Tips on investing money

The following video has some very good tips on investing money, especially tip #2 – never invest money which you cannot afford to lose.

Learn to Invest Money: Investing Made Fun for Teenagers
 by: John Kim

If you’re a teenager interested in making money, then this article is for you. I’ll tell you how to multiply the money you earn from your after school job with something just as fun as gambling in Las Vegas but a lot safer – the stock market.

Most people think that teenagers would be bored by the subject of investing and the stock market, especially when there are much more exciting things for teenagers to talk about such as dating, going to the movies, and hanging out with their friends. Well if you’re reading this article, then you’re one of the many teenagers that break the ‘teenager stereotype.’

Ok, to make sure that this article wouldn’t bore you, I sat down and discussed some rules about investing with a group of teenagers. They helped me come up with similarities between investing and dating, so I’ve decided to tell you ten ways investing in stocks is like dating. I know you’re thinking ‘whatever’. But keep reading and you’ll see it’s true. Learn how to invest in stocks and you’ll also learn how to win at dating. Let’s start out by defining what exactly a stock is.

Stock – A way to own part of a company. Company stock, or shares, can be bought online through internet trading companies such as E-Trade or through an investment company. You can make money by buying shares of a company that you think will sell a lot of its product. Stocks can be as cheap as $1 a share or as expensive as $3000 for a single share. For example if you bought Apple around the time it started selling ipods, you could have bought 100 shares for about $800. At its high price this year, those same 100 shares would have been worth about $8,500, not too shabby a profit, right?

OK. Now for the Ten Ways Investing is Like Dating.

Rule One: It’s possible to get ahead sometimes by doing close to nothing.

Investing in stocks is all about getting ahead by doing close to nothing. That’s not to say you can be lazy and earn money because, from the moment you start learning, it will take you at least a couple of years before you develop enough knowledge before you will feel confident enough about putting that hard earned money from your job into the stock market. And that’s a couple of years of consistent learning. But once you develop confidence in your ability to invest and make money, your money will start making money for you even while you’re sleeping. And that’s getting ahead by doing close to nothing.

So how does this concept apply to dating? Every teenager knows that if you’re trying to get ‘in’ with somebody that you really like, that the best thing that you can do is to get that person’s best friend to like you. Because if you do, you can count on that best friend to tell the person you like a lot of good things about you. There is nothing more valuable than that. And you’re getting ahead by doing close to nothing.

Rule Two: The more experience you have, the better you’ll become at it.

Becoming good at making money doesn’t come easy. You’ll find that in the beginning, when you buy stocks that you’ll want to take small risks as you develop your style and gain more confidence in your skill.

This is good advice when it comes to dating as well. The more experience you have with dating, the more confident you will become, and confidence is an aphrodisiac to members of the opposite sex. Not arrogance. But confidence. So in the beginning of your dating history, when asking someone out, take small risks until you build up your confidence that you have the right approach. After that, confidence is all you’ll ever need.

Rule Three: If you ain’t Cassanova, don’t ever try to be. Develop your own style. It’s much more attractive.

In investing, people try to copy the styles of the best investors out there. They buy the same stocks as the people that are known to have earned millions and sometimes billions in the stock market. The problem is this often doesn’t work for the average Dick and Jane because the experts that they copy have so much money that they make tons of money if stock price goes up just a few pennies. Not so for the average Dick and Jane.

It’s never that easy just to copy other people’s success. The same applies if you try to copy someone else that is popular with the opposite sex. Most times, when you try to copy someone’s style, it means your not using what you’re naturally good at. If you were, you wouldn’t have to copy someone else. So just be yourself and don’t try hard to copy a popular boy’s or girl’s style. Because nobody likes a poser or a fake.

Rule Four: Dig below the surface and you’ll discover what’s real.

Just like with boys and girls, in investing, all that glitters is not gold. In deciding what stocks to buy, you don’t want to invest in a rapidly rising ‘hot’stock before really doing your homework. If you do, the chances are that you will get burned. The price of many ‘hot’ stocks fall just as quickly as they rise unless there is substance backing that hot streak.

Girls and guys are the same. You want to see if the ‘hot’ guys and girls have anything more than just the genetics that their parents gave them. Is there anything beyond that beautiful face or body that gives them substance?. If you find out they have strong character, loyalty, and honor, then you’ve dug enough and you’ve got a winner. But if you dig and find nothing, then keep looking for something that’s real.

Rule Five: Sometimes you gotta find a way to discover what nobody else knows to get ahead.

The way to make money in investing is to find out about companies doing stuff that is really cool before anyone knows about it. If you had found out that Apple was coming out with the ipod several months before they started selling them and bought their stock, you could have made a lot of money.

Likewise, in dating, try to make these same types of discoveries. Discover what a girl or guy really likes before he or she tells you, and do something special for him or her based upon what you discover. If you do, you’ll definitely have one up on your competition.

Read about rules 6-10 in Part Two of Investing Made Fun for Teenagers: Ten Ways Investing is Like Dating.

About The Author
John Kim is the founder of Global Market Opportunities. One of his goals is to get teenagers to learn about stocks now so they’ll be set later in life. In writing his Investing Made Fun for Teens guides, many teenagers provided input. To learn how to set up a practice investment account, click here, http://www.globalmarket-opps.org.
© 2006 Global Market Opportunities, Inc.
This article was posted on April 11, 2006

Investing Tips For The Beginning Stock Picker
Investing Tips For The Beginning Stock Picker. by Guest Blogger on February 20, 2009. I remember when I decided that my normal savings account wasn’t good enough any more.

Newbie Tips For Would Be Stock Investor
When you deposit your money in a bank, it bears interests in a given period of time.

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Small Cap Stocks Part 4

Investing your money in Small Cap Stocks can lead to high returns if you are not too greedy but you need to understand the stock market. 

Learn to Invest Money in Small Cap Stocks and Make Triple Digit Profits (Part Four)
 by: John Kim

Ever hear of no risk, no reward? Well, buying riskier small cap stocks that could return triple digit gains doesn’t have to be a risky proposition. In the first three articles of this small and micro cap series, the first four rules focused on buying strategies. In this last article, the last and fifth rule will cover selling strategies.

Rule Number Five: Remove emotions from your decisions with disciplined selling strategies.

So now that we’ve covered how to buy in to such stocks, let’s review selling strategies because they are just as important. With selling, always limit your downside with stop losses of 10%-15% in long positions and stop losses of 25% with options. Using this strategy eliminates much of the risk from attempting to capitalize on double digit and triple digit gains. In fact, once you become good at identifying opportunities, having winning pick percentages of 70%-85% would not be unusual. And if you attain these percentages, the 15% of picks you lose several hundred dollars in becomes irrelevant when offset by your huge gains. In reviewing what to do about gains, just abide by one rule.

Don’t get greedy and always lock in gains.

If you don’t get greedy, there is no way you should not make money from a stock that has experienced explosive growth. But this scenario does happen. And only one thing causes this to happen. Greed. People will watch 100% profits turn into 20% losses because of greed.

Just as you did with your buy in price, have a predetermined selling price. As opposed to the buy in price range, I would choose a more specific price. For example, let’s consider stock YYY again and assume you bought the stock for $3 a share. Say you set your goal at $5 a share, a 67% increase, but that it blows right through that price two weeks later.

Now what do you do? Hold on or sell?

With sell strategies of rapidly rising stocks, the picture becomes slightly murkier than with sell strategies of stocks that are falling. When a stock passes through your 15% stop loss order (see part I of this article), it will sell automatically, no questions asked, with all emotions removed from that decision. But what do you do when the stock is shooting skyward with seemingly unlimited upside? It depends on what’s driving the price up. If pure speculation is the only thing driving the price, sell half your position and then put trailing stop losses of 20% on the remaining half. In other words, now that stock YYY has risen to $5 a share from my original buy-in price of $3 a share, I sell half my position, and my stop loss price on the remaining half has now moved up to $4.25 a share. This way I’ve locked in my predetermined 67% gain on half of my position of YYY and the least amount of profit I can make on the remaining half is 42%.

Now if earnings and sales are driving the price up, I may take another strategy. Instead of selling half of my position in YYY, I’ll hold onto my entire position, but again institute a trailing stop loss of 20%, moving my stop loss price-point up to $4.25. This is riskier than the first strategy, but the important thing to note is that I am still locking in gains. In this scenario, I still guarantee myself a 42% gain no matter what happens with the stock from here on out.

The key, and I can’t emphasize this enough, is to always take gains off the table or to lock them in with trailing stops. By doing this, you remove your emotions from your decisions. Formulate a disciplined sell strategy and you’ll make a lot more money than you would by trying to forecast the direction of the small and micro-cap stocks you invest in. Plus you’ll save a lot of money on the psychiatrist you won’t have to hire due to all the unnecessary stress you would have caused yourself by not employing these strategies.

So to summarize, always limit your downside and lock in gains with stop loss orders when investing in small and micro cap stocks and you can invest in stocks with enormous potential without the stress associated with the enormous risk of some of these stocks.

About The Author
John Kim is the founder of Global Market Opportunities. He has over thirteen years of experience in finance and financial services, and has earned a BA in Neurobiology from the University of Pennsylvania, a Master in Public Affairs from the University of Texas at Austin, and an MBA with a concentration in finance from the McCombs Business School, University of Texas at Austin. To learn how to discover small and micro cap stocks that consistently and significantly beat the market indices, click http://www.globalmarket-opps.org.
© 2006 Global Market Opportunities
This article was posted on April 18, 2006

Other articles on Small Cap Investment

Agoracom: Small Cap Investment
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