Beginner Investing

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Tags: finance, financial institutions, global finance, investor, joint ventures, money, money management, risk management

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Losing A Little Is Better Than Losing A Lot

As a beginner investing in the stock market you will need to understand that there will be times where you will have to take a loss. If you do your research and homework, you can avoid many of those experiences. Unfortunately there will be times where the markets will correct themselves after a major run up in stock prices. In those times, It prudent to take a small loss instead of sitting there watching a bigger one happen.

The other day when the stock market went through a correction period, I remembered when I was able to minimize my losses by just dumping everything in the morning hours. Waiting until the “panic” and/or profit taking was finished to get back in to the stocks that I feel had no reason to lose value. It will happen to some great companies that are fundamentally sound when the market as a whole take a dive.

A couple of years ago I was listening to CNBC in the pre-market hours, they were say that things looked pretty grim. I went on to a few message boards as well as many different blogs that expressed the same news. According to the streamer that I use to follow my portfolio, the value of the portfolio had already lost about 2-3% of it’s value. I wasn’t comfortable with the overall message that was being put out there by the many different sources, so I dumped my entire portfolio at the opening bell.

I wasn’t happy about the fact that I did it, but I thought it was the best thing I could do at the time. As the day went on, the DOW, NASDAQ and the S&P 500 all fell another 4% or more. My thoughts were correct and what turned out to be a $2000-$3000 loss, could have been a $10,000 loss instead.

Of course that type of situation doesn’t take place every time the markets look grim in the pre-trading hours, but there will be days where you will see the writing on the proverbial wall. I didn’t like the small loss I did take, but I look back on it now and see that later on when the dust cleared in the final hours of that day, I jumped back in a made that money up and then some.

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Tags: Beginner Investing, cnbc, dow, investing in the stock market, money, nasdaq, stock market, stocks

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Six Questions To Ask Before Investing In Mutual Funds

A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio. Each share represents an investor’s proportionate ownership of the fund’s holdings and the income those holdings generate.

1. What is the fund’s goal?
The fund’s goal should match your own. If your goals change over time, you may need to reevaluate your investments. If you invest primarily for growth, your goal is to increase the value of your investment over the long term. If you invest primarily for income, your goal is to receive a regular flow of earnings from your investment. If you invest primarily for stability, your goal is to protect your investment from loss. No investment can maximize all three goals simultaneously. Some funds emphasize one goal; others try to assign priorities among goals; still others try to strike a balance among different goals.

2. What is the fund’s investment strategy?
The prospectus describes the range of securities the fund may purchase, how it selects them, the types of securities it emphasizes, and investment practices the fund may use. The fund’s investment strategy relates to its, and your goals.

3. What are the fund’s fees and expenses?
All funds must fully disclose their fees and expenses in a table at the front of the prospectus. To make it easy to understand and compare to different funds, all fee tables must follow a standardized format. You must decide if the cost of owning a particular fund is acceptable to you.

4. How are the fund’s distributions made and taxed?
Fund distributions—your earnings—include dividends earned on the investments the fund holds, and any capital gains made when the fund sells investments for more than it paid for them. Funds must make distributions at least once each year. Many shareholders elect to have their distributions reinvested in the purchase of additional shares of the fund, rather than taking them out as cash. It may also be important to you to determine when distributions are made and how they’re taxed. You will be taxed on all taxable distributions, whether you take them as cash or reinvest them in additional shares. Of course, if you sell your fund shares, you may realize a gain or loss which is subject to taxation.

5. How can you buy fund shares?
Some mutual funds offer their shares through investment professionals who provide investment advice, such as brokers, bank representatives, and financial planners. Other funds offer shares directly to investors through the mail, by telephone, over the Internet, or at their own retail offices. Funds may also be offered through employer retirement plans. No matter how or where you invest, mutual funds, unlike bank deposits, are not insured or guaranteed by the federal government.

6. How can you sell fund shares?
By law, the fund must stand ready to buy back your shares on any business day. Depending on their value at the time you redeem, you may receive more or less than you paid for them. Redemptions may be made by contacting the fund company directly or through your investment professional

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Tags: capital gains, dividends, investment strategy, investments, investors, mutual funds, shareholders

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Free Trial To Action Alert For Investors

If you’re a beginner investing in the stock market, it’s a good idea to check out as many resources as possible to get different opinions.

If you have Sirius/XM radio, you can listen to the Bloomberg channel and a handful of others for up to date information. As for TV, you can watch CNBC. Their stock market coverage throughout the day is quite informative, but other than these few channels you really don’t have a wide variety of choices.

When it comes to the internet though, there is a ton of resources to get you started and the amount of information is endless. Of course you have a lot of the spammers out there and those who just want you to buy into their program or buy their e-book. Most of these people are not known in the investing community and all they talk about is their own self-proclaimed accomplishments of how they struck it rich.

One person that I would recommend is Jim Cramer, the over-the-top, happily-insane, entertainer and well informed in the investing world, host of Mad Money. He is also the chairman of the stock market website, The Street.com

I have been watching Cramer for as long as he’s been around and I learned a lot of things from him and I personally have made quite a bit of money from his recommendation. Yes, there are times that he will be wrong but when he does, he admits it, which I admire about him.

Jim Cramer is very knowledgeable in the stock market world and I trust his opinions and his techniques in choosing the right stocks. He is more of a fundamentalists analyst than a technical one.

There’s so much more to what Cramer can do for you than just his TV show. His website The Street.com has a few different services available that I know can help increase your knowledge and your portfolio. Action Alerts Plus is one of those programs that will give you the insight into why Cramer picks the stocks he does.

As a member, I receive his e-mails several times a day and they inform me as to what stocks he’s going to buy or sell before he does any trading. I also get a chance to study his portfolio.

The best part is that you can get a FREE two week trial of his service. If you don’t like it and want to cancel, no problem. During the two week FREE trail, you will be able to poke around and see what you need to do to make your portfolio a success.

I’ve been a member for a year and have made some good returns in a down market. With all the different places out there that want to get you to sign up before seeing anything, give Jim Cramer a try for two weeks of FREE and I sure you won’t be disappointed.

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