Advice For A First Time Investor

First attempt at investing, all advice appreciated. I'm not looking for alternative investments strategies, I'm looking for tips on how to do defensive investing. Basically trying to follow the advice in The intelligent investor by Benjamin Graham, possibly 50% stocks 50% bonds.


 


(I)150 dollars a month dollar cost averaging


(ii)Not looking for quick buys or sells, seeking to hold for long terms to make an eventual profit over time


(iii) Reinvest all dividends


(iv)Spend minimum time on it - The rationality in the book being that, no-one can predict the future no matter how much time is spend over charts and spreadsheets, and nothing is certain, so the advantage comes basically from holding through thick and thin. I would be happy wth a 4% return at the end of year, minus tax and inflation won't be any profit but invaluable experience.


 


Any advice, mainly on where I can go to get company accounts, purchase stocks and bond indexes etc, without being crucified by fees?


 


 


 


 


Comments

  • Don't invest in the usual stock markets and similar. They are all hell and over-valued right now for the most part. Invest in your education instead. Start your own business and invest in that.


    Biggest takeaway after several years as a hardcore biohacker: think long-term. Focus on health first before adding in boosters. It works a lot better.
  • If you are going to set up an account with something like Sharebuilder they will usually offer a certain number of trades free if you set up a monthly deposit into your account.


     


    For long term investing what I like are called ETFs because you can find ones that are essentially an entire sector as one stock. Find something you like or think will be consistent, for example the SP500 will have an ETF and instead of you having to buy stocks from all of those different companies you can get the ETF. Maybe you think emerging markets in South America will be growing well, there will be several ETFs there, and again you are buying one stock that is a fund that holds multiple stocks.


     


    On short term more speculative you can find a single company you like for whatever reason and buy it's stock each month. One recently I have been eyeing is Terratech or TRTC, it's trading under a dollar and could go up in value as soon as the next state follows the lead of Colorado.


     


    You can set your account to reinvest dividends with Sharebuilder, as well as other buy and sell options. They are a good place to start out and could be where you invest and remain.


  • StevoStevo Upgrade in Progress
    You seem to be on the right track.


    My advice is to do the research and once you buy in, leave it alone. There was an article I read recently where the best performing portfolios were owned by dead people. Because they didn't (couldn't) fiddle with them. It also cuts down on fees which can eat into your capital.
  • This is assuming you have a large savings account right?


     


    Any online brokerage will do the trick: e-trade, fidelity, td ameritrade, charles schwab, vanguard.


     


    These companies have deals in place with many ETF providers to trade their ETF's for free. Based on what you said, I would look at a broad, market-based ETF and start buying into it on a regular basis. 


     


    I would forget about what Graham said in his book. Unless you are willing to invest large amounts of time in researching stocks, you will never have the performance of Graham or Buffett. Hell, Warren Buffett suggests investing in Index Funds.


     


    It is critical that you pick something and stick with it. Dont check your accounts often, if ever. I'm serious. The investors that check their accounts on a daily basis are the people who buy high and sell low (bad).

  • My understanding was that Graham's investment strategy was easy to follow, find a high grade company with a record of string dividends payout and a good PE ratio, and hang on for the long run. Index funds are great but the strength of company's is the dividend reinvestment programme, bought direct from the company with one time fees. 


     


    I'm not trying to emulate Buffet of Graham:). I have basically no funds but was planning on putting away 150 pounds a month(not dollars, my mistake above), into a bank account, as a permanent savings programme, then I thought i might aswell get the money working, Grahams method seems the safest. The added psychological advantage of not having to worry about changes in the stock market and time spent on the actual product is golden.


     


    Thanks for Terratech, definitely worth a bet.


  • First, are you sound financially?  you are the biggest risk to your portfolio.  8-12 months expenses in the bank, double if your income is irregular. with all high interest debt paid off.  If not keep stacking. 


    Being a capitalist without capital is very challenging on many levels.


    II is a solid program if you can ride out the waves of life.  But if you've got payments, expectations, and market gloomdoom in your ear all day the pressure to take those stacks of cash out to protect your lifestyle will be enormous. 


     


    Seriously, though pay for an educational seminar on trading and your investment options.  1 old book written 60 years ago is hardly a guide to go by.  Strategically, don't lose money, is great advice.  Buffet worked his ass off making sure he understood the straight and narrow for BH.  But people rarely talk about what he does between his big buys to weather the storm.


  • Yes, that's actually what brought me to saving/ investing, no point drinking it all away. No debt obviously, no dependents.


     


    I have emergency savings aswell, so each month i should have £150 away for savings and £150 for investing. Earn £1400 a month but accomodation, food, electricity, cable, internet all paid for. The figures will increase relative to salary, which hopefully increases :) I think I'd be crazy not to get the money working somehow.


     


    See the appeal is not having to go to a trade seminar, as the advice given will be gibberish anyway if it attempts to predict anything. Its set and forget, and if the stock market crashes it means nothing to me as its long term investing. People with phds and hedge funds manager can't beat the market long term, why would i even consider diving in beyond the bare fundamentals? With such a small budget i long term DRIP's seem to be the only option(even though to me II seems to be the way to go with any amount of money). And riskwise its probably better starting off small and losing money than starting off big and losing money

  • I recommend that you check out Wealthfront. It will give you the best long term results. Have your money directly deposited into the account and then check it once every year. Don't waste your time trying to beat the market, especially if you're DCAing.


  • Ok WF seems pretty amazing. Did not expect that something this hassle free existed re investing. 

  • Seriously, far too many people spend WAY too long on investing. Just put your money here and do not think about it. Don't touch it, don't toy with it, just don't. In reality, you're being a smarter investor by doing so. This is a relatively new company, but run by some very smart people who are taking a very smart approach to investing small (read: under 5-10mm in assets) sums.


     


    I would echo the comments above that recommend having a savings account. I shoot for 6 months in a savings account for an emergency fund, but to each their own. 3-9 months is standard, and some people prefer larger amounts. Your goal with an investment account is to never be in a position where you need to use it, you only want to touch it if you want to use it (there is a distinction there between want/need, make sure to internalize it).


  • No argument this end. Free up to 10 k unbelievable.


     


    Will have to cut back on the BP products/supplements/devices,spending crazy amounts - decisions decisions.

  • GarrettGarrett
    edited October 2014

    Read the book "The Intelligent Investor" by Benjamin Graham.. Study it. Also read & study the book "Securities Analysis" by Benjamin Graham. Both are THE books recommended by the world's top investor - Warren Buffett. A must-read & study for ANY investor :)


     


    These 2 books will set you up with the proper fundamentals for investing. You can take on their fundamentals & philosophy... or decide not to. That said, if the guy worth $60,000,000,000+ (from INVESTING) recommends them.. as the books he'd attribute his INVESTING success to....... wouldn't it be worth it to AT LEAST  check them out?  ;)


  • Instead of spending the time reading the books, allocate those resources to improving yourself in your profession. Find a way to make yourself indispensable to your employer. Or, better yet, go into business for yourself.


     


    Lets not forget that Buffett advises people to invest in Index Funds.

  • GarrettGarrett
    edited October 2014

    "The book you don't read might cost you a fortune" Jim Rohn


     


    Reading a book can help him improve himself in his profession.


     


    Let's not forget that Buffett's investments have made Berkshire Hathaway hundreds of billions of dollars. It's not about what Buffett advises people to do. The majority of people don't bother to actually educate themselves in what they're doing. The better question to ask is - What does Buffett HIMSELF do? 


    Also, Buffett isn't the only one who's become wealthy via the methodology of Benjamin Graham. He's simply the most well known.


     


    oneshot2shots could read the book for 10 mins in the morning, and 10 mins in the evening, and get through it in about a month or less. I'm sure he could find 20 minutes a day for reading. And he can still go into business for himself. He can still make himself indispensable to his employer, while reading for 20 mins a day.


     


    And books ARE a great way to improving oneself. Improvement isn't just about putting supplements into your body, or hooking yourself up to some machine. Reading does make a difference - when you read the right things. Improve your mind. Improve your thinking. Change the ideas that are flowing through your mind. A book can be a lifechanging journey. 

     



    In the end, oneshot2shots - It's your decision what you do. :) Do what looks & quantifies optimally for you. Wishing you the best of Success.




    Instead of spending the time reading the books, allocate those resources to improving yourself in your profession. Find a way to make yourself indispensable to your employer. Or, better yet, go into business for yourself.


     


    Lets not forget that Buffett advises people to invest in Index Funds.



  • Believe it or not, I read your recommendation to read Intelligent Investor somewhere else on the forum, which got me thinking about investing.(Still havn't finished it). People who read the book probably have a a better understanding/philosophy of finance than people with finance degrees. Not really into setting up my own business right now, think that's more the American entrepreneurial mindset, its always suggested as the most normal, natural thing in the world. 


     


    At Present(you may notice a pattern of flightiness:), I am seriously considering a masters in Data Science/Statistics. would complement current skills/job, with good job prospects, and  would give me the skills to hack my own body properly. Wealth Front will have to wait, hopefully not for too long. I don't want to miss out on a gravy train if they make too much money and start upping commissions.


     


    I do read like a freak, its important but not to be over-emphasized. For example, you can have poker theory down from 10 different books but if you don't par that with a serious amount of failure, practice and emotional resiliency,your toast. If its not believed in, properly implemented and internalized its pretty much wasted time. 


  • GarrettGarrett
    edited November 2014

    Knowledge without application is wasted :) Agreed.


     


    I would like to point out, for those who disagree with 'reading', and say that it's useles........ Bill Gates reads 1 book a week. Has since before he founded Microsoft. And he's currently the world's financially richest man. Warren Buffett is also a voracious reader. As are a lot of other Billionaires. 


     


    I'm going to, personally, subscribe to the advice of the Billionaires - Read, and apply. Instead of "Go do something, and see how it goes". What if reading a book, or a couple of books, could cut YEARS of pain and frustration off one's investing/business/life journey? 


    Take, for example, Dave. He's said he's a reader. Many of his guests are readers, including Tim Ferriss. Most multi-millionaires and billionaires are readers. A question I'd ask is this - Why is it that wealthy people have libraries (often times large ones), and poor people have TV's.. and nick nacks? Makes you think and wonder.


     


    For myself, there have been numerous books which have changed my life. Richest Man in Babylon. The principles in that book completely shifted my life. The Compound Effect is another of those books. 80/20 Principle, as well. 


    oneshot2shot - You said you've read The Intelligent Investor. If things are unclear, have you gone through the book again, this time with a notepad & pen.. and studied it? :)


     


    One last thing to ponder (for Jared) - What's the difference between someone who can't read, and someone who CAN read, but doesn't?


     




    Believe it or not, I read your recommendation to read Intelligent Investor somewhere else on the forum, which got me thinking about investing.(Still havn't finished it). People who read the book probably have a a better understanding/philosophy of finance than people with finance degrees. Not really into setting up my own business right now, think that's more the American entrepreneurial mindset, its always suggested as the most normal, natural thing in the world. 


     


    At Present(you may notice a pattern of flightiness:), I am seriously considering a masters in Data Science/Statistics. would complement current skills/job, with good job prospects, and  would give me the skills to hack my own body properly. Wealth Front will have to wait, hopefully not for too long. I don't want to miss out on a gravy train if they make too much money and start upping commissions.


     


    I do read like a freak, its important but not to be over-emphasized. For example, you can have poker theory down from 10 different books but if you don't par that with a serious amount of failure, practice and emotional resiliency,your toast. If its not believed in, properly implemented and internalized its pretty much wasted time. 



  • edited November 2014

    I would jump back on here and recommend the new Tony Robbins book on money. I don't really care how you feel about him, it's a good book and one that you will learn a lot from. It's not 'woo-woo' stuff; he interviewed some of the most successful people in the world, people that I would give my life savings to spend even a few minutes with.


     


    Link: http://www.amazon.com/MONEY-Master-Game-Financial-Freedom/dp/1476757801/ref=sr_1_1?ie=UTF8&qid=1415671423&sr=8-1&keywords=tony+robbins


     


    Note that it isn't out yet. I got my hands on an advanced copy. That being said it's out in a week, so just preorder it.


  • StevoStevo Upgrade in Progress
    Wow, lucky you! Mine has been dispatched already, just waiting to get the special all weather formula! :-D
  • Richest man is Babylon is an excellent read. Havn't finished the Intelligent Investor but have absorbed what I think are the main principals:


     


    (i)Can't beat market short term


    (ii) Invest for long (5-10 years) term


    (iii) Dollar Cost Average (Wealthfront have provided papers that their plan with Vanguard ETFs beats this long term I believe).


    (iv) Be skeptical of quick wins


    (v) Leave it alone


     


    Richest Man in Babylon


     


    (i) Save a tenth, pay yourself first


    (II) Your not gonna get rich until you set your mind towards it


    (iii) Desire and motivation are key 


    (Iv) Get the money working


    (v) Laws of Gold


    (vi) Be skeptical of quick wins


     


    With accompanying parables to drive the point home.


     


    I am a Robbins fan and may purhase the book, but honestly I think I'm just overcomplicating things.(I did say that before reading The Richest man in Babylon, however) The above is more than enough if I can just bide by them. Was contemplating going into work, printing off both books, laminating them and carrying them around with me as a reminder, When the principles are down, the gold can but follow. 


     


    I have currently been offered a pension plan by my Company, who will match up to 5% of earning into the scheme. So as I am(currently) earning £19k i will pay 5%(£850) and the company will put in another 5%(£850). This can only be taken out when I'm 55, and if I change employers I'm not sure if the money I put it will be matched at all. Just wondering if this sounds like a good idea, given I'm tied to this plan till death(or age 55) do its part? Would hate to have money tied into a pension fund if opportunity shows up, but at least this way I know what I'm getting, a doubling of what I'm putting in with a interest of surely 2-3% a year. 

  • I'm jealous. I wish I had started investing at your age!!  Don't worry too much about the fine points of your strategy, you already win!


  • I'm reading Tony Robbins' "Money - Master The Game" right now.  Everything he touches is gold as far as I'm concerned and the list of names he has access to is truly unparalleled.  I'm going to follow his recommendations to the letter.


     


    I don't have much faith in the stock market either, similar to what others have intimated in this brief thread, but the fact is, there are men, women and children who have gotten rich in ALL market conditions and seasons.  I want to know what they know and make my money bust its ass (when I make some!)


  • DManDMan Master of Arts ✭✭✭

    I'm currently reading Think Big and Grow Rich.

    May you be well, may you be happy, may you be healthy, may you be loved.

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    advanced | How to train: bulletproof training | HRV: HRV FOR TRAINING HRV BASICS What Affects HRV | Brain  & Memory dual n back training advanced training

     

     

  • riggykriggyk
    edited January 2015

    I work in the industry and I'll be the first to tell you: Do NOT focus on performance via beating benchmarks or get lost in minutia.


     


    Focus on personal goals and figure out a way to automate a portfolio to set and forget. -- Go for the lowest cost index funds (Vanguard) and go for an ETF or mutual fund that tracks the market.


     


    From there, if you have extra money to invest, THEN and only then should you explore a personal, more speculative type portfolio (and even then this should be a fraction of your overall disposable/invest-able income) but at this point, youth and compounding is your best bet. Beating the market is possible but consistently is another thing. --  When in doubt, always avoid anything that is overvalued and have a tendency for deeper value stocks. Be different, be contrarian, be global. -- Set and forget so your emotions do not do the work for you.


     


    Congrats on this. It's not easy but will pay off.


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