Your Questions About What Should You Look For When Investing In A Company

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Michael asks…

What stocks should I buy?

Hey my dad is giving me $2000 to use in the stock market? I have been looking for companies to invest in, but even I know that you can lose it all. I am probably going to do it for long term since I am only 12, but I want it to grow really high. My dad says maybe he will put in a little more every year. Some good stocks are pobably rimm sne msft appl and t. Please give me advice. I want it to grow enough so when I am 23 it will be more tha 4 times i put in

Justin answers:

If you’re a rookie in investing or stocks, go to

www.finance.yahoo.com.

Open up a portfolio without using real money. You can give yourself as much or as little money to try out the market. 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.

Then once you’re comfortable and test the waters of the market, you can finally put some real money in. Go to Scottrade.com. They’re excellent for beginners.

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.

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.

Chris asks…

Professionals: What should I invest in?

Ok. So I am turning 16 in 4 months, and my parents have offered to buy me an investment of any kind for no more than 500 dollars. I have been reading up on popular investments such as gold, platinum, palladium, silver, mutual funds, Roth IRA’s, etc… I’m looking for something that I can grow with possibly. Maybe even sit on it for 50 years or so. I already have $5000 of bonds that were purchased for me when I was born. If you can, please include a company or place that I could use to invest. What should I invest in? Thanks in advance!

Justin answers:

PURE GOLD – 24 CARATS

John asks…

SERIOuS PEOPLE ONLY!!!I NEED HELP ON WHAT STOCKS AND HOW STOCK MARKET WORKS!!?

HI. Im 20years old and i want to get into the stock market game.Im not completly dumb about stock market i know that you shoudl buy stocks when they are low,read about the company bla bla but my question is that what stocks should i invest in for a first timer with an investment around $1500.I know i should invest in 2 or more stocks but what stocks and how many shares should i buy?Should i wait a few more weeks and hope for the market to drop lower so the bigshot companies stocks might fall also and i can invest in?Ok if thats not the case then what stocks shud i invest in that look good in the future.Please dont tell me go read the news and find out i want to know from you the people who are already in the stock market game making that bank account biggger…im 20years old and ive got family issues mom and dad bout to split i dont want that to happen..i want to get rich NOW and stock market is the only option i got to invest in..please SERIOUS,SMART, stock market players only PLEASE.

Justin answers:

Check this link its good

http://buyingandsellingshares.blogspot.com/

.

William asks…

Should I invest in individual REITs?

I already maxed out my employee 401k and 457b. My money in these is invested in index funds consisting of 60% stocks and 40% bonds/fixed income.
I have a few thousand dollars left over at the end of every year.
Initially, I was considering putting half that money into a REIT index fund (Vanguard REIT Index Fund: VGSIX), and half into a commodities index fund (Rogers International Commodities Index: RJI).
However, I was looking at the history of both indexes, and I discovered that they are VERY volatile. I would hate to retire when I need to draw money from these investments in a year where they are down 40%!
So, instead, I thought of purchasing a couple of individual REIT companies that pay a high dividend. So, even if the stock price of these individual companies is very volatile, at least the high dividend will cushion the ride.
I just opened up a Roth IRA with Scottrade, and I plan on investing $2,500 a year in 2 REIT companies from the following list:

American Capital Agency Corp (AGNC); dividend yield 15.52%

Sabra Health Care (SBRA); dividend 9.90%

Annaly Capital Management (NYL); dividend 15.11%

Two Harbors (TWO) dividend 16.8%

What do you think of this? It seems too good to be true that these companies pay double digit dividends, and yet their stock price has appreciated over time, too. What‘s the catch? Am I missing any pitfalls?

FYI: I am 42 years-old, and I will be retiring in the next 8-10 years. My tolerance for risk is low to moderate.

Justin answers:

The 15% and 16% dividends are from Mortgage REITs. You are basically buying a leveraged pool of mortgage-backed securities. Two things you have missed:

1) The huge dividends are not sustainable.
2) If interest rates rise, Mortgage REITs get destroyed.

More stable REITs (apartment, office, storage, etc) are paying dividends of 3% to 5%.

Buying a REIT fund is fine. I think you need to study quite a bit before it is appropriate for you to buy individual REITs. A good place to start your education is NAREIT (National Association of Real Estate Investment Trusts).

Richard asks…

ROTH IRA account – Should I sell & buy different funds that are rated 4 or 5 stars from Morningstar?

I started investing in my ROTH account about 5 years ago. On the advice of my broker, I purchased MERAX. This is a load fund, but because I worked for the company, I wasn’t charged the load or expense fee. I really didn’t know anything about mutual funds at the time. Fast forward to today, I have educated myself on mutual funds and have a better idea of what to look for in a “good” fund. I did a MorningStar search on this particular fund, and it does not appear to be that great of a fund. But, since I didn’t have to pay any fees on it, it’s really not as bad as a fund as it could have been if I did. I also had purchased MASVX several years back. This fund is doing better overall, but not great. I put in the max allowable for each year into these two funds (mostly in MERAX, other than the one year that I have 5K in the MASVX).

I recently opened a Vanguard account. After some research, I decided to purchase MERDX. It has a 5 star MorningStar rating, and is in a low risk, high return category. Plus, the expense fee is relatively low for being growth fund.

What I want to know is, should I sell the funds (MASVX & MERAX), and purchase better 4 and 5 star founds out of my Vanguard account or should I just leave them where they are? I’m only 32, so I have time on my side, but I don’t want to stick w/ s/thing that has little growth potential when I could find s/thing better. I understand that just because it’s a 5 star rating from Morningstar, doesn’t guarantee a better return. But, I think I have a better chance of doing better on a 4 or 5 star fund than the current funds that I own. S/one w/ experience, please let me know what you think.

Thanks….
Rogue – bad advice. I know better than to just to look at ytd returns. Please don’t respond if you don’t know what you‘re talking about.

I have considered ETF’s but I’m more comfortable w/ Mutual Funds right now. Plus, I think I can do better w/ a good, solid mutual fund over the years than an ETF (even if the fees are slighly higher).

Justin answers:

ETF’s are doing better than mutual funds with the same holdings.
Have you considered looking into ETF’s?
Schwab and Fidelity offer no commission etfs.
And ETFs carry low expense rations compared to mutual funds..

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