Want to start investing in stocks...
 

I'm in my early twenties and recently found a stable job to start earning enough to save. Now I want to start investing my savings in stocks, instead of leaving it in my .01% savings account. I was an econ major in college, so I've come across the basics, but where do I start?

1. What percentage of my cash savings should I invest?
2. What is a good online broker?
3. Any other hints?

EDIT: Nevermind...found what I need through a search.

The average person investing in single company stocks will not beat the market and will generally loose his ass. Most people recommend mutual funds and EFT's to get diversification. Lean about how the fees on these work before investing.

I would start with a low cost Roth IRA and fully fund it to capture the tax benefits.

Do you mean gambling in stocks?

are you completely out of debt?

I'm in the same boat as you. I started managing my own stock portfolio and have enjoyed it so far. It's better than paying someone to do it.

I would disagree with the person that said anyone buying individual stocks will lose their ass. EG: I like Wells Fargo is a good, responsible banking. If instead I purchased an ETF in financial institutions, I'm taking on the risk of hundreds of banks that I know nothing about. But I also have an active approach where I watch the market every day.

If you want to set it and forget it, go with a few different ETFs and diversify industries. If you want to be more active, do some homework on stocks. I'd say go 100% in equities though (assuming you don't need this money with in the next ~2 years) since you're young and can afford to take more risk compared to people that will be using the money in the near future or can not afford to lose money in today's volatile market.

LiquidRetro is right. It is extremely highly improbable for a professional who do this every day as their profession to beat a well diversified mix of ETFs or index funds with an ultra-low cost brokerage once you move 20, 30, 40, 50, and 60+ years down the road.

You can't save money in the stock market any more than you can walk into a casino and save money at the craps table.

And real intrest rates are negative because lending to banks is also not a form of savings.

Welcome to 2012 (almost).

Like I said, if you want to set your portfolio and never think about it again, buying ETFs is the way to go.

But it's definitely possible to beat an ETF as an individual investor. To say that it's improbable, I might even agree to that. But extremely highly improbable? I disagree. Do your homework and pick the right stocks.

The problem with trading every day is people become obsessed with it. They also tend to rack up a lot of trade fees. Most places charge between $5-15 a trade so you have to figure that into your returns. Many people just dont have the time or large enough sums of money to really make a return that will be beat an index fund, or quality MF once you factor in fees. People are also highly subjective to emotional trading when they trade often. The idea that oh it's going down I better sell to cover myself takes over. People don't take the time to find out why a stock is going down and end up selling low and buying high. The exact opposite of what you want to do.


To the OP. If you think you want to play the market like this I would encourage you to read up on your theory and then play some of the virtual stock game sites and really pretend this is your money and your future rides on it. If you do well after a year or more then maybe consider doing it for real with a few thousand extra dollars (After you paid off debt and funded retirement accounts) that you are prepared to loose should things go bad.

I agree with you across the board. I would never recommend day trading to any average investor. I also wouldn't recommend controlling your own portfolio unless you had a great understanding of how the market works and have researched a handful of different strategies.

I'm 23 and took over my portfolio from a manager my parents were using probably 7 months ago. My returns are... well it depends on what day you ask in this market. On Monday, I wasn't doing well. Today I'm doing well. So it fluctuates quite a bit. I enjoy it though. It gives me more ownership over my money knowing that I'm handling it, rather than me paying some guy to let them sit in a mutual fund.

Ya there are cases where some people can beat the market but even the big mutual fund investors and fund managers have bad years. So the average guy has to understand that. I also think there are a lot of shady or bad professionals out there too.

My suggestion was geared more to the OP who had not done any research and not a very savy. It looked to me like he was looking more to jump on the bandwagon of "Stocks" to make a buck and that likely won't turn out well.

I think the OP doesnt need to pay someone but he could instead get a Roth IRA from someone like Vanguard and then pick and manage funds inside it. That has tax benefits too. It provides protection from individual stocks but also is a more active roll than an EFT.

I'm not trying to be argumentative, but choosing index funds or ETFs is no less "handling it" than picking individual stocks. Both are "handling it", but from macro vs. micro approaches. Truly "handling it" is being control of the company on some meaningful level, neither of which the aforementioned choices are.

Besides, in the end, for me, there's no glory in doing more work - I'm just want the most money as possible.

I have been using VectorVest for several years now. It tells you what to buy, when to buy and when to sell. I had a "portfollio double" in 2010, so I am quite pleased. Was long until this past August but (thanks to VectorVest) have been on the sidelines since then. Try their free trial for 30 days.