Investing for Beginners

[Ducksnort]

I need help.

I would like to start investing, but I really don't know where or how to start. It seems like there are so many options...index funds, savings bonds, crypto, Robinhood, and on and on and on. Is there anyone on this board that has lots of experience and can help a brother out? How and where do I start? How much money should I start out with? Can I do this on my own or should I have an advisor? What other questions should I be asking?

Edited November 19, 2023 by ScootsMcGoots

[Tony]

I’m far from an expert, but lot of variables go into it, most importantly, what you are looking for right now? Short term or long term? Risk or little risk?

Here would be a few very general tips:

- Do your homework, but invest in what you like/believe in. If you’ve never heard of the company and you have no interest in what they produce, don’t invest 

- One of the safest things you can do (in my opinion) is investing in something like VOO, which is the Vanguard S&P 500 ETF. It’s a collection of the stocks traded on the s&p 500 which is fairly safe and also diverse. Its going to move slow but one of the safer ETF’s you can go with 

[bmags]

Highly recommend spending money on financial news sources but not investment news sources. WSJ and bloomberg news will help build your strong opinions on what may be undervalued/on the rise/ready to sell. Investment info makes you feel like you should be making constant adjustments.

But yes, i'd just recommend putting aside some money in VOO or SPDR and then when you feel strongly about some individual sector or stock, it will be easier to perform research on its status and how to invest in it.

 

[bigruss]

To me, an advisor is worth it if you have a decent amount of cash/retirement/etc and looking for what to do.  The benefits of what to do from a tax perspective, what types of accounts to have, etc can all be worth it with the right advisor.  

 

That said, let's talk personal investing.  There are general rules to follow:

• Maxout company sponsored retirement
• Keep fees as low as possible
• Avoid leverage and individual stocks
• Stay in the game and compound as much as you can

How many years to retirement are you?

How risk adverse are you and will you stay invested during the bad times?

How much reserve cash do you need for emergencies?

Tons of questions to answer for yourself, but the important thing is (especially if you are younger) to not worry about timing the market and spend hours looking up individual stocks, the math is 100% there to support buying low cost index funds like VOO (as mentioned above) and not touching it until you get closer to retirement.  

 

In terms of resources, I REALLY recommend checking out The Compound and Friends podcast, which is hosted by Ritholtz Wealth Mgmt, and they have some great podcasts specifically for individuals such as Portfolio Rescue.  I listen to 4 of their podcasts probably weekly, I'm actively trading and investing though so I like to keep up with it all.  

https://www.youtube.com/@TheCompoundNews

TCAF - weekly podcast with someone in the industry to talk through what's happening in the market, background of that person, insights, etc.  Sometimes it's traders, sometimes its journalists, sometimes its analysts, this is what got me to these guys.

Animal Spirits - 1-2 a week about what's happening in the market, hot topics, etc

Ask the Compound - Portfolio rescue podcast, they take questions from listeners (prior to podcast) and talk through their answers from a financial advisor position, and they'll bring in experts from their company to talk about tax, insurance, FA, etc.  Maybe the best place for you to start.  

[Falstaff]

Keep in mind the difference between a Trader and an Investor.

When you see a guy like Kramer on CNBC he is speaking to traders or to use the term day trader. To me this is a very volatile way to make money, even the so-called experts struggle to come out ahead. Aggressive day trading is close to online gambling. it sounds good when you talk to your buddies about buying low and selling high. The truth of the matter is you have a better chance of losing money because you can't time the market. 

Retirement fund:  If you are young and have a 401k at work that the company matches I would suggest to max out your contribution. You want to be in very aggressive growth. If you don't have a 401K available at work then you can go to a brick and mortar like Fidelity, Edward Jones, and Charles Schwab to name a few. The online choice to me would be Vanguard. Let this fund grow without taking any money out for any reason. You can educate yourself on the difference between 401k, IRA, rollover IRA, and Roth.

Investing : Depending on your age, if you are married with kids, looking to buy a house, once you do have available funds to invest then you can look into stocks/bonds/real estate and invest accordingly. The retirement fund needs to be kept separate from all the things I just mentioned. 

 

 

[Ducksnort]

On 2/22/2024 at 7:35 AM, Falstaff said:

Keep in mind the difference between a Trader and an Investor.

When you see a guy like Kramer on CNBC he is speaking to traders or to use the term day trader. To me this is a very volatile way to make money, even the so-called experts struggle to come out ahead. Aggressive day trading is close to online gambling. it sounds good when you talk to your buddies about buying low and selling high. The truth of the matter is you have a better chance of losing money because you can't time the market. 

Retirement fund:  If you are young and have a 401k at work that the company matches I would suggest to max out your contribution. You want to be in very aggressive growth. If you don't have a 401K available at work then you can go to a brick and mortar like Fidelity, Edward Jones, and Charles Schwab to name a few. The online choice to me would be Vanguard. Let this fund grow without taking any money out for any reason. You can educate yourself on the difference between 401k, IRA, rollover IRA, and Roth.

Investing : Depending on your age, if you are married with kids, looking to buy a house, once you do have available funds to invest then you can look into stocks/bonds/real estate and invest accordingly. The retirement fund needs to be kept separate from all the things I just mentioned. 

 

 

I decided to start listening to podcasts and I will probably pick up a few books. Getting educated. Have learned quite a bit. Thanks for your advice!

[The Grinder]

I invested heavily in real estate in the late 90's, buying property in certain affluent areas. ALl was good then 2008 happened and it wasnt pretty. After I licked my wounds, Im now very conservative in my investments thank God

 

[Falstaff]

Scoots if you are in a company 401k you might be able to move a percentage to a Roll Over IRA. I was able to move up to 20% out of my company 401K to a Roll Over IRA. 

You can transfer the funds to a Roll Over IRA at any institution like Vanguard or Fidelity. There are some very important rules on transferring the funds to avoid penalties. A timeline of 60 days, transfer the funds electronically without cashing a check if issued, a Roth Roll Over IRA would require you to pay taxes up front.

The reason people do the Roll Over IRA is because sometimes their company 401K plan is limited in investment options. 

[southsider2k5]

Closing prices on August 2nd, the day before the MARKET CRASH

Dow Jones 39,797

Nasdaq 15,583

S&P500 5346.

The closing prices today August 13th

Dow Jones 39,765 down 32 points, or 0.1%.

Nasdaq 17,188 +606 points, or 3.6%.

SP500 5435 or up 88 points or 1.6%.

Here's hoping you all didn't fall for the panic, or you lost a lot of money.

[Texsox]

My entry was a mutual fund that I literally just kept adding money into and barely looked at until I split it with my ex. 

I got interested in a more active approach, like yourself, and started picking some individual stocks with mixed results. @southsider2k5suggested ETFs and my results have improved greatly. 

QQQM has been very good to me. NOBL is my safety bet. About half or so I have in stocks are in those two. 

I know a few people that got started with an Acorns account. Cheap to open. Set your risk levels and they pick the investments. Watch them for a while and you'll gain some insights. 

For the majority of Americans their best investment is buying a home. Their second biggest is not paying interest on credit cards. 

 

[Texsox]

4 hours ago, southsider2k5 said:

Closing prices on August 2nd, the day before the MARKET CRASH

Dow Jones 39,797

Nasdaq 15,583

S&P500 5346.

The closing prices today August 13th

Dow Jones 39,765 down 32 points, or 0.1%.

Nasdaq 17,188 +606 points, or 3.6%.

SP500 5435 or up 88 points or 1.6%.

Here's hoping you all didn't fall for the panic, or you lost a lot of money.

I was a buyer. 

[southsider2k5]

Just now, Texsox said:

I was a buyer. 

So was I, when everything was down 3% intraday

[Texsox]

2 minutes ago, southsider2k5 said:

So was I, when everything was down 3% intraday

Having confidence in a couple choices allows me to react without really any stress. 

[southsider2k5]

On 8/13/2024 at 7:49 PM, Texsox said:

My entry was a mutual fund that I literally just kept adding money into and barely looked at until I split it with my ex. 

I got interested in a more active approach, like yourself, and started picking some individual stocks with mixed results. @southsider2k5suggested ETFs and my results have improved greatly. 

QQQM has been very good to me. NOBL is my safety bet. About half or so I have in stocks are in those two. 

I know a few people that got started with an Acorns account. Cheap to open. Set your risk levels and they pick the investments. Watch them for a while and you'll gain some insights. 

For the majority of Americans their best investment is buying a home. Their second biggest is not paying interest on credit cards. 

 

No matter who you are, the first thing you should learn as an adult is the Rule of 72.  It works for interest rates and for rates of return, and is absolutely vital for your life's savings.

[Texsox]

When I was teaching senior seminar we would do a simple lesson let's plan on having $500,000 cash at age 60. How much would you have to save if you are 50, 40, 30, 20 and they start seeing the magic of interest. 

 

[WhiteSox2023]

On 8/19/2024 at 8:29 PM, Texsox said:

When I was teaching senior seminar we would do a simple lesson let's plan on having $500,000 cash at age 60. How much would you have to save if you are 50, 40, 30, 20 and they start seeing the magic of interest. 

 

Would that even cut it these days?

[southsider2k5]

For those out there wondering what to do:

First off, if we are talking about your retirement funds, and you are more than 10 years from retirement,  do nothing.   You might not want to hear this, but the time to sell is passed.  We might still have legs down to go, but the ability to guess market bottoms to buy back in at is notoriously impossible,  and odds are you will be wrong and miss a large piece of the rebound and that return.  Just sit tight and let it ride.  Forget it is there.

In general, if you are close to, or in retirement, you should already be largely in cash and bond type funds in order to protect your cash value.  Don't change that.  The more you depend on those funds, or the sooner it you will need it, the less market exposure and more cash you should have.

If you are looking for investment opportunities with spare cash, look for industry leaders.  Things which got beat up in these conditions,  but have business models to survive these conditions.   Banks, brokers, and exchanges are my typical favorites, but YMMV. There could still be volatility and big legs down, but if you are looking longer term to add to your portfolio, this is a good time.  Blue chips first and foremost. 

As for day trading type stuff, this is a crazy dangerous times.  The moves are wild, and predicting the next seconds moves is a fools errand.  One tweet can blow up anything.   That goes for stocks, options,  bonds,  crypto, etc.