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Discussion Starter · #1 ·
So, like I mentioned to helpful part-time investor Samblaze a couple weeks ago, I want to invest in the stock market but I have no experience with S.M. investing.

I am thinking $50 to start investing with because I want to start out small to get comfortable then use bigger bills later on. Is $50 enough? How would one go about investing for the first time? What type of stocks should a beginner invest in?

I am planning on investing in large established international fortune 500 companies first, for the obvious reasons. Then as I get my swagger I'll make risky short term investments.

So, any advice? I'm hoping this thread can not only help me but others in the same situation as well.
 

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aclegend
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when i wanted to start out , i did a lot of research on how to get in. the only way possible was to invest through a bank or there are private corporations that just deal with investments. investing through a bank required a minimum balance of $5000, but a company like etrade only requires i think $2000. So im pretty sure $50 wont be enough. I'll have to find out but i think there are a few other companies with the minimum requirement of $1000.
 

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aclegend
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1 more thing, there are two types of account u can go for, either a cash or a margin... lets say if u open a cash account with a balance of $5000, and the stock starts to decline, all u will loose are those $5000 u invested, but in a margin account, u will be responsible to cover up ur losses meaning u will have to maintain a balance of 5000 at all times.
 

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Discussion Starter · #4 ·
Aw, my bank has investment options as well I just wanted feedback from you guys. About the 50, I was just trying to get an idea of how much is too little. I would think it can be used with a mutual fund. No?
 

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SGM / Type F
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Hey Xcaliber what's up! The best place I know to get started investing with small amounts of capital is Sharebuilder.com (owned by ING Direct). It's where I started and still maintain one of my accounts. They have no minimum to start with. Most of my accounts are now with Schwab/Etrade as they have far more sophisticated market analysis tools, but that's a far later stage in your investing career! So you can start an account there with your $50. They also only charge $4 per transaction but have a transaction limit per month, which is a very low rate and perfect for beginners who don't want to: (a) trade a lot and; (b) pay more per transaction for features/services they will never use.

I would recommend that you start an account with $100. This gives you some cushion for both transaction fees and market fluctuations. I would start with looking at ETF's (Exchange Traded Funds). These are similar to mutual funds, but have no minimum purchases balances (typically ~$2.5K for mutual funds, lower if you go the IRA route). So look for an ETF based on the "established international fortune 500" companies you're interested in. This is a good site to start learning about ETF's: http://www.etfresearchcenter.com/

Once you find the ETF you're looking for, use your Sharebuilder account to put about $75 into that particular fund, keep a $25 cash margin in the account. This is a good rule to follow for ALL your investment accounts in the future, keep 25% liquid at all times.

Now remember, since you are starting with low capital, it will take a long time to build up to amounts that will return higher yields as well so you have to be patient. You also have to pick an amount you can contribute monthly to your investment account. When I started I would put in $50 a month. Now it's much more of course because I earn enough interest. I still put in $150-$200 a month from my regular income into whatever is my newest investment account. It's like a car payment and I end up with something that builds value unlike 99.9% of cars! Anyway, monthly contribution is the only way to bring yourself up to the capital levels where your investing can start bringing you significant income and value.

Sorry for the long post, hope it gets you started on the road to making your money work for you. I'll try my best to answer whatever questions you might have in the future too. GL!
 

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when starting out, its best to avoid picking individual stocks. I advise buying a fund that is already diversified - and lower risk. The trick for anyone starting out is to first preserve and secondly accumulate their initial capital.

The market is low now, so its actually a good time to jump in.
 

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Investment Banker eh, what firm do you work for? I'm on Bay Street too.

Good advise from the folk here. If you are just starting out, your initial steps should be to accumulate capital. The best way to go about it is to start a Mutual Fund account and contribute $50-100 on a monthly basis. Commodity linked MFs have been performing well over the past couple of years and may continue to do so in the short term. Once you have over $1K, then you can look into buying equities but you would be limited in terms of options; you'd have to choose between a cheap growth stock or very few shares of a blue chip company. ETFs are the best way to get in on the action. There are so many of them out there and you can make money on the way up and down. I advise you to learn more in the meantime as you accumulate capital. The market is about to get much worse, so it would be wise to be conservative for now.
 

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Discussion Starter · #9 ·
Thanks everyone! You're right Tony, there is alotta great advice. I'll definitely keep learning as much as possible while I'm building capital.:yes:

Hey Xcaliber what's up! The best place I know to get started investing with small amounts of capital is Sharebuilder.com (owned by ING Direct). It's where I started and still maintain one of my accounts. They have no minimum to start with. Most of my accounts are now with Schwab/Etrade as they have far more sophisticated market analysis tools, but that's a far later stage in your investing career! So you can start an account there with your $50. They also only charge $4 per transaction but have a transaction limit per month, which is a very low rate and perfect for beginners who don't want to: (a) trade a lot and; (b) pay more per transaction for features/services they will never use.

I would recommend that you start an account with $100. This gives you some cushion for both transaction fees and market fluctuations. I would start with looking at ETF's (Exchange Traded Funds). These are similar to mutual funds, but have no minimum purchases balances (typically ~$2.5K for mutual funds, lower if you go the IRA route). So look for an ETF based on the "established international fortune 500" companies you're interested in. This is a good site to start learning about ETF's: http://www.etfresearchcenter.com/

Once you find the ETF you're looking for, use your Sharebuilder account to put about $75 into that particular fund, keep a $25 cash margin in the account. This is a good rule to follow for ALL your investment accounts in the future, keep 25% liquid at all times.

Now remember, since you are starting with low capital, it will take a long time to build up to amounts that will return higher yields as well so you have to be patient. You also have to pick an amount you can contribute monthly to your investment account. When I started I would put in $50 a month. Now it's much more of course because I earn enough interest. I still put in $150-$200 a month from my regular income into whatever is my newest investment account. It's like a car payment and I end up with something that builds value unlike 99.9% of cars! Anyway, monthly contribution is the only way to bring yourself up to the capital levels where your investing can start bringing you significant income and value.

Sorry for the long post, hope it gets you started on the road to making your money work for you. I'll try my best to answer whatever questions you might have in the future too. GL!
Thanks Sam! That's what's up. :bowdown: Lots of good vital information. This is the route I'll take; $100 in the sharebuilder account, $75 goes to an ETF, 25% remains liquid (great tip btw), and build the capital each month.

Being patient is the plan, I'm just laying the foundation to try to become a solid investor.

Um, I don't have any more questions right now but I'll let you guys know if *scratch that* WHEN I do. lol

I sincerely appreciate the help guys!:thumbsup:
 

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I agree with the guys responses.. Don't get discouraged if that $50 isn't turning into $100 right away.. thats a 100% gain.. be happy with 10%+ gains year over year if you arent actively managing the money.. i think the rule is , 10% a year for 7 years = your money doubles..

stick with mutual funds for now as you build your capital. i use vanguard.com and fidelity.com - keep in mind, to buy into mutual fund, you have to buy into their minimum.. vanguard is $3k per fund minimum, but VGSTX is $1000 minimum. fidelity has lower minimums.. $2500
 

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Most investors aren't going to suggest this but I'll throw it out there.

At 16 I bought 3000 shares of a local tech company at $.03 a piece. I figured what the hell, if they come out with something big I could make some loot, and if not its only $90 lost. Within 8 months the stock went up to $1, and I made a $2700 profit.

I don't think penny stocks are such a bad idea if you're going to be investing a small amount of money initially. Chances are slim you'll make a large (or any) profit, but if you do it could be a very huge percentage of what you invested.
 

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OK! My other passion besides cars! INVESTING.

I think you should check out: UpDown | Social Network for Virtual Investing: A social network for investors. Learn investing with virtual portfolios. Contribute stock analyses and ideas. Earn real $. Investment club tools. Portfolio competitions.

you get a million dollars (fake, of course.) and get to invest it anyway you want in any company. There are investers on there that give there opions on other stocks and what not. Based on your performance vs. the S&P 500, you win real money. For ex. last month i won like 1.75 for beating the S&P 500 by a few %. The better you do, the more $ you make. I am not in it for the $ tho, for the experience.

When you get savy playing with that, you could try to open an account with tdameritade.com (like e-trade) and the trades are 9.99 to buy and 9.99 to sell. Your 50 dollars is not a good beginning because:

Lets say you start with 50 shares of a 1 dollar stock. 50 investment, then they get there 9.99 for the trade. SO now you have spent 60. The stock goes up 20% and you want to sell, well it cost 9.99 to do the trade. So you made nothing.

I started with 500. That way i can net a profit. Now i have 1800 in the market and i still have my play acount with theupdown.com and am sitting at a nice 1,175,000. So 17.5% gain.
 
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