Investing 101

[treydawg]

Here's a little introduction thread to investing your money wisely. If anyone would like to talk about specific topics, (401k, stock market, 529 plans) feel free to start a thread andI can help you more on a case by case basis.

First, if you're interested in the stock market, I'd definitely recommend reading a book or two. The first book I read is How to Make Money In Stocks: http://www.amazon.com/How-Make-Money-Stocks-Winning/dp/0071373616/ref=pd_bbs_1?ie=UTF8&s=books&qid=1203441302&sr=8-1

Great book to get started in the market. Starts off with the basics and then gets a little more in-depth with options trading etc.

I'm going to find a write up or do a little write up to get this place started when I get a chance to.

[treydawg]

By the way, don't ever feel like you have a dumb question. Everyone is always in a constant state of learning about investing. There really is never a right or wrong answer to most questions as well. It's all about educating yourself as much as possible.

[JLB]

this is gonna be an interesting forum!! :rockon:

[treydawg]

this is gonna be an interesting forum!! :rockon:

:rock:

[Billsman]

Trey, what is usually a good amount of money to initially invest? I'm sure the correct answer would be what you can afford to lose or miss. FYI, I always wantd to have my money work for me but never took the time to learn. I appreciate taking time to teach and help us.

[treydawg]

Trey, what is usually a good amount of money to initially invest? I'm sure the correct answer would be what you can afford to lose or miss. FYI, I always wantd to have my money work for me but never took the time to learn. I appreciate taking time to teach and help us.

There really isn't any. I've heard people preach both ends of the spectrum. The guy who I talked about in my first post (William O'Neil) started with around 500 bucks back in the 70's.

From my personal experience you really learn the most about the market when you lose some $$$. It's quite funny how it works. I made about 12% before the market hit the shitter. Since then I've lost some money but I've learned far more than I ever did when I made that 12%.

Honestly, sticking some money in a mutual fund isn't a bad way to go. Let the fund manager do the work for you. If you want to buy individual securities I think anywhere between 5-10k is what it takes. I think at that price point you want to own 3-4 stocks at most. The problem some people get into is they over diversify themselves which can be a big negative.

I would definitely pick up a book before dropping a penny on any individual security.

Another topic I'd like to get into is retirement vehicles (401ks, IRAs, etc.)

[chickie]

I like this!

Helping to educate people with finances! Right on!

I was reading some of the other threads and right now I am waiting for the tide to change before I begin investing.

I do want to retire one day! :)

And you are right - now is the time for people to educate themselves.

Thanks for the book references, I will be sure to pick one up. But for now keep posting some good tips!

[SabresAllTheWay]

Great Idea for a thread/forum! I am studying Investing and Securities at Penn State, and minoring in Econ/Marketing. I have been avidly investing in companies since I was about 16 or so, when my neighbor at the time, who now is a multi multi multi millionaire with his own Securities Company(mainly in hedge funds) bought me my first stock for my birthday. Also, great thread in the loom of the so called "recession". If you have any questions, don't hesitate to ask me. I might just now be "studying" but I do know a lot, and I am a seasoned Investor. If you are a seasoned investor, then just ask yourself "What would Warren do?" :D

I Trade, Therefore I am.

[MLLE2383]

I also like this forum a lot!!

I have a few questions regarding retirement accounts. I am a public school teacher and I opened up a 403(b) account a little over a year ago. I know that this account is actively involved in the stock market, and as I am fairly young (28), i decided to go for an above average risk factor.

Anyways, I've heard good and bad things about these 403(b) plans, and I was wondering about your opinions......I am going to be opening up a Roth IRA soon, but I know that I am limited to the amount of $$ I can contribute per year, where I am pretty sure the $$$ amount contributed to the 403(b) is unlimited.

Your thoughts.....

[treydawg]

I do not know what a 403b is but it could be capped at 15.5k like a 401k is. Opening a Roth IRA is never a bad thing. I would definitely open one up and do the direct deposit. Before you know it, you will have a nice chunk of change in there.

[pabstman]

The city kicks in 3% of my salary to a 401k, but we also have the option of a 457 plan but the city contributes nothing. I've always put extra in the 401k but a lot of guys say to use the 457 so I can take it out sooner.
Should I just let the 401k grow with no contribution from me and kick into the 457 or I am I better with more money in one account?

[treydawg]

What the Numbers Mean:
401K, 403B, 457

With all of the different numbers floating around, you may become confused as to what is what. 401Ks, 403Bs, 457s, it’s all a bunch of numbers that can sometimes make your head spin. The differences mainly lie in what kind of employer you have: For Profit, Non-Profit, or Tax-Exempt. The plans are relatively similar in their basic principles about how money is put in and taken out.

401K

These plans take their name from the section of the IRS Code that created them. It is a plan qualified under Section 401(a) which defines qualified plan trusts and their rules. The 401(k) plan is a qualified plan established by employers into which employees may make salary deferral contributions either post or pre-tax. Employers may elect to make matching contributions to the plan as well. The funds in these plans are allowed to grow without tax penalty until they are withdrawn. The ability to contribute pre-tax reduces the amount of taxes taken out of each paycheck, which is a drawing point for many. 401(k)s can also move with you from company to company, allowing rollover.

403B

Similar to the 401K, the 403B plan is a retirement plan for educational and non-profit organizations. The funds in these plans grow without tax penalty until withdrawn. The ability to contribute pre-tax reduces the amount of taxes taken out of each paycheck, as is found in 401Ks. Employees set aside money for retirement through pre-tax salary reduction. As with 401Ks, employees can decide where their money is distributed and how. Employees may also elect to rollover their plan into a new one should they leave their current employment. This type of plan is also known as a tax-sheltered annuity.

457

This may be a retirement plan that you’re not well-aware of. A 457 retirement plan is established by state and local governments and tax-exempt employers. It is highlighted in Code Section 457, from which it gets its name. Once again, employees can make salary deferral contributions to their plan. Like the previous two plans, earnings are not taxed until distribution is made. These types of plans are also known as nonqualified, deferred compensation plans.

[treydawg]

They sound similar. I'm not familiar with either to be honest. Maybe someone here who is in the public sector could shed some light on them. In the meantime I'll try and do some reading and see what differences there are.

[billsin2050]

Does your employer match your 403b? And if so by what amount? If not a Roth is the smartest way to go to start saving your money...There is a maximum but it is tax free in the long run unlike a 403b....I work in an investment bank and the benefits of a Roth are too good too pass up if you are not a sophisticated investor

[billsin2050]

i should say the earnings are tax free in a roth ira vs a 403b in which your earnings are simply tax deferred

[billsin2050]

Great Idea for a thread/forum! I am studying Investing and Securities at Penn State, and minoring in Econ/Marketing. I have been avidly investing in companies since I was about 16 or so, when my neighbor at the time, who now is a multi multi multi millionaire with his own Securities Company(mainly in hedge funds) bought me my first stock for my birthday. Also, great thread in the loom of the so called "recession". If you have any questions, don't hesitate to ask me. I might just now be "studying" but I do know a lot, and I am a seasoned Investor. If you are a seasoned investor, then just ask yourself "What would Warren do?" :D

I Trade, Therefore I am.

and as sabres all the way said....what would warrend do? one of the main holdings of my roth ira is berkshire hathaway...best advice you can give....before you make your own investing decision, is to ask what warren would do...

and relating to treydawg, saying that he thinks its good to have lost money, i disagree, but i would agree its good to learn when its time to cut your losses and not hold on to a bad stock for too long....you will lost, just know when to get out and get back in....easier said then done, but face the facts, YOU WILL LOSE IN INDIVIDUALS STOCKS, but you dont have to lose on your overall investments...

[SabreBill30]

I have 2 funds. One is an MFS mutual fund and the other is the TSP government fund. Should I stick with these, start an IRA. My plan is to retire and not have to do a damn thing but fish.

[MLLE2383]

Thanks for the insight on the 403b and Roth IRA accounts. I plan on opening a Roth very soon, once I get full-time employment. Right now I'm working as a long-term substitute teacher.

I've not heard of education employers matching any 403b contributions, which is the downfall. I'll most likely continue to contribute to both the 403b and a Roth IRA once i gain full-time employment.

Thanks again

[JFKDivisionChamps02]

I also like this. I have been searching the internet for forums like this, and I didn't come across anything. Thank you!