Replies to post #9 on Investing 101

[Bob Zumbrunnen]

Opinion on that varies, but IMO, assuming you've already "paid your dues" with papertrading, and you trade relatively infrequently so you don't get eaten up by commissions, you can start with as little as $5k. Just don't expect it (or even try) to quickly become $10k.

I use $5k as a minimum because I feel you should never commit more than 20% of your portfolio to any one position, and $1k worth of any stock is about the least amount you want to own if you want to make a profit after commissions.

In a larger portfolio ($100k), I feel that 10% per position should be the max.

People who have million-dollar portfolios tend to be conservative about the size and riskiness of their trades. That's how they got million-dollar portfolios.

Edit: One of my favorite things about one of SI's most colorful characters, Anthony@Pacific, is that he has always preached asset allocation management. Put all of your money into just one stock and he'd come down hard on you for that.

[bbgold]

That's a Good question
The first thing that you need to decide, before you commit any cash, would be What you would like to learn about. Are you interested in investing or trading Stocks? If that is the case then is there a specific company that you are interested in or just want to learn about the general process of investing or trading? I have run across a few good learning websites in the past but will need to see if I can find them again. If you are interested in learning then I would suggest starting with a book on trading or investing. Take a trip to the library and see what you can find. I started out by jumping into investing without really doing much reading about it first. That was a mistake on my part as I learned a lot of lessons from experience and they were costly. There is a lot of good information on the internet also so you might want to try a Google search to see what websites come up. Here is a link to the New York Stock Exchange education section
http://www.nyse.com/getstarted/getstarted.html
I would say to find as much educational information as you can and read as much as you can before you start thinking about the money part. A good timeframe for learning could be as much as a year of paper trading and learning. It just depends on how well informed you want to be about what you are going to be doing. If I find any other good websites or message boards for starting out I will put them up. Definitely do some searching on the internet and the library before buying any books or trading systems IMO. I hope this helps :^)

[bbgold]

That NYSE link was not that good
I will see if I can find a better link for starting out. Might want to take a look at this one
http://www.investopedia.com/university/

[bbgold]

Here is another website
http://www.morningstar.com/Centers/Investor.html
Good Luck Tina! :^)

[greg s]

Hi Tina,

Here's my recommendation. I don't "trade" stocks (buy & sell often) very much. I tend to try to buy stock in established firms who are #1-2 in their industry that have the potential to increase in price over a longer time period (3-5 years) and pay dividends. Once you own at least 1 share of such a firm, you will be automatically enrolled in their dividend reinvestment plan (DRIP). This way, all the dividends you earn can be rolled back to buy more of the stock. But the big plus is you can buy additional shares (up to a dollar limit set by the plan) directly through the DRIP administrator without paying brokerage commissions. You wil get periodic DRIP statements which contain a form you can send in with a check to purchase additional shares.

Bob can probably explain more about DRIPs but it is, in my opinion, a good way to dip your toe into the market.

[Cassandra]

Tina: Here are links to two sites that I have found helpful in looking up the meaning of various terms used in investing.

http://www.investorwords.com/

http://www.marketvolume.com/glossary/a.asp