Any Stock Holders out there? I need Financial Advice. No...not which stocks I should buy.

by Voices 17 Replies latest jw friends

• 

  Voices

  My main concern is not my 401k ...honestly, I believe the 401k is going to FALL in the future (Read Robert Kyosaki's 'prophecy' ..founder rich dad Poor dad). So i'm trying t make alternative methods to make money, here, in the now. One way to do this...is to invest in a company, I will research repeatedly. I'm trying (like many others) to become financially independant in the long run. I also do not trust the 401k. If I can use it to my benefit now and put it into stocks an dmake money now or in the long run, i'd much rather do that. My main thing is, I need money NOW. I need to invest NOW, not only for the long run...because I want a long term shares, but also a short term. And I'm reading up books by Lynch and trying to undersatnd it all. I think it's ridiculous to put money in the bank and save it, when you can put it in an investment and make more. Yes, i'm aware of the fact that you can loose it all spending 100 bucks a money on buying shares...in the long term investment, will only benefit me in the long run, if I do my research correctly and choose the correct stock. Yes I want a diversified portfolio, but seeing how i'm just getting started, I want to make cash to invest and reinvest, and reinvest all gains and profits (excluding taxes of course [like take out 15% out of all capital gain and reinvest the rest]). The fact is, I don't know about mutual funds...i know barely anything about it. I have what Lynch calls 'Common sense' when it comes to certain things that i can just look around and say 'this is a great product, it'll take off.' or 'this is going to really suck.' Just listening to people helps understand what the consumers want and what will work. Of course it's not tha tsimple, but it's a start. and of cours elooking at balance sheets and P/E is good, but that doesn't always help, however, it is a good start. I basically need to speak to someone and have a serious conversastion about what I can do right now. No, i'm not going to come running and screaming about how i lost everything, if i do. I undersatnd the risk here. The part I DON'T understand is the taxes and stuff. If i take all the crap i buy (soda, ice cream, energy drinks etc..) and just take all the money i would put into those 'luxuries' and instead put that money into a particular stock and STILL loose it all, I will have gained only knowledge and experience, as opposed to a stimulation of oral gradification through certain unnecessary items. I just don't want to sit there and not only LOOSE th emoney invested, but have to PAY MORE than I invested. That bothers me.

  I'm open to more advice. If anyone is open to having a one on one discussion, I would greatly appreciate the guideance.
• 

  elder-schmelder

  You should never have to "pay more" then you invested. That would be a SCAM. It sounds to me like you need to find a financial advisor.

  elder-schmelder
• 

  Quirky1

  I just used some chicken stock in my soup..
• 

  Judge Dread

  Open an account with Scottrade and just buy the stock.

  You will only pay taxes when you sell and will be taxed short term if you sell within a year.

  If you hold your stock for more than a year you will be taxed at a slightly lower long term rate.

  If you sell at a loss you will be able to claim that loss up to $3000 per year.

  That seems to be what you need to know.

  If you have anymore questions, you can p.m. me.

  JDW
• 

  diamondiiz

  I'm not sure about 401(K) structure and how it affects your retirement pension and old age security in US which you should check into it. If the employer matches your contribution that's a bonus. In Canada 401(k) equivalent (?) - the rsp, is beneficial if you're in the higher tax bracket where you can write off the amount of money you contribute to your retirement savings plan. If you're in the lowest tax bracket, rsp is not beneficial and is a bad idea since you will end up paying tax on the money when you take the money out of the rsp, maybe even higher tax than what you got back. In Canada when you retire or at age 65 if I remember correctly you have to start slowly taking your rsp contributions out and if you have too much in there your old age security payment is lowered due to your rsp "earnings." If you are in US it's good to find out these small details before you pursue 401(k) account as it may bite you in the ass when you retire.

  A benefit of having a margin account is that you can trade options and also you can hedge your stock in some cases it is a very useful tool. Also when you take profits here in Canada you pay tax on 50% of the profits - capital gains. Once again, in US it might be different story.

  Research which trading company suits you best and find out if there is a minimum amount of trades you need to do per month/quarter without paying penalties. If you trade through a broker, commissions are always higher.

  Markets are rigged so there is no common sense and don't count on it. Some sectors are more volatile than others and some you have to have nerves of steel. Your best tools are charts, other than that, lots of luck. Daily and weekly charts are great tools to look at stocks when to buy and sell, bollinger bars are great too. Don't trade on margins or you can loose more than a shirt and try to know your exit strategy. Discipline is important and that's the hardest thing to learn IMO as I struggle badly with that :( Also, if you do research a stock, look at daily trade volumes and spreads because if you get into a stock where the volume is small and the spreads are wide it might be harder for you to sell when you really need to at a price you want. Also remember, it's easier for $5 stock to double than $50.

  IRS should be able to provide you with booklets that answer many of your questions.
• 

  Razziel

  You said you aren't just looking for financial independance in the future, but also a source of income now. If that is the case, you need both long-term value investing principles, and short-term technicals. It depends a lot on how much capital you have to work with. If you are only investing in $1000 increments, even brokerage fees of less than $10 a trade will seriously reduce most short-term gains.

  If your starting capital is less than $10,000, my advice is to keep all your eggs in 2 or 3 baskets, and throw diversification to the wind until you have more to invest. You say you already have a company your research has identified, and I'm assuming that means you feel it is a solid company with future growth opportunities, and that you feel the company's stock is underpriced.

  I would split my capital into thirds. If you feel the company is underpriced, I would use the first third to buy the stock now as a one year or more hold depending on how the companys future unfolds. Use the 2nd third to trade off of volatility in the same stock. Volatility is your friend. Use technical analysis to identify trends and trading ranges. The 1st third of your holding will appreciate if the market eventually agrees with your research assessment. In the mean time, the 2nd third will help you lock in gains and minimize losses right now.

  Be patient with the final third. Wait for the stock to break out from its trading ranges before committing it. If it is a break on the upside, get in and ride up to the new trading range, then get out. If the stock breaks to the lower side, wait for a new trading range to be established first, and re-evaluate the company. If nothing has fundamentally changed about the company, you can use the final third to lower your cost-average of the 1st third.

  Finally, if you have some success with this, research options trading. You can both hedge part of your investment to protect yourself, and add income right now. Options gains can potentially outperform (on a percentage basis) any common stock purchase you will make. But you have to know exactly what you are doing before you get involved with them.
• 

  Razziel

  To add to Diamondiiz' comment, I wouldn't say stocks are rigged, but in the short-term, they can definately be artificially manipulated for months or even over a year before they swing back towards fair market value.

  Also, for the comment that it is easier for $5 stocks to double than $50 dollar stocks, that is not exactly true. Stock price is simply market capitalization divided by the number of outstanding shares. A $5 dollar stock isn't "cheaper" than a $50 dollar stock. What is true, is that it is easier for a company with a smaller market capitalization to double before a company with a large market capitalization, and that has nothing to do with stock price.
• 

  serendipity

  Back to basics advice:

  1. Use the money to pay down any debt with an interest rate above 7%. (Long term stock market gains are projected to be around 7% conservatively. If you are paying 12% interest, but can only earn 7% in the market, you are better off paying off debt.)

  2. Build an emergency fund of 6 months living expenses and invest in short term CDs/money market accounts at your bank or credit union.

  3. If your employer offers matching funds in the 401K, increase your 401K withholding to get all the employer match. Many employers match the first 3-6%. This is free money. Invest in indexed funds - either S&P500 funds or total stock market funds. There aren't a lot of employers who allow you to purchase stock from a 401K. If you can purchase stock, make sure it is no more than 10% of your total investments.

  4. Max out your 401K or other tax-advantaged account (e.g IRA or government't plan)

  5. Max out a Roth IRA. You can set this up at a brokerage and buy the stock in this account, and avoid having to pay the taxes as some have mentioned above.

  There is some disagreement among financial advisors s to how much to invest in a tax-deferred 401K VS. a Roth . If you think you will be in a higher tax bracket in retirement (either due to rising tax rates OR due to substantial wealth), you are better off in a Roth. Most people will end up in the same or lower tax bracket. If you are unsure, or want to hedge your bets, do #1-3 above. Then, if you have any extra money, split 50/50 between the 401K/tax advantaged and the Roth.