General Stock Investment Information

For those of you just wanting to get started in investing in the stock market or even for those of you that feel you are pretty well informed.  It is my desire to make this blog applicable to all ranges of investors with various knowledge bases.  Here I am going to be giving out stock tips and information.  To let you know a little about my knowledge and experience, I have been interested ever since High School in investing.  After college I decided it was time to head out on that adventure of preparing for the future.  Really it is never to late to start investing.  But the younger you get started the better.  I studied investing and business classes in addition to my nursing courses.  Now retired after 30 years of working in nursing and business management I have time to share the knowledge with others.  I still study the stock market on a daily basis, reading articles, looking at information and continue to buy, trade, sell, and hold in accordance with the holds of my own personal portfolio.  Over the years I have only lost money on one stock investment in the past 30 years and that was due to my own stupidity when I new better that take the gamble.  I invested in a penny stock and bought tons of shares for $500.  Well that was a $500 lesion well taken to heart and I will not be doing that again.  Can you make profits on a penny?  Yes, but the odds are against you.  I will not be taking that gamble ever again.

I am going to outline next some simple advise for both new and old investors.  Many make very simple and basic mistakes when investing which is hurtful to them financially and to their portfolio.

1. Make a Commitment:  If you put money in to invest, do not take money out.  If you are investing money that you really cannot afford and foresee in the future a need for that money, do not invest it.  Sometimes it takes a while to see a good return on your investment.  Frequently buying and selling like a day trader is highly discouraged.  This is just to risky.
2. A good portfolio will consist of a good base of Mutual Fund investments, not a lot of Individual companies.  Why?  With an individual company you have all your eggs in one basket.  If the company does bad, then you do bad in your portfolio.  Mutual Funds provide a lot less risk and they have their assets spread out over many stocks, bonds, other mutual funds etc. so they can absorb a hit on an individual stock/company.  For a good balanced portfolio a good range of Mutual Funds is the best way to get started.
3. But a good range of mutual funds when investing you should have some that focus on Large Cap Growth, Small Cap Growth, Short Term Bonds, Long Term Bonds, Emerging Market Funds etc.  Your Financial Advisor can help you find a good mix of differed Mutual Funds of which to add to your portfolio.
4. Try to keep your Mutual Funds investments within the same Family of Funds.  But this I mean there are many good companies out there, some of which have thousands of separate funds to invest with.  One of my personal favorites is Franklin Templeton.  T. Rowe Price is another good family, and so is Fidelity.  Principle is a good family as well, but I find myself being more careful when making portfolio choices with them.  Why try to stay in the same family company?  Because after you hit certain levels in dollar amounts you invest they give you discounts.  Discounts are more money in your pocket instead of theirs.  Also when staying in a family of funds, if you find a mutual fund ends up being a dog and not meeting your expectation you can freely move that money to another fund within that family at NO cost to you.  Where if you moved to a different family of funds it would cost you some bucks.
5. Should you use an Online Investment company:  The answer is simply NO for the new or average investor.  Do not get me wrong there are several good Online Investment companies.  I personally Scottrade.  But I do not consider myself the new or average investor.  E-Trade is another good company online as well.  These online companies can provide perks and cheap trading cost.  But the problem is they offer no financial advise to investors.  So unless you are an old pro and savvy investor, an online service is not the place for you to be.  I use Scottrade for what I call my "play money".  Yes, I know what I am doing on my own, but I have a totally different strategy investing using Scottrade than I have with my primary accounts which I use Chase Bank Investments which is a part of J.P. Morgan/Chase.
6. Make sure you get a good financial advisor with a good company.  There are many good investment companies and remember that stockbrokers are a dime a dozen.  Find a good company and financial advisor that works for you.  If they are only giving you advise to invest in the products of the company that they represent, then run fast and find a different stockbroker and perhaps a different company to deal with.  If your stockbroker is not willing to look at your suggestion and strictly advises investments/mutual funds held within their companies umbrella this is definitely NOT in your best interest and you need to move on and find someone else.
7. Mutual Funds are the base of any good and safe portfolio.  For the new or average investor starting out I suggest that you work your way towards building that base with well rounded, moderate risk growth funds to start out with.  A mutual fund with 100% stocks in it is lots more volatile and carries a higher risk.  But they certainly have their place, but not in a new or building portfolio.  I have a high risk 100% stock mutual fund (AMANX) in my portfolio and it is blowing the roof off my portfolio with a 78% gain since I purchased it PRIOR to the 2008 recession.  It survived the recession pretty well and surged to be the top performing mutual fund in my portfolio at this time.  It is a Large Cap mutual fund and Large Cap funds are doing great right now due to the record breaking markets.  But for the new investor building their base in their portfolio I suggest getting two to three good blend mutual funds to get started.  As you build them to a good level then think about branching out into specific mutual fund markets such as Large Cap funds, Small cap funds, Bonds funds, and Emerging Market funds.  A good blend mutual fund will give you a little of everything and is a much safer risk to you when starting your portfolio or as you build a good base.
8. When is the best time to invest?  The simple answer is ALWAYS!  There is no bad time to start investing.  But the best thing you can do is again make a commitment.  Find in your budget what you can afford to invest on a monthly basis.  Even small amounts of $25 to $100 is good.  But more is always better if your household budget allows.  DO NOT invest money you really cannot afford.  Putting money in should always stay there.  This is your future and your retirement.
9. What does it cost to get started investing in Mutual Funds?  The cost is pretty reasonable for the average person ready to begin investing.  I know for most Mutual Funds, especially within the Franklin Funds family it is usually a minimum one time investment of $1000.00 to get started.  But after the initial buy in, you can invest any amount you wish whenever you wish.  Most funds are like this, but I have seen some that are lots less to get started even a $1.00 initial investment and others as high as $10,000.00.  But the normal initial buy in to get started is usually $1,000.00.  After an initial buy in you can invest monthly as little or as much to the Mutual Fund that fits into your budget.

I will continue to write in this blog on a fairly regular basis as to stock tips, hot stocks and mutual funds and give you my opinion for consideration. Of course any advise I give is purely my opinion.  I am NOT a licensed stockbroker and any advise you read in this blog should be reviewed with your financial advisor before making any final decision in your portfolio.

Gus