Your Questions About Investing

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Robert asks…

Whats the difference between investing in the stock market and futures and options trading?

What is the difference between investing in the stock market and futures and options trading?

Justin answers:

Let’s see:

Investing in the stock market means that you are buying an ownership interest in a corporation which provides valuable goods and services. If you invest broadly enough in stock markets, you are betting that global growth will happen during the holding period which accrues to the owners of global corporations.

Trading in futures means that you think that pork bellies are going to go either up or down faster than they would go in the other direction which would cause you to be closed out.

Trading in options means either you are an amateur looking for increased leverage on a directional bet in just about any market anywhere or you have some opinion about volatility which is different from the price of volatility expressed in the option.

Joseph asks…

Is it a good time to start investing in BP stocks?

With the BP stock prices dropping, would it be a good opportunity to start investing in BP stocks now or pretty soon?

I doubt they will go bankrupt. They seem like a strong company even with what’s happening now.

What are your opinions on this?

Please no comment on the oil spill disaster. I just want to know if they would be a good company to invest in for the future.
1 second ago – 4 days left to answer.

Justin answers:

I think lots of people have this idea, buy BP while it’s low and reap the rewards in the future. Just today, I’ve seen several people asking the same question on YA. I have no idea whether it’s smart or not, but if everyone else is doing it, the reward won’t be as high as you think it is.

Charles asks…

How do I take care of an investing problem?

I got into investing in a cosmetics company through a friend of mine. I met with the guy starting the company and signed a contract with him stating that I have invested $5000 with the company and i will collect from profits for 2 years. From the looks of it the company hasn’t gotten up and running and he’s been spending money on rolex’s and moving into a new apartment. I really want to get my money back from this individual. How can I?

Justin answers:

Sue in small claims court

Richard asks…

I’m 16 and looking to start investing. How can I begin and how much money should I risk at first?

I have always been interested in the stock market and how it works, and I believe that I am not old enough and mature enough to invest. I have had a $8 an hour job for about a year now, so i have a good amount of money to start with. But where should I start? How much money should I put at risk for my first time? Where can I find a good source to learn even more about investing? Thanks in advance.

Justin answers:

My brother started investment accounts for my children, two own stock in Southern Company, two in PSE&G (both are utility companies). Their accounts were started with $250 invested directly though the companies. Many companies have direct buy programs which require low investments to start. He puts $100 into each account for them each birthday and Christmas. It is really easy to do. You can try to go to the company’s websites and get information there. I think Coca-Cola has a similar program. On the other hand, starting a Vanguard IRA at your age would be a great option, you can learn more by going to www.vanguard.com. Both the options I described are long term, stable investments with low or no costs. Good luck! If you want to learn more, Money magazine is great for learning about investments, I also like “The Motley Fool” investors, both websites are informative and legit.

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