Allow me this shameless self-promotion: Here are a couple of comments I've made dispersed through other threads pertaining to investment. Though honestly, if you're starting to invest and only have a limited amount of capital, you should start a Roth IRA as described in the first link I provided above. Hands down.
- From Original Post:
As a general rule with any investment, maintain diversification! Do not put all your eggs in one basket. If you are considering buying gold with money you do not need, for example if you plan to preserve assets in gold for your children to inheret after you die, by all means soak it up right quick. But if you are playing as a relatively short-term investor (if you are planning to sell your gold to make a profit), buy incrementally and DO NOT buy all at once. Also to touch upon zippoz recommendation above, if you have enough money to buy a house - DO THAT FIRST! That will be the single best investment you can make, even in a market that is so paranoid about a glut of housing which will result in declining value. Housing is moderating, no question about it, but it will continue to rise. If you can afford it, a house will be your best investment. Just don't get caught in a squeeze on an interest only loan. Be honest with yourself and if you cannot afford a house, don't take the risk.. yet!
- From Original Post:
Do your homework, consider the overall sector performance for the companies you're investing in (after all they say half of a stock's performance relies on overall industry-sector performance), know the company's future prospects, past quarterly performance, and once you have your money involved, make sure you keep up to date on it all. It can be very nerve wracking what with the wild swings from time to time, but the most important take away is Don't Panic!. Go with best-of-breed companies for long term investments and don't let your emotions get the best of you - concentrate on the fundamentals of each business and its future growth prospects. It sure is nice to have this record to reflect upon. I can see where I went wrong, and where I went even wronger! I suggested purchasing GME at $32 - $34 a share, and adjusted for the two splits that took place in early 2006, that stock today trades at a 650% gain to where I mentioned it at the end of 2005! Boy, do I feel like a dunce for selling my shares after gaining a seemingly paltry 40%... but indeed, one should never begrudge a profit! Other recommendations I made at the end of 2005 included Gildan (GIL), Microsoft (MSFT), and Altria (MO), all three of which have done absolutely fantastic... but as it turned out, I wasn't along for most of the pleasant ride. At least I did manage to surf Google from $280 up to $375, and again from $475 to $700.
This leads me to my next suggestion - if you want to actively manage your money, you need to have the time and inclination to keep up to date on what is going on, every day. If on the other hand, you want your investing to be done without direct intervention by yourself, you should consider the following:- Place your capital in a Bank's Certificate of Deposit (CD) account, which will guarantee you a specific interest rate for a specific period of time that you choose. Your money will be locked in a CD for the term you choose, and the interest rate is unchanged throughout the term. No risk.
- Buy Treasury Notes/Bills/Bonds, which will offer a defined %-return for a given term, 1 year, 2 year, 10 year, 30 year are the most common terms. No risk.
- Invest in an Index fund or ETF. No asset class has outperformed the average market return of the S&P 500 over the last 20 years. So if you don't have the time or just don't want to pick stocks and you're willing to take on some risk, an index fund or ETF (such as ticker symbol SPY) are good methods of obtaining diversified exposure to the stock market. Some risk.
- Mutual Funds... I'm not a big fan of these as I like to take more of a hands on approach to my money management. You'll have to be very choosy and most funds end up underperforming the S&P 500 especially after management fees. But if you find a good one, it can be very profitable and require no work on your part. I'd rather take matters into my own hands though. Some risk.
That's all I got for now, I'm tired of typing...
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