Your Questions About Stocks And Bonds

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Steven asks…

What are the similarities and difference between stocks and bonds?

financi4 answers:

Differences:

Stock is a piece of the value of the company. Part ownership.

Bond is a debt instrument…the company owes you money.

Similarity: if the company does well you make money either because the total value (including the value of your piece) of the company goes up, or because they pay back the bond with interest.

Ken asks…

How do I get into investments/trading, stocks and bonds?

How do I get in on it on a personal level. I don’t want to work for a firm just to do it privately.

How does it work?

financi4 answers:

First, take 6 months in learning about stocks and trying it out with fake money in a stimulation web site like Yahoo! Finance.

Www.finance.yahoo.com

The stocks you want to focus on is consumer staples, consumer discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and bad times. Most of my positions are in these stocks. Some names include 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody’s got to eat and wipe their butts regardless of the state of economy. Many of these companies survived through the Great Depression.

That’s the benefits. You can sleep at night knowing your money is doing well. There are NO guarantees that you won’t lose money. It’s just that these stocks are the best. They pay good dividends too.

If you’re new to stocks, DON’T DAY TRADE. You’ll a rookie in a world of professionals. I tried day-trading with Citigroup and AIG when they were a little bit over $1. I had some luck at first, making about $30 a day but I was way over my head. My luck didn’t last long and I had to rethink my strategy.

Besides you can’t do much with $100 in the market. Day trading involves A LOT of commissions to the broker. With all the commissions deducted from each trade, you’ll be lucky if you only lose half your money.

I would just day trade using Yahoo! Finance. Open a stimulation account, give yourself $100 worth of fake money and play it in the stimulation format. You’ll see what I mean by losing money every easily.

Good luck.

Paul asks…

I have $20,000 in savings and I want to invest in stocks and bonds. How and where do I start?

financi4 answers:

Get a broker

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