Investment & Stock Mkt

Investment & Stock Mkt - Starting Investing Finance...

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Starting Investing Finance 3312 Author: Dr. Ha-Chin Yi
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Time Really IS Money! EarlyBird Johnson: I've earned a compounded rate of 8% over the past 30 years. LateComer Larry: What a coincidence, so have I! EarlyBird: Yes, I started contributing $2,500 a year when I was 21, but had to stop when I was 30. I've not contributed since, although the money continued to grow in my account. LateComer: I, too, contributed $2,500 a year! However, I didn't start until I was 30. So, now that we're both 51, I've been contributing for 21 years, and you contributed only nine years. How much is in your account? EarlyBird: Let's see. .. $169,723. How much is in yours? LateComer (stunned): Uh. ... just $136,142.
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Early Bird vs. Late Comer 2500 2500 2500 …… 2500 0 0 0 ….. 0 $169,723 Early Bird 21 22 23 …. 29 30 31 32 ….. 51 0 0 0 0 2500 2500 2500 ….2500 $136,142 Late Comer 21 22 23 …. 29 30 31 32 ….. 51
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Steps 1. Get educated: Read about stocks and the market, take a seminar or class on investing and review online financial sites. http://www.investopedia.com/university/stocks/ 2. Develop financial goals and find your risk tolerance. Know your appetite for risk before you start investing. http://www.bankrate.com/brm/news/investing/20011127a.asp 3. Research individual stocks by reading annual reports, quarterly reports and other documents on file with the Securities and Exchange Commission. Look them up online at www.freedgar.com http://www.library.txstate.edu/ref/onlinedb/business.asp
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4. Invest in what you know. Consider the stocks of local companies with which you are familiar and in which you have confidence. 5. Diversify. Avoid putting your money in just one or two stocks or, for that matter, in one or two industries. 6. Use a discount brokerage to buy stocks if you are confident in your investment skills and have the time to do your own investing. You'll save on commissions. 7. Buy stocks that you will feel comfortable holding for three to five years. Resist the temptation to dump a stock the moment its price drops a few percentage points. Give it a chance.
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8. Look for value. Use price-earnings ratios, usually reported in newspapers' stock tables, to compare a stock to industry norms before you buy. 9. Take advantage of investing through 401(k) plans, Individual Retirement Accounts and Keogh plans. These provide tax breaks to the investor.
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Brokerage firms Finding a discount brokerage firm may be a good starting point. Do keyword search at Yahoo! Ameritrade, E*Trade, Scottrade, to name a few!
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Investing on what securities?
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instruments 90% Large-company stocks 13.3% 20.1% Small-company stocks 17.6 33.6 Long-term corporate bonds 5.9 8.7 Long-term government 5.5 9.3 Intermediate-term government
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Investment & Stock Mkt - Starting Investing Finance...

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