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Приложения в Google Play – Биржа и форекс, stock investing.#Stock #investing


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Stock Quotes & Prices, investing in stocks.#Investing #in #stocks


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Stock Market News

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Key events are scheduled for the companies listed below next week. Notable earnings reports: Tyson Foods (NYSE:TSN), Progressive (NYSE:PGR), and Kamada (NASDAQ:KMDA) on .

Investing in stocks

By Tim Hepher and Alexander Cornwell DUBAI (Reuters) – Dubai s Emirates [EMIRA.UL] may place an order at the Dubai Airshow for 36-38 Airbus A380 superjumbo jets, worth some .

Investing in stocks

(Reuters) – Three UCLA men s basketball players detained in China over allegations of shoplifting this week will not be on the team s return flight to the United States .

Stock Markets Analysis & Opinion

Investing in stocks

Leading cruise-line operator, Norwegian Cruise Line (NASDAQ:NCLH) took a hit Friday after reporting earnings. At one point, the stock was down by nearly 3% on the back of weaker guidance. Other .

Investing in stocks

For Immediate ReleaseChicago, IL November 10, 2017 Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest .

Investing in stocks

A reassuring trading update confirms that SuperGroup (OTC:SEPGY) continues to deliver attractive top-line growth. Admittedly, the superior wholesale performance means (as previously flagged by the .

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Stocks – Stock Trading – Stock Investing, stock investing.#Stock #investing


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Investing Short-Term When Stocks Are High? Imagine a Painful Drop, investing in stocks.#Investing #in

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Investing in stocks

Every week brings a new worry, something or another that could finally, truly, end our eight-year-plus bull market in American stocks.

If it’s not conflict with North Korea, then it’s concern over a damaging showdown in Congress over the federal debt. And if it’s not debt, it’s the possibility of a trade war or a hurricane season to end all hurricane seasons.

Then again, even in years past, there has always been something to fret about. For a while, it was fear of rising interest rates. Brexit set off market alarms, too. And I spent hours after midnight on election night last year writing a column counseling people through what turned out to be a stock market hiccup.

Given how little anyone can know about what will end the bull market and when, most people should try to avoid making predictions, let alone investing based on them. But there is one group of people who deserve to worry at any particular moment: those who will need most or all of their investment money soon.

Consider the people who are trying to scrape together a down payment but who also want their savings to keep up with the rise in real estate prices, if possible. Or the parent — say, me — who hopes to send a firstborn child off to college in seven years. How much money should any of us have in stocks right now?

If you poll investment experts, there is no consensus about a perfect mix of stock, bonds and cash. There never is. But there is probably an answer that is right for you, as long as you know how comfortable you are with the possibility of losing some money and have thought through every detail of what you’re willing to sacrifice if you do.

Figuring out how low your portfolio’s value might drop ought to be much easier than it is. In a perfect world, every brokerage firm and 529 college savings account administrator would have two buttons on their web pages.

The first, a “What if?” button, would let you see how much portfolio pain you’d be in for if your stock investments fell by 10 or 20 percent — or some more apocalyptic amount — and if bonds earned nothing over some period. The second, a “What are the chances?” button, would let you input the portfolio percentage decline of your choosing and then set the site to work estimating the odds of anything like that happening based on what has happened in the past.

If you don’t have access to anything like that, you can at least approximate the “what if” math yourself if you know what’s in your portfolio. (With the age-based funds that some people put their 529 money into, it can take a little digging to figure out what percentage of the investments are in stocks.)

A good financial adviser will put the numbers in front of you and demand that you reckon with them. Paul V. Sydlansky, a financial planner in Binghamton, N.Y., recently went through this exercise with a couple who hope to buy a home in Spain in two to four years. And because it could indeed take 48 months, they don’t want to leave their money in cash, earning very little, for that long.

So Mr. Sydlansky put it to them this way: If they have $180,000 split equally between stocks and bonds, a 30 percent stock market decline would leave them with $153,000. How would that feel if the perfect house came along? Not good, they decided, and they elected to have just 30 percent of their money in stocks.

This conversation probably gets harder if you’re a first-time homeowner. Sure, you could hope that housing prices in your area would fall as much as your portfolio, but there is rarely precise alignment in the choreography of market corrections and crashes.

So, would you be comfortable passing up the perfect property if your down payment account had fallen by 10 or 20 percent? How would it feel to sacrifice the dream of buying your “forever” home and settle for a starter one? What about buying the bigger house in the second-choice suburb? And let’s say you have a spouse. Better be sure that you two are on the same page. Have you asked?

Or perhaps you would just borrow more. Easy, right? But could you afford it, if interest rates are a point or two higher then? That could happen. And how much would all that extra interest cost you over time? Or would the bank even lend you that much?

And don’t forget this possibility either: How much would you kick yourself over the lost stock market gains if the market continues to rise? If you have all of your down payment money in cash for years while the housing market outruns you, as it has for many people in expensive coastal markets this decade, it wouldn’t feel so good.

Now, consider a college savings account, perhaps for a middle-school student. You’re reasonably sure that there will be some kind of stock market calamity between now and when the kiddo leaves home. How bad might things get?

It’s tempting to consider how you reacted to the stock market declines at the end of the last decade in figuring out how you might react in the future. If you had decent nerves back then when your child was in preschool, perhaps you were betting that you were buying stocks on sale.

That’s how I consoled myself in 2009, at least. But now that my 11-year-old is seven years away from college (or eight if she takes a gap year), riding another market wave like the one we all rode in 2008 and 2009 seems like a sure path to stomach ulcers.

How bad could things get over the next 10 years? Given how rough things got last time, I asked Howard Silverblatt, senior index analyst at Standard Poor’s Dow Jones Indices, to calculate what people might have seen if they’d been looking back at total S. P. 500 returns (including reinvested dividends) over a previous 10-year period. Any decade ending between January 2009 and September 2010 would have been negative, he said. In the first four months of 2009, you would have been facing a decade-long decline between 21 and 29 percent.

You’d hope that few with children about to start college were invested entirely in large United States stocks then. One benefit of diversification, as Preeti Shah, an accountant and financial planner in Matawan, N.J., reminded me this week, is that even over the four years of college, you can pull from the investments that aren’t hurting as much (say, the bond or cash portion of your portfolio) during the first year or two. Then, you cross your fingers that the stocks will recover during the latter part of your child’s undergraduate years. Indeed, stocks nearly doubled from their March 2009 lows within two years.

This summer, what felt right in my household was to cut the stock allocation in our 529 account by about 10 percentage points. That put us about halfway between what Vanguard does in its aggressive 529 account and what it does in its moderate one for people with children the same age as my daughter.

But something more conservative may be better for you. Again come the pressing questions, perhaps even more emotion-laden since they involve your son or daughter: How much more could you pay out of pocket if your college savings portfolio suffered a big loss? What if your employer cast your aging self off during the recession that might come with a big stock market decline?

Perhaps you attended a private college and hope to give your child a shot at the same thing. Would you insist upon the state university where you live — and nothing else more expensive — if your aggressive portfolio took a big dive? Or have you made a promise to your overachieving teenager about ye olde alma mater that you couldn’t bear to break? Would you want to borrow? What could you do now to limit the debt in that event?

Again, none of the answers dictate a precise asset allocation. And sure, some people could address any potential losses by earning more, saving more or spending less.

But many of us aren’t that lucky. An untimely stock market decline could hurt, badly. A bear market will emerge eventually, so imagining the pain of its severe bite is one of the healthiest things you can do for your finances when the stock market continues to seem so sunny.


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Investing in Stocks for Beginners, stock investing.#Stock #investing


The Complete Beginner’s Guide to Investing in Stock

Stock investing

History has shown that investing in stocks is one of the easiest and most profitable ways to build wealth over the long-term. With a handful of notable exceptions, almost every member of the Forbes 400 list got there because they own a large block of shares in a public or private corporation. Although your beginning may be humble, this guide to investing in stocks will explain what stocks are, how you can make money from them, and much more.

What Is Stock?

Stock investing

Have you ever asked yourself, What is stock? or wondered why shares of stock exist? This introduction to the world of investing in stocks will provide answers to those questions and show you just how simple Wall Street really is. It may turn out to be one of the most important articles you ve ever read if you don t understand what stocks represent. Find out the answer to What is Stock? and how it comes to exist . More

How Do I Actually Make Money from Investing in Stocks?

Stock investing

You probably know that investing in stocks is a way to get rich but very few new investors actually realize how you make money from your shares of stock. Now, you don t have to wonder any longer. Let us show you the two ways you can profit from owning and investing in stocks, and some of the factors that determine how fast a company grows. Find out how to make money from owning stocks . More

How to Invest in Stocks

Stock investing

Once you ve come up with a list of potential stock investments, you need to actually jump in and start buying shares. How do you do it? It s not hard at all. Let us show you how to invest in stocks . More

How Can I Find Stocks for My Portfolio?

Stock investing

Now that you understand the basics of investing in stocks, the next step is to find investment ideas. You need the names of actual companies in which you want to purchase stock. How can you find good investment ideas? Here are some suggestions . More

Why Do Stock Prices Fluctuate?

Stock investing

When you own shares of stock, you better get used to your portfolio going up 50% or falling 50% over short periods of time. What, exactly, makes shares of stock fluctuate so much? The answer is really simple . More

What Is a Stock Split?

Stock investing

If you invest in stock, you are going to experience a stock split at one time or another. What is a stock split? Are stock splits good or bad for you? Find out what stock splits do to your investments . More

What Is a Stock’s Market Capitalization (and Why Should I Care)?

Stock investing

Once you begin investing in stock, you need to pay close attention to the market capitalization of each stock you own. Terms such as mega cap, big cap, small cap, and micro cap may not make sense to you now, but in a few moments, it will be old hat. Find out more about how market capitalization influences your investment returns . More

What You Should Know About Stock Prices

Stock investing

Did you know a $50 stock can be more expensive than an $800 stock? It has to do with the way corporations are structured and as a new investor, this is one of the most important things you need to learn before you invest a single dollar into the stock market. Find out how you should think about share price . More

Dividends 101

Stock investing

Studies have shown that 99% of the real, after-inflation return you earn on your stock investments will come from the dividends you receive each year. This guide covers everything a new stock investor needs to know about dividends including how they are paid, and much more. More

Should I Invest In Blue Chip Stocks?

Stock investing

Now that you are an investor, you are going to hear a lot about blue chip stocks, or bellwethers as they were called in the old days. How is investing in blue chip stocks different, and why would you consider adding them to your portfolio? Discover the benefits of blue chip stocks . More

How Is Investing in Preferred Stock Different from Investing in Stock?

Stock investing

Preferred stock is very different from regular shares of common stock that virtually all investors have owned at one time or another. In fact, preferred stocks have their own list of risks and drawbacks. Find out how investing in preferred stocks is different . More

How To Choose a Stock Broker for Your Stocks

Stock investing

It s difficult to begin investing in stocks without a stock broker. This complete guide to choosing a stock broker and brokerage firm should make the process easy and enjoyable. More


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E*TRADE Financial, Investing, Trading – Retirement, stock investing.#Stock #investing


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Five Investing Pitfalls To Avoid, According to Investor s Business Daily #good #small #business

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Five Investing Pitfalls To Avoid, According to Investor s Business Daily

Big stock market winners look a lot alike — they have strong earnings and sales growth, a dynamic new product or service, leading price performance and rising mutual fund ownership. Interestingly, successful investors share similar traits.

Top investors always keep their losses small; they never average down in price; they don’t immediately shun a stock because it has a high price-earnings ratio (P/E Ratio); and finally, they pay attention to the general health of the market when they buy and sell stocks.

Yet, at the same time, many investors still operate using unsound principles. Successful investors learn to avoid the common pitfalls, and follow these insights that can put you well on your way to becoming a better investor.

Buying Low-Priced Stocks
What sounds better? Buying 1,000 shares of a $1 stock or buying 20 shares of a $50 stock? Most people would probably say the former because it seems like a bargain, with more opportunity for big increases from owning more shares. But the money you make in a stock isn’t based on how many shares you own. It’s based on the amount of money invested.

Many investors have a love affair with cheap stocks, but low-priced stocks are generally missing a key ingredient of past stock market winners: institutional sponsorship.

A stock can’t make big gains without the buying power of mutual funds, banks, insurance companies and other deep-pocketed investors fueling their price moves. It’s not retail trades of 100, 200 or 300 shares that cause a stock to surge higher in price, it’s big institutional block share trades of 10,000, 20,000 or more that cause these great jumps in price when they buy — as well as great price drops when they sell.

Institutional investors account for about 70% of the trading volume each day on the exchanges, so it’s a good idea to fish in the same pond as they do. Stocks priced at $1, $2 or $3 a share are not on the radar screens of institutional investors. Many of these stocks are thinly traded so it’s hard for mutual funds to buy and sell big volume shares.

Remember: Cheap stocks are cheap for a reason. Stocks sell for what they’re worth. In many cases, investors that try to grab stocks on the cheap don’t realize that they’re buying a company mired in problems with no institutional sponsorship, slowing earnings and sales growth and shrinking market share. These are bad traits for a stock to have. Institutions have research teams that seek out great opportunities, and because they buy in huge quantities over time, consider piggybacking their choices if you find these fund managers have better-than-average performance.

The reality is that your prospect of doubling your money in a $1 stock sure sounds good, but your chances are better of winning the lottery. Focus on institutional quality stocks.

Avoiding Stocks With High P/E Ratios
“Focus on stocks with low P/E ratios. They’re attractively valued and there’s a lot of upside.” How many times have you heard this statement from investment pros?

While it’s true that stocks with low P/E ratios can go higher, investors often misuse this valuation metric. Leaders in an industry group often trade at a higher premium than their peers for a simple reason: They’re expanding their market share faster because of outstanding earnings and sales growth prospects.

Stocks on your watch list should have the traits of past big stock market winners we mentioned earlier: leading price performance in their industry group, top-notch earnings and sales growth and rising fund ownership, to name a few. A dynamic new product or service doesn’t hurt either.

Stocks with “high” P/E ratios share a common trait: their performance shows there’s plenty of bullishness about the company’s future prospects. For example: In Aug 2003, stun-gun maker Taser International had a P/E of 44 before a 900% increase. At the time, the market was bullish about the firm’s earnings and sales growth prospects. The market turned out to be right. For five straight quarters, Taser has posted triple-digit earnings and sales gains.

More great examples come from the medical, retail, and oil and gas sector, which were all strong performers in the 2003-2004 period. The table below shows leading stocks in the sectors that staged big price runs from seemingly high P/E ratios. In every case, it was explosive fundamentals that drove their stock price.

At end-Oct 2004, the average P/E Ratio of stocks in the S P 500 Index was around 17.

Letting Small Losses Turn Into Big Ones
Insurance policies help us minimize risk when it comes to our health, home or car. In the stock market, most people don’t even think about buying insurance policies with individual stocks but it’s a good practice.

Cut your losses in any stock at 7% or 8% and you’ll never get hit with a big loss. This is your insurance policy. If you buy stocks at the right time, they should never fall 7-8% below your purchase price.

A small loss in a stock can easily be overcome. It’s the big ones that can do serious damage to a portfolio. Take a 50% loss on a stock, and it would need to rise 100% to get back to break-even. But if you cut your losses at 7% or 8%, a single 25% gain can wipe out three 7%-8% losses.

Here’s a set of hypothetical trades to illustrate the point. Even if you had made these seven trades over a period of time – and taken losses on five of them – you would still come out ahead by more than $3,700. That’s because the two stocks that worked out resulted in a combined profit of $5,500. And the five losses – all capped at 7% or 8% – added up to $1,569.

The rationale for that 7% Sell Rule was never clearer than in the bear market that began in Mar 2000. It caused unnecessary, severe damage to many investors’ portfolios. Small losses in tech stocks snowballed into huge ones. Some stocks lost 70%-80% or more of their value. Some will never reclaim their old highs. Others may, but it’ll be a long road back. All successful investors share one trait: they firmly recognize the importance of protecting hard-earned capital by selling fast when a stock declines 7% or 8% from where they bought it.

If a stock you own starts to fall on expanding trading volume, it’s usually better to sell first and ask questions later, rather than the other way around. Keep losses small to avoid severe damage. You can always re-enter the game if you’ve only lost 7%. Don’t ever look back after a smart sell, even if the stock rebounds. You have no way of knowing its future, so you are best off reacting to what your stock is telling you right now. Learning this trait is hard — but it will save you a great deal in the long run.

Averaging Down
Averaging down means you’re buying stock as the price falls in the hopes of getting a bargain. It’s also known as throwing good money after bad or trying to catch a falling knife. Either way, trying to lower your average cost in a stock is another risky proposition.

For example, take Amazon.com between June and Oct of 2004. Its chart revealed much institutional selling by mutual funds and other big investors.

In June, it was a $54 stock. In July, it was a $45 stock. Investors who bought in at $45 may have thought they were getting a bargain, but they weren’t paying attention to multiple heavy-volume declines in the stock. What’s the sense of buying a stock when mutual funds and other big investors are selling big blocks of shares? That’s a tough tide to swim against.

When Amazon released its earnings on Oct 21, it fell another 10% to around $37. In general, stock charts tell bullish or bearish stories long before headlines do. In Amazon’s case, heavy volume declines between July 8 to 23 told a bearish story.

Buying Stocks In A Down Market
Some investors don’t pay any attention to the current state of the market when they buy stocks. And that’s a mistake.

The goal is to buy stocks when the major indexes are showing signs of accumulation (buying: heavy volume price increases) and to sell when they’re showing signs of distribution (selling: heavy volume price declines). Three-fourths of all stocks follow the market’s trend, so watch it each day, and don’t go against the trend. It’s not hard to tell when the indexes start to show signs of duress.

Distribution days will start to crop up in the market where the indexes close lower on heavier volume than the day before. In this case, a strong market opening will fizzle into weak closes. And leading stocks in the market’s leading industry groups will start to sell off on heavy volume. This is exactly what happened at the start of the bear market in Mar 2000.

When you’re buying stocks, make sure you’re swimming with the market tide, not against it.

CAN SLIM™ and the IBD Way
If you are a reader of Investor’s Business Daily (IBD) or any other of William O’Neil’s writings, you may have noticed that these five pitfalls compliment the CAN SLIM methodology of stock selection. By avoiding low-priced stocks, looking beyond the P/E, implementing a stop-loss plan, not averaging down and monitoring the overall market, you’ll be well on your way to a sound investing strategy based on years of studies and research from IBD.

For more on CAN SLIM, see Finding The Magic Mix Of Fundamentals And Technicals or Guide To Stock-Picking Strategies .


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Online Investing #business #magazine


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Online Investing

About the Online Investing Page:

Many investors find it more efficient to trade and manage their portfolios online. This requires a fair amount of education and research. Through our Online Investing section, we offer investors everything from the basics to the latest financial tools.

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Analyst Info – This page shows graphical representations of a company’s Consensus Recommendation, Detailed Analyst Recommendation, 12 Month Price Target Range, Earnings Surprise, Momentum (4 Weeks), Detailed Estimates Submitted, Earnings Growth, Price/Earnings, Consensus Earnings Forecasts and PEG Ratio.

Online Investing Articles

  • Diversification, Planners, and Brokers
    Of course you want your investments to grow. Here are some tips on diversification, choosing a broker and choosing a financial planner.
    Before you can invest for the future, you need to have money put aside for the present. Don’t be forced to liquidate some investments when an emergency arises. Build an emergency fund of three to six months’ living expenses, and you’ll be giving your online investments the best possible chance to grow. Read More
  • Investing in Stock
    Equities have been the road to wealth for many investors, but selecting the right ones for your portfolio is a difficult process. Chasing after the latest hot tip is no better than taping a newspaper stock page to a dartboard and throwing a dart. Take time to do some homework. This article is a good place to start in your search for unbiased advice for investing online. Read More
  • Money Market Comparison Chart
    This chart provides a quick comparison of rates on the three major types of money market accounts — taxable mutual funds, nontaxable mutual funds, and money market deposit accounts. Read More
    Check out our list of high yielding money market accounts and money market mutual funds:
    • Taxable Money Market Mutual Funds
    • Non-Taxable Money Market Mutual Funds
    • Money Market Accounts
  • Margin Trading
    It’s no secret that the advent of credit did wonders to beef up our modern economy, and the stock market has been no exception. While most new online investors buy stock through traditional cash accounts, there is another way. Read More
  • Two Sides to Every Trade
    One of the hardest concepts for a new investor to grasp is the idea that every single trade represents a difference in perception between you and whoever’s on the other side of the transaction. What do you know that the other guy doesn’t? Read More
  • Analyze Mutual Fund and ETF Fees and Expenses
    Fees and expenses can vary widely from fund to fund. Here�s a tool to help you compare how sales loads, fees, commissions, and other fund expenses can affect returns. Even small differences in expenses can make a big difference in your return over time. Read More
  • How to Trade Options
    Stock options are an incredibly versatile online investment flavor. Despite their reputation as an instrument for high-rollers, there are several conservative options strategies almost anyone can employ. Sophisticated investors find options can be highly profitable. Read More
  • Test Your Financial Knowledge
    Today, more than 84 million Americans and countless others around the world invest in the U.S. equities markets, some directly, others through pension plans, mutual funds, and other vehicles. The NASD recently surveyed investors to get an idea of what people know – and what people may not know – about investing. See how you stack up against other investors. Read More

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How to Start Investing in Stocks with Only $1, 000 #business #taxes


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Start Investing With Only $1,000

So you have a $1,000 set aside, and you’re ready to enter the world of stock investing. But before you jump head first into the world of stocks and bonds, there are a few things you need to consider. One of the biggest considerations for investors with a minimal amount of funds is not only what to invest in but also how to go about investing. Not long into your investment journey you may find yourself bombarded with minimum deposit restrictions, commissions and the need for diversification, among a myriad of other considerations. In this article, we’ll walk you through getting started as an investor and show you how to maximize your returns by minimizing your costs.

More from Investopedia:

What are the account minimums?
To the inexperienced investor, investing may seem simple enough – all you need to do is go to a brokerage firm and open up an account, right? What you may not know, however, is that all financial institutions have minimum deposit requirements. In other words, they won’t accept your account application unless you deposit a certain amount of money. With a sum as small as $1,000, some firms won’t allow you to open an account.

Stocks
Stock brokers come in two flavors: full-service and discount. As the name implies, a full-service broker provides much more in the way of service, but it only deals with higher net worth clients. It’s not unusual to see minimum account sizes of $50,000 and up at full-service brokerages.

This leaves the $1,000-investor with the option of a discount broker. Discount brokers have considerably lower fees, but don’t expect much in the way of hand-holding. Fees are low because you are in charge of all investment decisions � you can’t call up and ask for investment advice. With $1,000, you are right on the cusp in terms of the minimum deposit. There will be some discount brokers that will take you and others that won’t. You’ll have to shop around.

You also could purchase shares directly from a company through direct stock purchase plans (DSPPs). But some of these plans have a minimum investment amount restriction, which ranges between $100 and $500.

With the advent of online trading, there are a number of discount brokers with no (or very low) minimum deposit restrictions. One of the most popular online trading sites is ShareBuilder. You will, however, be faced with other restrictions and see higher fees for certain types of trades. This is something an investor with a $1,000 starting balance should take into account if he or she wants to invest in stocks.

Mutual Funds and Bonds
If mutual funds or bonds are investments you would like to make, it is simpler in terms of minimum deposit amounts. Both of these can be purchased through brokerage firms, where similar deposit rules apply as stocks. Mutual funds also can be purchased through your local bank, often for less than $1,000 when you have an existing relationship with the bank.

If you want to purchase government bonds, this can be done straight from the government through TreasuryDirect. The only restriction here is the minimum purchase amount of a bond, which can range from $100 to $1,000.

Learn the Costs of Investing

Commissions
Before you open an investment account, you must also consider the costs that you will incur from purchasing investments once the account is open. In most cases, every time you purchase an investment, it will cost you money (through commissions). With a limited amount of funds, these transaction fees can really put a dent on your $1,000.

Investing in stocks can be very costly if you trade constantly, especially with a minimum amount of money available to invest. Every time that you trade stock, either buying or selling, you will incur a trading fee. Trading fees range from the low end of $10 per trade, but can be as high as $30 for some discount brokers. Remember, a trade is an order to purchase shares in one company – if you want to purchase five different stocks at the same time, this is seen as five separate trades and you will be charged for each one.

Now, imagine that you decide to buy the stocks of those five companies with your $1,000. To do this you will incur $50 in trading costs, which is equivalent to 5% of your $1,000. If you were to fully invest the $1,000, your account would be reduced to $950 after trading costs. This represents a 5% loss, before you investments even have a chance to earn a cent!

If you were to sell these five stocks, you would once again incur the costs of the trades, which would be another $50. To make the round trip (buying and selling) on these five stocks it would cost you $100, or 10% of your initial deposit amount of $1,000. If your investments don’t earn enough to cover this, you have lost money by just entering and exiting positions.

Mutual Fund Fees
There are many fees an investor will incur when investing in mutual funds. One of the most important fees to focus on is the management expense ratio (MER), which is charged by the management team each year based on the amount of assets in the fund. The higher the MER, the worse it is for the fund’s investors. It doesn’t end there: you’ll also see a number of sales charges called “loads” when you buy mutual funds.

In terms of the beginning investor, the mutual fund fees are actually an advantage relative to the commissions on stocks. The reason for this is that the fees are the same regardless of the amount you invest. So, as long as you have the minimum requirement to open an account, you can invest as little as $50 or $100 per month in a mutual fund. The term for this is called dollar cost averaging (DCA), and it can be a great way to start investing.

Reduce risk with Diversification
Diversification is considered to be the only free lunch in investing. (If you are new to this concept, check out Introduction To Diversification, The Importance Of Diversification and A Guide To Portfolio Construction.) In a nutshell, by investing in a range of assets, you reduce the risk of one investment’s performance severely hurting the return of your overall investment. You could think of it as financial jargon for “don’t put all of your eggs in one basket”.

In terms of diversification, the greatest amount of difficulty in doing this will come from investments in stocks. This was illustrated in the commissions section of the article, where we discussed how the costs of investing in a large number of stocks can be detrimental to the portfolio. With a $1,000 deposit, it is nearly impossible to have a well-diversified portfolio, so be aware that you may need to invest in one or two companies (at the most) to begin with. This will increase your risk.

This is where the major benefit of mutual funds comes into focus. Mutual funds tend to have a large number of stocks and other investments within the fund, which makes the fund more diversified than a single stock.

A Small Step Toward a Large Future
It is possible to invest if you are just starting out with a small amount of money. It’s more complicated than just selecting the right investment (a feat that is difficult enough in itself) and you have to be aware of the restrictions that you face as a new investor.

You’ll have to do your homework to find the minimum deposit requirements and then compare the commissions to other brokers. Chances are you won’t be able to cost-effectively buy individual stocks and still be diversified with a small amount of money. Given these restrictions, it’s probably worth starting out on your investment journey with mutual funds. However, like all aspects of investing, it’s up to you to do the research and figure out the strategy that suits you best.

by Chad Langager

Chad Langager is the Senior Financial Editor for Investopedia.com. Chad graduated from the University of Alberta Business School with a degree in finance.

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