Shane, people invest for one of two reasons, to make money, or to keep the money they have already made. If you are young and need to make money time is on your side and bonds are not important in your investing plan. If you are retired and need to keep the money you have earned of the years then bonds are a good safe place to have your money work for you.

Mutual funds are always good advice for a new investor. You are paying a fund manager to do the research and don't have to know much or work very hard. The only down side is the costs. The best way to learn about mutual funds is to go out and invest in one.

A good portfolio is diversified. That could be some bonds, some stocks, some mutual funds. The nice thing about a mutual fund is the fund itself can be already diversified, so you will be investing smart from your first investment.

For example, many years ago when IRAs first came out they were a good deal and easier to start. I advised a friend to put some money into one just for the tax savings. That person put a couple hundred in for a few years. Interest rates were high back then, and it grew to something like $1,700. That person was interested in mutual funds, so I put together the paper work to have it transfered to a mutal fund as an IRA. Last I heard the value is close to $8,000. Some years it was down, but over time it did well.

 

I found a cool site for Virtual Online Stocks. I just registered today and bought some shares of Nextel stock. I hope to get a feel for what its like, it looks like a real nice site.
Shane

 

(in the virtual stock market) I just bought 500 shares of Vanguard 500 INDEX Fund. We'll see how the mutual funds do vs the stocks.

I see there is an open end mutual fund, is there a closed end also?
Shane

 

i know sirius has done very well...i was bored one day...and i had $90 bucks(i was 17 by the way) and didnt feel like buying anything for my truck....anyways i went to a broker and i bought some stock....i believe there was like $21 commission or something...but i ended up buying 54 shares @ 1.32 a share totaling $79...well i must say that the stocks doing well at 3.44 right now and worth about $185....i kinda wish i invested more

 

Take the above advise from the guys replying above me...But it's fun to peel a little money off and buy some stocks and watch them. Sure it's a gamble, but it's fun/frustrating to watch them. I keep mine in an IRA...Lost some money with poor choices, but also made some money...Like when I bought Chrysler for about $8.00/share. Its a crap-shoot.

MR

 

Thank you both for the input. That is something I'd like to do is buy a # of stocks that are at a real low cost. Then they have no real other way to go than up. Verses buying a stock for $28 a share but its high for a year is only $32 it may only go up a few dollars if that. But it can go down for sure. I know it can go way up to, I just dont want to have to time the market....
Shane

 

Price isn't everything. You have to compare it to the number of shares at that price, the earning of the company, and growth of that company, and the likelyhood the company will remain profitable.

 

yeah I'd much rather research a company and buy stock when I feel the company is about to expand, rather than trying to time the market. I hear that is where people lose their money. And most of the time they lose big...
Shane

 

This is pry a dumb question but here goes: You don't make any interest on your money/investments in the stock market right? Also there arent any tax breaks or advantages to buying stocks are there? Thanks, Shane

 

Since october 28th I have made $106k on the investment challenge.

 

That's Awesome Phillip. What did you invest in?
Shane

 

In theory, you buy the shares at current price, and as the company grows the stock price goes up and you sell it years down the road. Your stock price goes up relative to the growth of the company.

Some stocks do pay a dividend which works like interest that they pay you to use your money. That's why dividend stocks look good today when interest rates are low. You pay taxes on the dividends at the end of the year.

You pay taxes on the stocks when you sell them. If you paid $10 for the stock, and sold it for $20, you will owe taxes on your gains of $10 per share.

Mutual funds are more complicated because they are buying and selling stocks in the fund, and you will have to pay for the gains every year, and pay for the dividends every year.

For both stocks and mutual funds you can elect to have your divedends reinvested in more shares. You still pay the taxes though.

 

I've got some in an Index 500 fund, have done well with HRB and CAMP, F payed a small dividend. Most of them have gone up slightly over the short amount of time.

The best way to play is to invest a set amount every set number of day's. For example, invest 2k in an index fund every 14 day's from now on. Gradually it will grow. Be sure and max out that Roth IRA and stay current on the tax law's. Oklahoma only has 15% on dividends right now, so be sure and take advantage of many things you might not be aware of.

Oh, I think a roth IRA you pay the taxes when you invest the money and not when you take it out. For example, you purchase 100 shares of a company for $2,000. You pay taxes on $2,000 AND when your 50 years old and retiring and want to build a house you dont pay taxes on the $98,000 that you made. Its a great thing!!!

 

A Roth IRA is just like investing in stocks. The only differnece is you do not get taxed on the growth, and you can't remove your money without penalty until you are 59.5 and other very narrowly outlined situations. The money you put into a Roth is after tax. So you already have paid the taxes as regular income.

 

Did any of you invest in Amazon.com a few years back? It is doing real well. What about lucent, did anyone invest in them a while back when they were $70 a share? now they are down to $4 a share?