investing, mutual funds, etc. Either that, or go ahead and trade/speculate/gamble but I suggest you should be aware of what you're doing.

    Let's talk index investing. Specifically: Couch Potato. This is investing if you believe the GDP growth will pace inflation.

    The problem with broad spectrum index investing and mutual funds is that most of them have a return limit that is somewhat tied to GDP and inflation. They also have the overhead of other people taking their cut before you get your profit. This is particularly so in the case of mutual funds.

    For people who can't or don't want to value companies, the overhead of indexes and mutual funds is part of their reality and not that big of a deal.

    For people who can value companies, the overhead of broad spectrum investment mechanisms is justification for taking some risk, as investing in stocks will generally involve some losses but a decent investor will keep these below the overhead of aggregated investments.

    I share this point of view because I believe I am the only poster who voices an investment perspective in this wilderness of traders and speculators.

    Whatever your approach, I wish you well.

    Kind regards, Bridget.
     
    #8 TomB16, Aug 21, 2018
    Last edited: Aug 21, 2018
  9. TomB16

    TomB16 Active Member

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    To reinforce my previous post, I will point out that, to an investor like myself, the only way to invest in a commodity is to process that commodity in a way that adds value to it. In other words, buy the commodity as feed stock to a business operation.

    An individual investor can only trade and speculate on the price of a commodity. Trading that commodity is a casino of sorts. This is because the commodity itself will do nothing for the investor, other than being represented by quotes which are basically a random number generator.

    Please consider: I'm not suggesting Mr. Roy is wrong. I am merely offering an alternate point of view. With finance, wright and wrong are often (but not always) a matter of perspective.
     
    #9 TomB16, Aug 21, 2018
    Last edited: Aug 21, 2018
  10. TomB16

    TomB16 Active Member

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    Here is an excerpt of a conversation in which Warren Buffett discusses non-productive assets (commodities) versus productive assets (property, companies, etc.).

     
  11. Rahul Roy

    Rahul Roy New Member

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    Hi Tom,

    Value of commodity up & down within seconds or minutes or in a day but this kind of scenarios do not happen in stocks. Stocks come under long-term investment but commodity trading is "day trading" if beginners don't want to face a huge loss then knowledge of the stock market is must or mandatory for everyone.
     
    #11 Rahul Roy, Aug 22, 2018
    Last edited: Aug 22, 2018
  12. bigbull

    bigbull Active Member

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    The best way to invest in the stock market is via index funds or through ETFs. It weeds out most inefficiencies, day to day shenanigans or any other market force that implicitly leads you to make a mistake. In the end, the stock market is one giant platform of movable ideas. How so? Because when you put money to work you are inherently placing an idea in motion. What decides if the idea pays off is impossible to explain here, but what matters is how you go about it. Picking individual names will automatically narrow your chances of success since you are outright making a binary call. Wether you choose to hedge that idea/trade with options or though some other investment vehicle misses the point entirely. By picking a stock to trade or invest in, your essentially reducing your chances of success precisely because your defining risk into a particular pocket of the market without knowing how other ideas are and will affect the balance of trade. To be crystal clear, this has nothing to do with the potential payout. Let it not be confused. By buying into multiple index funds or ETFs you are branching out to the entire market, and in effect, reducing your risk profile. Newcomers, and even propped up professionals, think of investments in payout terms instead of risk units. Investments ought to be thought as a risk unit -- how much risk am I assuming by entering X trade? The payout potential should not concern you, it will take care of itself.

    Lastly. The reason why 70% to 90% of individual traders/investors lose money in the stock market isn´t because they do not know what to look for, but instead, its because without giving it much thought, they automatically reduce their chances of success right form the get-go by picking a side. This gets compounded when emotion, bots, large funds, options, etc all get in the way of the trade. Trades that might have worked in the end may end up as complete failures because one of these factors ended up distorting your perception of the trade. The final nail is placed when investors naively believe that a comeback is possible. While statically possible, its rare because you enter a distorted state of mind that leads to the commonly known -- Monte Carlo (or gamblers) fallacy -- where you believe a near certain outcome will change because one particular event may prove to be different than the rest. Don't let this happen to you. Its happened to me, but today I am better for it. How?e

    I know trends cannot be controlled over the long term, they just evolve. The trends in emerging markets and the Euro are in full effect. The outcome is almost certain with the Euro most likely to trade below par against the US dollar with emerging market economies instigating the trend, and carrying the brunt of the pain, before the trend spreads to other parts of the globe. Day to day, week to week or even month to mont trends are irrelevant. These will show a lot of noise as different groups interfere to try to sustain, disprove, make an example of or simply try to get you to change mindset. In the end, though, the trend set in motion decades ago will come round circle.


    Long story short. If you want to invest and make money in the stock market do it via index funds or ETF.
     
  13. Rahul Roy

    Rahul Roy New Member

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    New investors are always finding a way to go for the online stock market to earn profitable success. The first and foremost things are learning the basic of online commodity trading to access multiple sources easily.
     
  14. JerryM

    JerryM Well-Known Member

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    Knowing some of that info, especially approx. age, ball park amount you are starting with and purpose of investment (retirement, college fund, use 10 to 20 years from now) This will help suggest a starting point. You don't have to get personal, just some ball park type info.
     
  15. Andrew Mazza

    Andrew Mazza New Member

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    I highly recommend diversifying a portfolio. Generally setting 15% in ETFs with about 3.5%-5.5% dividend, about 35% in the Dow 30, 15% in Nasdaq 100 (that are not in the Dow 30), putting 20% in high dividend stocks that release earnings on a monthly basis as opposed to a quarterly (11% yield), 10% in high dividend quarterly (8% yield), and the rest in bonds, funds, mutual funds, or REITs. Always look to maximize guarenteed revenue in the form of dividend and yields
     
  16. mn_sho

    mn_sho New Member

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    for investing long term one can do fundamental study of different companies or can simply invest in SIP or mutual funds ...........
     
  17. AJain

    AJain New Member

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    I think you should start with something easy like mutual funds. Mutual funds are a very lucrative option for investment and the drift that I am getting from your question is that you a novice in investment; hence, I would say consult a broker. A brokerage firm will charge some amount to make your investments and carry out all the activities. There are types in a mutual fund as well that have low risk, moderate risk or high risk. I am from India, and I always suggest people to invest in mutual funds and PPF which are the profitable options in India. The trending mutual fund of India is L&T mutual fund which would be similar to American funds or Vanguard in the US. It also gives one of the highest returns. The advantage of investing in mutual funds is that a professional will be investing your money who has experience and the analytical skill set required for this, there is diversification in your investment as the money is put invested into various financial instruments and lower transaction costs. There is also direct plans for mutual funds that you can start with at a later stage when you are comfortable and have enough experience. I hope this was useful to you.
     

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