Getting Started in The Stock Market - How Much Should You Invest & With Who?

Thinking about investing in the stock market? Not sure where to start? Here is a step by step guide to getting started in the stock market.

Step One: Evaluate Your Financial Situation

Before getting started in the stock market, it is important to determine whether or not you can really afford to invest in stocks. Start by looking at both your savings and your debts. If you have credit card debt or an auto loan, it would make no sense to invest in the stock market. The average annual stock market return is seven percent. If the interest rate you pay on a credit card or auto loan is any higher than that, you will be much better off paying down your debt versus investing in stocks.

Step Two: Decide What to Invest In

The next step involves deciding which stocks to invest in. You have two main options: straight out stocks or mutual funds. Stocks are shares of ownership in a company. A mutual fund is pooled money from a large group of investors that is invested in stocks, bonds, and other securities. Mutual funds are often the best choice for beginning investors because they are managed by someone else and are easy to invest in. Whatever investment option you choose, be sure to research your picks before you buy.

Step Three: Decide How Much to Invest

When you have chosen your investment vehicle, the final step is deciding how much to invest. A good rule of thumb is to not invest any more than you can reasonably afford to lose. No stock pick is guaranteed, which means it is just as easy to lose money as it is to make money. It is also important to think about diversification. Spreading around the money you can afford to invest is the safest way to get started in the stock market.

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Wall Street Snake Oil

If you are the average American investor it means you have no idea what or when you should be buying and selling. stocks? Bonds? Mutual Funds? Limited partnerships? ETFs (Exchange Trader Funds)? Money Markets?

Any broker is ready and willing to prescribe his brand of snake oil. Notice I left out 'able'. The brokerage houses require their "experts" to stick with the party line and to recommend only what the house wants sold. It might be a new issue or some excess inventory they want to move.

Brokerage houses to this day do not want their brokers to think for themselves or to come up with any creative method to help the customer make or preserve his money. No, that is not what they say, but it is what they do.

History has proven that a knowledge of technical analysis is far superior to fundamental analysis. The fundamentalist studies corporate sales, P/E ratios, gross margins, cash flows, earnings, growth, management's background and economic data. When most of these factors look their best is when the market is at the top and gives fundamental buy signals. When they look the worst is at the bottom and that is when these companies are the best buy - sometimes.

The best signals are given by technical analysis. With today's computers it is relatively easy to follow hundreds of stocks or funds by setting up specialized programs to alert the investor when certain technical indicators are aligning to give investment signals. These parameters are not subjective, but mathematical. One large portion of technical analysis is based upon charting which is very subjective and requires a great deal of applied apprenticeship.

The greatest amount of customer snake oil is made from fundamentals as corporate "facts" are most easily distorted from huge sources of information. It is somewhat more difficult to hide empirical facts especially when placed on charts.

Snake oil comes in many forms, but mostly in beautiful color brochures about their projected performance. Pictures of their offices and equipment. On CNBC-TV there will be interviews with the company CEO who will paint a glowing picture of anticipated performance and profits. Fingers are twitching as the investor wants to write a check to buy some of these magnificent shares. Never listen to the company CEO. Do you expect him to tell you any bad news?

It takes a while to develop a story and have it seep into the pores of broker/salesmen. They are the targets of many snake oil presentations as these are the people who then sell it to you. There is one way to check out the story's facts. Put up a chart on your computer screen that is from one to three years and if it has a price appreciation that is slowly ascending at about a 30 degree angle this one might be a good buy. If it is declining look no further. Pass or sell out if you own any.

Always be cautious. What you might be getting is a big expensive bottle of snake oil.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

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Learning All About the Stock Market With a Free Online Stock Market Game

Learning how to help your money work for you in with stocks can be very confusing. Many people would like to leverage their extra money but they are scared to take the first leap. If you want to learn about trading without all the risk, then you should try a free stockstackup.com" title="stock market">stock market game. These games offer you up to $100,000 dollars to trade with in a fake market. The benefit to this type of game is that it is just like the real thing only the money is not real. Playing these games is the perfect way to learn how to invest without any risk to you.

There are many terms used that the average person would not understand. For instance, buying long or buying short. When you play a free stockstackup.com" title="stock market">stock market game, you can learn these terms and see them in action. The Wall Street Survivor is a game that is absolutely free to sign up for and you can learn everything there is to know about the market and how it works. There are many different sections where you can trade, do research and even talk to members all for free.

Another benefit to a free stockstackup.com" title="stock market">stock market game, is that you can win cash and prizes. If you do well, you earn points and these points can be used for prizes. They also have incentives for people when they accomplish a task or beat other players. Doing well in this pretend world of trading could give you the courage to try trading your own money. Once you have the understanding of how the stock market works, you then can take that leap and make some real money in the real world.

It is very common for people to be hesitant when they are putting money on the line. You never know how an investment will pan out and if it will be worth the risk. Playing a free game is the best way to learn about the stock market and have some fun. Some may say that it is not the same because you are not risking real money but learning about the stock market through buying and trading fake money is a good way to start. Try one of these free stock market games and you will be surprised how much fun you will have and maybe even win some cash or prizes in the process.

Find out more about this Online Stock Market Game in my Wall Street Survivor Review.

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Market Plunges

The frequent fall (or downward trend) in the price of stocks is referred to as a Stock Market plunge. The general public sentiment is that in order to avoid Stock Market fluctuations and risks, it is better not to step into the market, while the stockstackup.com" title="day trader">day traders' policy is that the best way to deal with the risks involved in the Stock Market is to get in and get out of it quickly. We have plenty of advice on the Stock Market.

The change in the stock price is unpredictable. Sometimes it touches the sky, while at times an investor feels as if his investment is dumped in a pit. Despite long detailed tips given by television commentators, financial writers, analysts, and market strategists, investors find it very difficult to benefit from them as the tips often prove to be misleading. Many investors become a victim of serious depression due to the risks and losses they have to encounter.

There are a number of ways to survive in a down market. While it is tough enough to save oneself from some general losses, an investor can be secured against the losses that will make him completely disappear from the Stock Market forever. Some of the key tools to protect the capital invested in the Stock Market are given hereunder:

o Be alert on the existing and potential market scenario and make changes in your stockstackup.com" title="investments">investments according to it. Be cautious before it is too late. Do not wait for the extreme to happen in the fluctuating market.
o Sell your stocks instantly if you are on the margin position. When your position is on the margin, it may become even worse. So, it is suggested to save your cash for a better opportunity after the market has stabilized.
o If it is essential for you to stay in the market, just rotate your portfolio. That is, buy safer and defensive stocks. The benefit is that those stocks have regular and stable income streams and are not much affected by the market scenario.
o Don't run for growth stock. Such stocks are extreme in nature, that is, either too profitable or too adverse, thus, increasing the risk factor.
o You will always be tempted to buy more stock under the down market condition as they are available at cheap rate. But it is advisable to invest in the market at a higher price to avoid any downside risk. Some stocks take many years to become stable again.

It is better to seek advice than to assume the conditions individually. It will help you a lot in researching and understanding the market criteria and deciding over the required steps to be taken in order to avoid risks.

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Life Insurance - A Must Have Necessity

Life insurance is the means to ensure that your dependents continue to have financial security even after your retirement, death or in case you can no longer provide for them due to accident/ disability. By entering into a fixed tenure contract with a life insurance company and paying the premium, you safe guard the financial interests of your family. If you die during the tenure of the policy, your beneficiaries receive tax free cash payout of a pre decided amount. Traditionally life insurance policy only eliminated the uncertainty arising due to loss of a bread winner for the family. But with the changing life style and need to provide a comprehensive cover, the financial investment planning has evolved over time. A good insurance policy can provide any or all of the following:

• Pure life cover
• Saving planning
• Child education plan
• Financial investment planning and
• Retirement planning

Rather than taking out a life insurance plan after reaching their fifties, people today are taking help of their insurance policy for financial investment planning of their entire family including their unborn children. A variety of insurance products are available in the market to cater to each and every financial requirement of the insurer. Well recognized and established players like ING Life offer a basket of mixed life insurance plans to suit the needs of every policy taker. Some essential benefits of buying life insurance India policy early in working life are:

1) Meet the fixed cost - Almost every average family has some or other long term fixed obligation like home loan, education loan or medical loan. You would not like to leave your family burdened down with a hefty loan obligation in case anything happens to you. Your insurance cover will help them better to deal with any fixed costs.

2) Take advantage of smaller premium payments early in life - A young and healthy person will have to pay smaller premium compared to an older and ailing one. Thus taking out a long term insurance policy for say 30 years will help you save considerably. Besides, the advantage is that if you do develop some health problems later in life, your insurance cover will help you deal with the financial ramifications of it.

3) Security for dependents - Death is unavoidable, but the pain and anguish of loss can be considerably reduced if the surviving family has a financial planning to fall back on. Besides, your death should not be a reason for your family to curb your child's education dreams or to do without medical support as they can't afford the expenses. The peace of mind you get from knowing that your loved ones will always continue to live in peace is the biggest reward of investing in life insurance.

4) Affordable Life Insurance - For those who cannot afford to take different types of insurance for different needs like health insurance, home insurance etc., taking an affordable life insurance is a better option. Your insurance policy will help you meet with any medical expenses arising due to terminal illness. You can also take out an insurance policy that will make periodic payouts according to your future requirements like for daughter's marriage or child's further studies.

5) Meet immediate financial needs - Since life insurance benefits can be accessed immediately, they can help pay funeral costs and estate settlement costs.

6) Stay independent all your life - The wish to live a dignified life and not have to beg and borrow in the older years can be fulfilled with a life insurance pension plan policy. Investment type insurance policy builds up in value over time and you can reclaim a good amount to life a comfortable aged life.

Whichever life insurance policy you opt for, make sure to understand all the terms and conditions of the policy clearly. Also calculate your minimum insurance needs to ensure that your policy amount is not insufficient when the actual need arises. Finally, invest a practical amount, don't take out an unreasonable premium policy that may be turn out to be a big drain on your monthly earnings.

Insurance policies are the largest largest financial investment planning services offered to the people. There are several advisors spread across the country to help the people in selecting insurance policy products like ULIP, child education plan, pension plan, etc...

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The Stock Market Explained

So, understanding the stock market...OK...what the heck is the stock market anyways?

The basic function of the stock market is to provide capital resources for corporations that seek capital to expand their operations and finance their growth.

If you make your money available to theses companies, you help them expand and prosper.

Companies that issue stock shares to the public are considered "publicly held" or "publicly traded" companies. Stock shares represents ownership of a corporation. As a shareholder, an investor owns a portion of the company's assets and profits.

With ownership comes risk and a shareholder assume the primary risk if a business does poorly. However, they also stand to make the greatest return if it succeeds. If he is smart, the shareholder would be wise to be understanding the stock market too.

When an entrepreneur starts a company, he often looks to family and friends for start-up capital. As the company grows, it will need more money, or in other words capital. Those who survive those tough early years, when most businesses fail, will look for a bank loan.

Loans carry high cash costs, in the form of interest payments. Eventually, if the company grows enough, its owners may choose to issue stock shares in the public markets. Understanding the stock market is very important to know for these entrepreneurs.

When you hear that a company is "going public", it means that the company is issuing shares of ownership for sale in the public marketplace. This process takes place during the initial public offering, or IPO.

The IPO is a first-time offering of stock for sale to the general public. The IPO process involves a number of people in addition to the company owners, and can be a rather complex undertaking. The company itself must be clear in understanding the stock market.

To go public and issue an IPO, the company must use and find an Investment Banking firm that is willing to underwrite the public offering. The Investment Banking firm, or underwriter, will do their best to sell the shares. They may reserve the right to sell the offering on an all or none basis, which means that if they cannot find buyers for all the shares to be issued, they may call off the entire offering.

The underwriter's profit in this case is made by a commission charged for selling the stock. If the underwriter agrees to a firm commitment to sell the entire offering, usually the first move is to buy all the shares that are going to be publicly offered at an agreed-upon price.

The underwriter then attempts to sell those shares to the public for a higher price, thus profiting from the transaction.

Stock Classifications

Stock Types There are two classifications of stock: Common and Preferred.

Common stock is usually what is issued to the general public. The term common Stock doesn't carry any negative connotations, but rather indicates that it is the "standard" stock the company has offered. Common shareholders have voting rights.

And as the word suggests, "preferred" stock has certain advantages over common stock. First, preferred shareholders are paid dividends before common shareholders. And if a company isn't doing well, the Common stock dividend is eliminated first.

Second, is if a company goes out of business, the owners of preferred shares have prior claim to any assets that remain when the company is dissolved and after bond holders and other creditors have been paid. Owners of common stock are the last in line to pick up the pieces of the fallen corporation.

There are disadvantages to owning preferred shares. Preferred shares have no voting rights. Also, the price of preferred shares tends to rise more slowly that the price of common shares.

As owners, common shareholders elect a corporation's Board Of Directors. The board of directors is a group of individuals, which are responsible for managing the affairs and growth of the corporation. The power of the board usually extends beyond that of the founder of the company.

The power resides in this board because the board is in the position of representing the shareholders as a group. This board must be educated in understanding the stock market.

Normally, owning one share of common stock gives you the power of one vote. If you have control a large number of shares, you will have more influence on the outcome of elections.

At worst, common shareholders can lose their entire investment if their company fails. In such a case, a company may be sold or liquidated and its remaining assets distributed among creditors, such as banks and bondholders. Shareholders would receive proceeds only after theses more senior claims are satisfied.

In order to stockstackup.com" title="make money">make money, the individual shareholder must sell his shares back to onto the market, through a Stock Exchange and their Stock Brokers.

StockMarket-Coach.com cares a great deal about you. Our aim is to provide the best stock advice with a friendly and positive attitude to keep you on the road to trading success.

StockMarket-Coach's mission is to provide a program of sound investing advice, education, and support that helps create successful lifetime stock investors. By doing the appropriate investment research and therefore becoming a confident, knowledgeable stock investor, you as a stock trader is empowered to build better financial futures for yourself and your family.

Peace and Abundance!

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Penny Stock List - 3 Steps to Creating a Hot Stock Pick List

Having a Penny stock list at your finger tips is what you need to do frequent stockstackup.com" title="short term trading">short term trading. You can create your own list by using technical analysis or you can buy a service that will provide you hot picks. Let's do a quick review of creating your own penny stock list.

3 Steps to Create a Penny Stock List

Using a Stock Broker
Find yourself an online broker. Most stockstackup.com" title="online brokers">online brokers have stock screening tools to sort through the thousands of stocks available. The broker will have ideas on how to screen stocks that are typically pretty decent. I focus on companies that have shown a steady increase of cash flow in the past year. I also like picks that are under $2. This type of screening is easy with the right online broker.

Technical Analysis
If you are not familiar with technical analysis, you will need to take little time to get up to speed. The idea with this type of analysis is to review price history on charts to predict how the stock price will act in the future. Charting patterns, oscillators, and indicators used together are common tools to do technical analysis. When combined, they can help you find a share price that will most likely move up or down in the near future. Your online stock broker probably will have lots of information that you can read to get up to speed with technical trading.

Before I started using a stock alert service, there were a few things I'd look for when doing technical analysis. I would like to focus on spikes in trading volume and trendline breaks. When I saw significant support or resistance broken while volume was spiking, this was a very good technical analysis sign to enter a trade.

Penny Stock Research
Finally, you'll need to know how to research a company you are considering to add to your hot pick list. The main component of this research will be financial. Understanding how to read income statements and balance sheets can shed some important light on potential picks.

If you thought penny stocks may be a way to make a lot of money, you are absolutely right. Having an easy way to create your own stock watch list or to pay a reputable company to provide you a penny stock list is the most important part.

Hector Breton's passion is trading. He does so successfully by using a penny stock list service provider. Find out what he recommends as the only proven method to trade at http://www.pennystockslist.us.

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