The official lounge stock market & investment advice thread

[Spray_resistant]

How do you know where to go to in order to invest in any company you think will do well in the future?

Adam, you are going to have to talk to me like I am 5 years old in regards to this subject because I know nothing about this.

Maybe a summary how how one actually begins in the stock market would help me or other posters who also don't know anything about this.

[Sugar Adam Ali]

i have vanguard 401k so i want to use vanguard..
what do you think of this index fund.. i want to invest $10k first and see he how it goes.. after a year, when i'm more comfortable, i'll invest more..


https://personal.vanguard.com/us/fun...tExt=INT#tab=0

It seems decent, I don't know your age or timeframe, so hard to say of this is a good fit..

Pros and cons

1. Has a great track record

2. I don't like how it's 1/3 stocks and 2/3 bonds.. Bonds have gotten a lot of love when the market crashed, but as the economy was stabilized year by year, stocks are slowly taking cash from the bond markets.. I would like it better if it was all stocks or at least 2/3 of stock..

3. Seems like a good cash generator.. 2.5 yield on 10k is an extra 250 every year and will only go higher as the shares value grows..

4. Fees- it's not expensive but it's not cheap either.. .25 fee ratio is pretty good but you could probably find a cheaper index fund.. Mine is at .08 but I have seen them as high as 1.2
They also have an annual fee ranging from 15-40 bucks a year depending on what sort if an account you have.. Some of the accounts the fees can be waived if you sign up for paperless reports, transactions, etc

If your going to put money into it, I would give it at least 10 yrs with dividend reinvestment.
And do dollar cost averaging which means if your going to put in say 10k, don't put it in at once but pay the 3k minimum, and then add in 1k every month till you have invested the full 10k.. That way if it goes up, then that's great, but if it swings down, this will allow you to purchase more shares at a cheaper price compared to the month or 2 before, so after a year you have a nice even cost basis, and won't get hung out dry if your initial price point proves to be bad..

But def give it 10 yrs if not more, and if you put money in, don't under any circumstances pull the money out when things go bad, things may get bad for 6-18-24-48 months but over time the market rebounds and goes even higher. Don't be hat sucker that invests, then loses some and panics and pulls out at the bottom.. When stocks drop, just think of them as being on sale and buy more..
My best investments ever were buying stock in early 2009 when everything had crashed.. 5 years later and my returns have been great

[spytactics]

I made a killing with JNUG... Bought 12,000 worth of shares at an all time low in the 13's and sold at 29. Turned around and bought bear and picked up another 4 grand. The recent unstable Iraq situation has allowed me to profit in the energy and gold sectors. I also have invested in facebook longterm as well as bio-printing and the marijuana sectors...this has been my best year so far in terms of investing!

[Butler]

It seems decent, I don't know your age or timeframe, so hard to say of this is a good fit..

Pros and cons

1. Has a great track record

2. I don't like how it's 1/3 stocks and 2/3 bonds.. Bonds have gotten a lot of love when the market crashed, but as the economy was stabilized year by year, stocks are slowly taking cash from the bond markets.. I would like it better if it was all stocks or at least 2/3 of stock..

3. Seems like a good cash generator.. 2.5 yield on 10k is an extra 250 every year and will only go higher as the shares value grows..

4. Fees- it's not expensive but it's not cheap either.. .25 fee ratio is pretty good but you could probably find a cheaper index fund.. Mine is at .08 but I have seen them as high as 1.2
They also have an annual fee ranging from 15-40 bucks a year depending on what sort if an account you have.. Some of the accounts the fees can be waived if you sign up for paperless reports, transactions, etc

If your going to put money into it, I would give it at least 10 yrs with dividend reinvestment.
And do dollar cost averaging which means if your going to put in say 10k, don't put it in at once but pay the 3k minimum, and then add in 1k every month till you have invested the full 10k.. That way if it goes up, then that's great, but if it swings down, this will allow you to purchase more shares at a cheaper price compared to the month or 2 before, so after a year you have a nice even cost basis, and won't get hung out dry if your initial price point proves to be bad..

But def give it 10 yrs if not more, and if you put money in, don't under any circumstances pull the money out when things go bad, things may get bad for 6-18-24-48 months but over time the market rebounds and goes even higher. Don't be hat sucker that invests, then loses some and panics and pulls out at the bottom.. When stocks drop, just think of them as being on sale and buy more..
My best investments ever were buying stock in early 2009 when everything had crashed.. 5 years later and my returns have been great

1. how much fees am i looking at if i want to take all my money for index funds like these? i know in 401k you have to wait until you are 59

2. regarding income tax.. do i have to pay tax every year if it makes money even though i'm not withdrawing anything..

[Sugar Adam Ali]

How do you know where to go to in order to invest in any company you think will do well in the future?

Adam, you are going to have to talk to me like I am 5 years old in regards to this subject because I know nothing about this.

Maybe a summary how how one actually begins in the stock market would help me or other posters who also don't know anything about this.

Ok, first thing you do is set aside some cash, at least 500-1000 bucks.. Most minimum investments when starting an account require initial investment of 500$ roughly..

2. Find a brokerage company you feel comfortable with.. I would recommend the one I use Charles schwab, but there are others like e-trade, scottrade, etc..
All these companies have websites and so just google them and check them out.. Look for fees and trading commission.. A flat fee for commission is best, at schwab I pay 8.95 per trade, but others like e-trade have them as low as 4.95 and have special deals like no commission for your first 6 months.
I like schwab because it has a long track record, have replaced money that was ripped off by identify theft, and they are very low cost for being a major brokerage.. Plus they have a good website, and a 24/7 help line, and every time I have called with a question they give great customer support, even if it's over 200 dollar trade and not thousands of dollars.. I highly recommend them, but use whoever you want

3. Decide what type of account you want, there are several types..
ROTH IRA or standard IRA -individual retirement account is an account where you can put money into and it's tax free when you take it out.. But there is a limit about 5,500 each year and you can't touch it till your 65 years old..
Then there are just standard accounts, which you can put unlimited money in and touch it anytime but there is usually big fees if you withdraw within the first 30 days, but afterwards nothing but your commission fees in each trade, and when money comes out it is taxed.. I usually invest in my Roth IRA til I hit the limit then use my standard account the rest of the year

4. Once my account is open and I have money in there, I would buy an index fund at each month put money into it.. It's very easy to buy stock once you have an account open.. I do all my online and never have to talk to anyone, it's very convenient.. If you sign in and surf the we page you will see the options to buy or sell and it's very easy.. Each investment has a ticker symbol, like apple is appl, or 3d systems is DDD, you can search for different symbols and just click and buy..

4. I highly suggest depending on your age to open an IRA preferable a Roth IRA. From there, find an index fund that tracks an index, and simply plug money in each month.. Doing this every month for 15,35,35 years, and reinvesting the dividends, you will have a huge nest egg once you hit 65 and are allowed to take it out with no fees or taxes..

An index fund is a fund that owns shares in all the stocks in a category..
Down jones index- has all money invested in Dow jones stocks-which are the biggest companies in the world spread across different business areas ie technology, oil, banks, manufacturing, etc..
I use an S&P index that owns shares in all the top 500 companies.
There are tech indexes that just invest in all tech companies..
China index invests in all china, etc etc..

If you were just now 65 years old and could touch your money and had been investing in index funds for 40 years or since the age of 25 in 1974.. You would be a millionaire or damn close to it...

[Sugar Adam Ali]

I made a killing with JNUG... Bought 12,000 worth of shares at an all time low in the 13's and sold at 29. Turned around and bought bear and picked up another 4 grand. The recent unstable Iraq situation has allowed me to profit in the energy and gold sectors. I also have invested in facebook longterm as well as bio-printing and the marijuana sectors...this has been my best year so far in terms of investing!

What marijuana companies? I have been looking at them and am interested but haven't found a decent one yet that seems to be legit for the long term.. I love the sector but just unsure how everything will shake out. It reminds me of when the internet came out and we had in the 90s compuserve, prodigy, AOL and now 20 years later the main players are google, yahoo, etc...

[Butler]

you said it yields $250 for $10k investment.. which is 2.5 yield..
i did see SEC yield 2.43%

how come on this graph if you click 1 year performance, $10k became almost $11k.. is this a hypothetical graph?

https://personal.vanguard.com/us/fun...tExt=INT#tab=1

[Sugar Adam Ali]

1. how much fees am i looking at if i want to take all my money for index funds like these? i know in 401k you have to wait until you are 59

2. regarding income tax.. do i have to pay tax every year if it makes money even though i'm not withdrawing anything..

1. Usually withdrawal fees are most severe early, like within the first 30 days or 6 months, or year.. With your fund I'm not sure, I will have to look again, or you can call them and ask
Once your invested in a stock, you don't get penalized if you cash out, you can cash out and by something else, you just can't take it out of your account..I know there is steep penalties for early withdraw for retirement accounts, but for standard accounts you can move cash around and in n out as much as you like as long as you have the bare minimum left in the account

2. I'm not a tax expert so my advice is not 100% when it comes to taxes. Yes you will have to pay some taxes if it's a standard account. Much like how your job will give you a W-2 every year, your brokerage will give you a similar form showing all your financial tax stuff..
Uncle Sam taxes everything and stocks are no different, but your taxes go down if you hold your stocks longer than a year.. Less than a year you will pay some steep taxes in capital gains etc.. As far as income tax goes, it's different in each state and federally I would suggest talking with someone from your brokerage..

If your looking to pull your money out quickly, I suggest don't even putting it in..
People trading stocks aren't investors, they are traders and yes you can make some cash, but for the average person, long term is the best way to go..
Warren Buffett is one of the best investors ever, but he hardly ever sells stock, he just accumulates it over the years

[jaded]

Somebody PM me when Warren Buffet shows up.

[Sugar Adam Ali]

you said it yields $250 for $10k investment.. which is 2.5 yield..
i did see SEC yield 2.43%

how come on this graph if you click 1 year performance, $10k became almost $11k.. is this a hypothetical graph?

https://personal.vanguard.com/us/fun...tExt=INT#tab=1

They are also factoring in the value of the share itself plus the yield..

So if you invested 10k, in one year it might rise to be worth 10,500 which is a modest 5% gain, plus the 250 yield to give you a total value of just under 11k for one year.. They are showing you gains in stock price plus the dividend payouts