In today's post, we will be focusing on gearing up to invest in the stock market. As you may already know, this blog is focused on tracking my Road to $100,000. One way I am going to accomplish this goal is by investing in the stock market. While I have averaged about a 60 per cent return in the past, I have since sold all my assets to become involved in real estate. I since went back into journalism two months ago and have been getting back on track to saving $100,000. I am more mentally equipped and I can use the information I learned about investing five years, or so, ago to propel my savings at a faster rate.
Getting Started in the Stock Market
Since pulling approximately $20,000 out of the stock market in the last year, I have hit a financial low. However, since returning to journalism, I have managed to pull myself out of about $3,000 of debt and save nearly $2,000, all in 2 months. Mind you, only about 60 per cent of this money was saved from my journalism job, the rest is through online writing and subletting my apartment.
Anyway, when I had about $20,000 invested (60 per cent was accrued interest over about three years), I reviewed my holdings once every year or so. This is because instead of getting caught up in the highs and lows of the market, and becoming extremely emotional (any investor's greatest enemy), I looked at each stock practically. Reviewing your stocks once every year or so requires you to update your knowledge on an annual basis. And by "knowledge," I mean technical knowledge. You see, investing is completely based on market research. There are at least 10 steps you should look at in each stock, and I'll go over these at a later date.
Read Read Read
I will break down for you in a future blog the exact steps I take before buying a stock. To give you an idea, you want to compare the annual profit growth of the company in question. If the company grows at a rate less than 10 per cent per year, move on. To give you an idea, I looked at every NYSE, Dow and TSX stock available each time I reviewed my holdings. After I narrowed my field to stocks priced between $5 and $20, I was left with about 200 to review. Of these, I picked 7.
So far, I have explained a couple of the indicators I pay attention to -- price and growth. By reading investment books, I managed to boil down a formula that works. It is from the book "The Motley Fool Investment Guide," and my style completely matches that what is explained in this book. You could read every book out there, but it will just confuse you. The Fool's Guide is all that is needed. Each year, when you review your stocks, read this book again.
Timing is Key
The time in which you make your move into the stock market is everything. I rarely pay much attention to what is going on with the world politics, such as the issue in Greece. However, when the problem was at its peak, in October 2011, I did pull some stocks out of the market. I anticipated people would begin to freak out and think the entire market would collapse, again. However, the issues in Greece wouldn't hold the stock market down for long -- because even though Greece is struggling, the nation is tiny when you compare it to the world economy.
Timing can also mean personal timing. I will have $2,000 saved at the end of the month. That means I can get a margin account and double that money to $4,000. But it's too early for me to invest. You want to have about 40 per cent of your holdings in large-cap companies and the rest in medium-cap stocks. This means, you should have around $5,000 to invest before you get into the market, and that's only if you plan on securing a margin account, which will double your holding to $10,000. With $10,000 to invest, you can buy 5 stocks at $2,000 each. I would recommend owning at least 7, however, but if you know you will have money coming in shortly, then you might as well put that first chunk into the market. I expect I will be investing in June if I save $1,000 per month.
Stay tuned to get tips about each step on the way to choosing a stock. I will then consolidate the steps together so you can follow them while choosing stocks.
Tip of the Day: Buy the Motley Fool Investment Guide and follow the strategy for choosing stocks, or continue to read my blog posts for a consolidated version.
As always, if you have any questions, feel free to comment and I'll do my best to answer. Also follow this blog for the latest information. Happy investing! Btw, I think it's sad that I'm the only one following my blog... please follow me, lol.
Getting Started in the Stock Market
Since pulling approximately $20,000 out of the stock market in the last year, I have hit a financial low. However, since returning to journalism, I have managed to pull myself out of about $3,000 of debt and save nearly $2,000, all in 2 months. Mind you, only about 60 per cent of this money was saved from my journalism job, the rest is through online writing and subletting my apartment.
Anyway, when I had about $20,000 invested (60 per cent was accrued interest over about three years), I reviewed my holdings once every year or so. This is because instead of getting caught up in the highs and lows of the market, and becoming extremely emotional (any investor's greatest enemy), I looked at each stock practically. Reviewing your stocks once every year or so requires you to update your knowledge on an annual basis. And by "knowledge," I mean technical knowledge. You see, investing is completely based on market research. There are at least 10 steps you should look at in each stock, and I'll go over these at a later date.
Read Read Read
I will break down for you in a future blog the exact steps I take before buying a stock. To give you an idea, you want to compare the annual profit growth of the company in question. If the company grows at a rate less than 10 per cent per year, move on. To give you an idea, I looked at every NYSE, Dow and TSX stock available each time I reviewed my holdings. After I narrowed my field to stocks priced between $5 and $20, I was left with about 200 to review. Of these, I picked 7.
So far, I have explained a couple of the indicators I pay attention to -- price and growth. By reading investment books, I managed to boil down a formula that works. It is from the book "The Motley Fool Investment Guide," and my style completely matches that what is explained in this book. You could read every book out there, but it will just confuse you. The Fool's Guide is all that is needed. Each year, when you review your stocks, read this book again.
Timing is Key
The time in which you make your move into the stock market is everything. I rarely pay much attention to what is going on with the world politics, such as the issue in Greece. However, when the problem was at its peak, in October 2011, I did pull some stocks out of the market. I anticipated people would begin to freak out and think the entire market would collapse, again. However, the issues in Greece wouldn't hold the stock market down for long -- because even though Greece is struggling, the nation is tiny when you compare it to the world economy.
Timing can also mean personal timing. I will have $2,000 saved at the end of the month. That means I can get a margin account and double that money to $4,000. But it's too early for me to invest. You want to have about 40 per cent of your holdings in large-cap companies and the rest in medium-cap stocks. This means, you should have around $5,000 to invest before you get into the market, and that's only if you plan on securing a margin account, which will double your holding to $10,000. With $10,000 to invest, you can buy 5 stocks at $2,000 each. I would recommend owning at least 7, however, but if you know you will have money coming in shortly, then you might as well put that first chunk into the market. I expect I will be investing in June if I save $1,000 per month.
Stay tuned to get tips about each step on the way to choosing a stock. I will then consolidate the steps together so you can follow them while choosing stocks.
Tip of the Day: Buy the Motley Fool Investment Guide and follow the strategy for choosing stocks, or continue to read my blog posts for a consolidated version.
As always, if you have any questions, feel free to comment and I'll do my best to answer. Also follow this blog for the latest information. Happy investing! Btw, I think it's sad that I'm the only one following my blog... please follow me, lol.
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