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Stock Investing for beginners?
I am 29 years old and wanting to get into the stock market. I have started contributing to RSP's since I was 21 and currently have roughly $80K in my RSP portfolio. Therefore, when I start looking to invest in stocks, I am willing to take on some high risk, and my goal for this, for the time being, is not for retirement - that's what my RSP's are for. However, I'm looking to only start with an investment of $2000, low I know, but I want to first start of with a small amount to learn the stock market and how to invest. Can someone help me understand what type of stocks I should be looking to invest in? I'm not sure if I should try to find stocks with growth potential, mix up my portfolio to keep it balanced, invest in bigger companies that pay dividends and have sustainable growth, etc.
Ideally, I would like to have a 15% ROI - 20% ROI, which I feel is not very high for someone willing to take on some risk. I've read some articles online on guides to investing for beginners, but I want to know more about what attributes of companies I should be looking at when choosing a company to purchase stock in.
Thanks for all the responses!! It looks like I have more reading to do before I actually start investing. I do not see myself spending hours per day researching and trading, but it if I start to like doing it then maybe I will spend more time. For now, I want to spend a couple of hours per week at most.
- 1 decade agoFavorite Answer
When you start, keep it simple.
You keep it simple and effective when you:
1) Invest in index funds (like the SPY for the S&P 500)
2) Buy the funds when the long-term trend in the market starts to go up and sell when the long-term trend in the market starts to go down.
Once you get comfortable with putting your real money to work in this way, you could start thinking of doing something else.
If you have sufficient time available and the skills and passion to analyze the financial data of individual companies, you could start allocating a part of your investments to individual stocks. But do your own analysis and do not follow the penny stock picks of someone else. And always keep an eye on the long-term market trend. Because when the overall market is going down like in 2008 or 2001-2003, most stocks go down, even those of the great companies.
Note that I do not bother with trying to pick individual stocks since I am happy with the returns I can get with the combination of Trend Investing and Index Funds.Source(s): Read more... http://www.stocktrendinvesting.com/
- Anonymous4 years ago
1Source(s): Earn From Home with Trading http://teres.info/TheTradingCode
- Anonymous1 decade ago
The first thing you need to know is that most beginners lose money. There are beginners courses available, some free and some very good low cost ones and it is wise to try virtual trading to start with as that will ensure that any losses are only on paper.
For a private investor, technical analysis is the only way to go. You will always be a step behind the pros on news who have massive resources and teams of people who will all know about the latest word on the street before it even hits the street.
Technical analysis allows you to find recurring behavior patterns in the price action of a stocks chart.
Technical analysis methods are applicable to any chart so it is possible to quickly assess a range of possible investments rather than the laborious task of sifting through income statements and such.
Those will give you what the company has done in the past but it it does not necessarily mean it can keep it up and fundamentals analysts need to try to predict what the unpredictable to try to place a value on a stock.
EWI have just released the Elliott Wave Principle free to download and well worth a read for anyone interested in technical analysisSource(s): http://www.tradersdaytrading.com/trading-course.ht... http://www.tradersdaytrading.com/elliott-wave-theo...
- ?Lv 45 years ago
Interesting Questions : 1) I would not ask you to jump into investing right from Day 1. Since you are starting out with investing, try and learn the basics of investing, when, why and how? demand-supply deals, I wont name any stocks for you friend, all i would say is, dont ask anyone for advice on what to buy and what to sell. It will get you into trouble. The world is full of 100 intelligent people who will give you 100 best stocks, so make the study yourself and work on it. 2)I am quite bad with Fundamental Analysis, so I cant help you on that. 3)Two ways - Fundamental Analysis and Technical Analysis. You will need to google that! See, its not a way to find out which stock will be successful but you sure can identify trends and pick out good buys. I use the latter. 4) How much should you invest? Its simple! Invest only the sum which you are prepared to loose, don't pump in all your savings. 5) Commodities are the best deal if you are looking to diversify your portfolio. And Gold is the real deal here. And yeah, read, read as much as you can. Give the thing your time, Investing is an art, you need practice before you can master it, though no one has mastered it. A trader or investor has to make losses as he starts off, thats how he learns and makes money. So be prepared for it. Good Luck! Sam
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- 1 decade ago
I would strongly suggest you incorporate some kind of technicals into your trading. I'm a trend trader and use an ADX (average directional index) strategy that works quite well. So it could be ADX or moving averages or whatever, but applying some kind of technical indicator to your stock picks can be extremely successful.
The attributes of stocks aren't always what propels them upward, but technicals will tell you what the stock price is doing right now and the strength of any movement. Additionally, you can also use ADX to determine the overall market trend which will really give your positions power.
My trades are based on some basic stock characteristics like average volume and price and then candidates are picked solely on how the price is moving. The idea is to buy into a trending stock and sell when the price breaks down. If the stock has some redeeming attributes - great - the more probabilities in your favor, the better.
I would also recommend How to Make Money in Stocks by William J. O’Neil. It’s a good book because it tells you what kind of fundamentals to look for in a growth stock, a bit about how to look for patterns in stock charts and how to protect your capital. It’s the first book I read when I started my stock trading and a very good start for stock investing or trading. Then perhaps some reading about ADX. Any questions about terms or anything go to Investopedia.
Also, some understanding of position sizing and capital risk management will serve you well.
- Anonymous4 years ago
2Source(s): Binary Market Secure Success http://netint.info/AdvancedTradingTechnology
- BCLv 61 decade ago
I am a trader. Although not technically a daytrader, I do trade everyday if I can either buy or sell something that meets my trigger points. I prefer biotech stocks between $1-5 and usually buy under $2. I sell when I feel the stock has peaked for the immediate future. I may re-buy the same stock immediately after selling it if the price suddenly dips (depending on the reason), and I have bought and sold the same stock several times in a week. I try to buy at the lowest price of the day and sell at the highest price of the day. My goal is make a "living wage" every day, which I consider my paycheck for the day. But I don't expect to buy every time at the bottom or sell evertime at the top. That would require predicting a stock's trading range perfectly, and I have never been perfect.
My goal is an actual 25% return on my investment PER TRADE. Not annualized. If I spend $1000 buying a block of shares, I expect to make at least $250 profit within five trading days. I have done much better than that, and I have done much worse. The most important goal is to NEVER take a loss. However, I will sell for a loss if I believe my money is dead and could be used to buy something profitable.
There are many free stock screeners that will help you choose stocks. Do your own research. Be wary of emailed stock picks. Most make money by convincing you to buy the shares they bought days earlier (called pump and dump).
Decide what price range you can afford, and buy small blocks of several stocks instead of a large block of only one stock.
- 5 years ago
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- 1 decade ago
Fist thing you need to do is decide how much of your time you are going to use for this endeavor. If you have limited time, I suggest buying companies with a low beta and selling covered calls on those holdings for a return at least that which you stated you are looking to achieve.
However with the amount of cash you are going to start with this would be difficult to do.
Limited time and limited money to start, but with an aggressive risk appetite, I suggest options to leverage you money and control more stock.