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New Investor - Methodology/Sources

T

T2P

Green Horn
Joined
Sep 12, 2009
Messages
700
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Smoking Section
Let me start this off by saying I am in no way looking for investment suggestions. Everything I have read that is of decent quality to this point indicates that in order to actually feel comfortable with an investment and learn anything about the process you must do the legwork/analysis yourself. Without this, you really are not going to understand why you are buying/selling anything and it becomes a crapshoot with costly lessons.

I am currently 26 and married. My wife and I have been working to pay of some higher student loan interest she incurred while in school. In addition, we are also putting 15% of our pay towards retirement through 401k contributions and Roth IRAs. Having maxed the Roth IRA for a few years now and only putting it into 500 funds I am looking to take the next step of learning how to invest in individual funds and other investment vehicles to vary our retirement funds a bit and maybe take on a bit more risk for reward. Later, when we have a little more discretionary income, I would also like to start investing outside of retirement for shorter term.

So ultimately, if you were in my situation, where would you turn? What sources offer good information for the fairly new investor and what are some of the more priceless piece of advice you can give? Again I want to put in the time to learn how to do this properly and am not looking for magic pill/golden egg solution. Any help is appreciated and if this has been asked/answered previously and I missed it in my search, please direct me there as well.

Edited: I forgot my actual age
 
No advice from me, but I'm interested in this discussion, too. I've just now been able to max out our Roth IRAs and am looking for options on what to pursue next, too. Between the RIRAs and college funds, I'm investing right at 17% of my gross base pay.

I've pretty much accepted that the student loans aren't going anywhere for many, many years, though. :D

-John
 
Well, there are a lot of books on the subject, but having not read any of them, I'm not comfortable making any recommendations. :p One thing you might consider though is checking if your bank offers financial planning services. You can use that to fish for info. You seem to be doing a good job for retirement, but stop in and talk to them about shorter term investments and ask if they know of any resources where you can learn more about the products available for the investment strategy you're looking for. Someone who makes their living in the field should be willing to help. I know the investment planners at my bank do as much educating as selling with their customers.

Sorry for the lack of specifics, but I hope this helps a little.
 
I would definitely recommend sitting down with a professional. Like Dave said you can get good advice at your local bank. If you're starting small it's the best place to get good information.

If you're looking for research you can start with bloomberg.com, zacks.com, and morningstar.com. You can definitely find enough information there to make you dangerous.
 
Why don't you go through a low cost investment house like Schwab, Vanguard, etc? Just go with one that has low commission and/or trade fees.

I'm really not in to buying single stocks as there is just too much risk IMO for the small time investor. You might want to look closer at exchange traded funds (ETFs) which are somewhat similar to mutual funds in that you have access to more than one stock within an ETF, but you can trade in a similar fashion to stocks.
 
I would recommend Robert Kiyosaki's series of investment books. The first, "Rich Dad Poor Dad" is where I started probably 10 years ago and also read "Cashflow Quadrant" and "Rich Dad's Guide to Investing". You can get them pretty cheap on Amazon. He also has expensive seminars now which anyone should think long and hard about before plunking down the cash. I wish I had all the money I've spent on my seminar based investment education. I'd have a really nice margin account now. :D

You can get into free or cheap investment seminars that will give you some pretty good basic information but just realize that they will also try to up sell you. I learned a great options based strategy for a self directed IRA in one that I have actually used some. I've been away from it for about a year but will use it again once I get cranked up again.

It doesn't really matter what route you take as long as you take one.

Jamie76 said:
Why don't you go through a low cost investment house like Schwab, Vanguard, etc? Just go with one that has low commission and/or trade fees.

I'm really not in to buying single stocks as there is just too much risk IMO for the small time investor. You might want to look closer at exchange traded funds (ETFs) which are somewhat similar to mutual funds in that you have access to more than one stock within an ETF, but you can trade in a similar fashion to stocks.
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I use Thinkorswim. :thumbs:
 
LarryH said:
I would recommend Robert Kiyosaki's series of investment books. The first, "Rich Dad Poor Dad" is where I started probably 10 years ago and also read "Cashflow Quadrant" and "Rich Dad's Guide to Investing". You can get them pretty cheap on Amazon. He also has expensive seminars now which anyone should think long and hard about before plunking down the cash. I wish I had all the money I've spent on my seminar based investment education. I'd have a really nice margin account now. :D
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Good books. If for nothing more than thinking about investment in a different way.
 
Full Disclosure - I am a financial advisor for an independent investment advisory firm, my post does not constitute investment advice but rather ideas in which to gain investment education.

Be very careful of the types of seminars you attend as LarryH mentioned. If they have a solution that is so good, why are they trying to teach it to you for only $50?

I would read "The Intelligent Investor" by Benjamin Graham it was written years ago but still has a lot of merit on the fundementals of investing. I own a copy and refer to it a lot.

I would also only get your news from Bloomberg or yahoo finance. CNBC and FoxBusiness are media driven outlets, the people who appear on those shows have to pay to do so, CNBC does not care what you invest in, only that you watch. Bloomberg is pure business news.

The books mentioned above are good choices. Becareful of some of the media/TV personalities books, they push their ideas down your throat when you need to do what is best for you and your situation. The general public sometimes think that the TV personalities are talking directly to them.

You are on a very good start to saving for retirement, make sure you invest those savings properly.

Good luck.
 
As mentioned earlier it sounds like you are off to a good start. A good rule of thumb is to always max your retirement savings first, whether it is a Roth IRA, IRA, IRA Rollover, or any of the myriad 401K type programs out there. Another thing to keep in mind with a Roth IRA is your contribution ceiling. As your earnings rise the contribution levels decline...keep an eye on that because at some point in your life/career, switching over to an IRA will be a better move. Also if you do have a 401K that you are maxing out, max out your Roth or IRA. Only then would I move to investing in a retail account. Given your age, you definitely want to seek alpha, so stick with equity over fixed income. It is true you want a well balanced portfolio, but you have to make sure it is balanced for your age. Avoid shorting stocks or short ETFs if you are risk averse. The caveat is that with shorting stocks, their is limited upside, but the potential for unlimited losses. Online services from Fidelity, Schwab, Ameritrade offer many tools, but none are a substitute for an investment professional. Steer clear of college savings plans if you are not maxing out for your retirement. There are always going to be student loans for the young, but there aren't loans for the old. Retirement savings is paramount to all else. Mutual funds are safer than individual stocks. That is a given. To diversify risk it is unwise to put more than 15% of your funds in any single stock. I think when buying a stock, you should always have a stop/loss price in mind. Equity investing requires discipline...if the stock takes a hit and goes down to your stop/loss figure, sell it...that's it...sell it...don't think about it, justify it, reason it...just do it. Sure sometimes you might regret it, but by and far in the long run it will save you money. Avoid options unless it is to hedge profits. There is so much more I could right...little pearls of wisdom and what not, which I unfortunately don't have time to do. There are many nuances to investing that you will learn through experience...don't daytrade...you can't beat the institutional investors over the long haul...you just can't beat them on execution and size. Tax consequences need to be taken into consideration everytime you sell and plan on reinvesting that money. Books can give you ideas, but that is it. Everyone has a book that tells you how to invest, but if any of them worked for everyone, we would all be rich. There are only three books that I would recommend that you read. They may not be all you need to know, but they are, in my opinion, important...Fooled By Randomness and The Black Swan by Nicholas Taleb and Reminiscences of a Stock Operator by Edwin LeFevre. There are other books out there that are great, but it depends on how involved you want to get into it and how much time you want to spend researching investment ideas. Oh...by the way...I don't want to creat controversy, but firms don't pay to be talking heads on CNBC...the media is constantly calling sell side and buy side investment firms to appear. Bloomberg works no differently than CNBC, or the WSJ, NYT, Barrons or FT for that matter. All of them have reporters calling research analysts and portfolio managers that have a reputation for a certain ideaology or experience to comment on a topic that is perceived to be of importance at the time. Trust me on that...Good luck to you.
 
thechenman said:
Oh...by the way...I don't want to creat controversy, but firms don't pay to be talking heads on CNBC...the media is constantly calling sell side and buy side investment firms to appear. Bloomberg works no differently than CNBC, or the WSJ, NYT, Barrons or FT for that matter. All of them have reporters calling research analysts and portfolio managers that have a reputation for a certain ideaology or experience to comment on a topic that is perceived to be of importance at the time. Trust me on that...Good luck to you.
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The example I gave is one from experience. Before joining the finance world I spent a number of years in public accounting, that firm had an asset management wing that paid big bucks to get the CIO on CNBC a few times. Two years later that accounting firm sold the asset management wing for pennies on the dollar.

The rest of your post I totally agree with, Stock Operator is a great book. Would have been nice to sit in a "bucket shop" with a nice smoke and play the trends...
 
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