money
Lunch Breaking Investing Rulebook
After careful consideration, I have decided to try a new investing strategy. I’ve found that I do not have time to use the traditional rules. My rules will have to fit my time constraints. In other words, it has be easy and simple enough to do during my lunch hour.
Here are my Lunch Break Investing Rules:
1. Only buys stocks on the watch list.
2. Must be trending upward.
3. Must have a trending sweep of at least 10%.
4. Buy only at the bottom trend line.
5. Set a loss limit (2-3%).
5. Set a trailing stop loss to 8% below the bought price (dollar amount on the stop loss, not percent)
6. Set a profit limit (5-10%).
6. Allow the stock to trend upward until trailing stop loss is activated.
7. Never break any of these rules.
8. Adapt my strategy as needed.
Over the next several weeks I will be expanding on each of these items. I will also concentrate on the automation and mobile techniques.
Comment and share!
Passion and the Stock Market
Picking individual stocks for a portfolio is not for everyone. If you are interested in investing, it’s worth the experience. Give it a try and if you love it, keep doing it. If you don’t love it, get out and find a different investment strategy like money markets or mutual funds. For an investor to really make money in the stock market they must have a passion for it. The stock market is a roller coaster with ups and downs. When you go up it’s the greatest feeling, elation with just a tingle of fear that it’s all going to crash. When it does crash, and it always does, it’s a sickening feeling that ties your stomach into knots and makes you doubt what you are doing. The doubt is the killer and passion is the defense. If you have the passion and excitement, then you too can make money in the stock market.
6 Excuses Not To Invest
1. I don’t have enough money.
Most accounts can be started for $500 or less. Use your tax return or start a saving account to save the money to start investing. Also see my post about getting started even if you make minimum wage.
2. It’s the wrong time.
The worst time to invest in the stock market is tomorrow. Tomorrow is too late. Today is always the best time. Your money can’t grow until you invest it.
3. Recession!
Remember the often used “Buy low and sell high.” Guess what a recession does to stocks; it pushes them down to the “low” point of the last statement.
4. It’s too complicated.
It can be. Depending on your investing goals and strategy. Of course, it can be so simple you can do it on your lunch break. Like me!
5. I don’t have enough time.
Like step 4, most investing can be done in under an hour. I do most, if not all of my investing homework at lunch.
6. I’ll lose ALL my money.
Diversify! Unless you have a string of bad luck and all the companies go out of business, you won’t loss all your money. Keep in mind one of the goals of investing is to persevere your capital. It’s ok to take a loss if it minimizes the damage one or two bad stocks can do to your portfolio. And remember, always have a loss limit.
Got other excuses you have heard and want to share, COMMENT!
How long to keep a stock at a loss?
First, always set a loss limit. Know when to get out when you are losing money. Depending on your goals you may want to set a 5-10% loss to trigger a sell.
Now if you are like me and when you got started you had no idea what a loss limit was, then you may have a few that have lost big. Here are 4 questions to ask before you sell:
Is this a long term goal/investment? The beauty of the stock market is that it does bounce back. Depending on the industry and the company, you could see it bounce back.
Is it a good value company? Do your homework. Is it a good value stock. This is a good sign it could bounce back.
How much are you down? If you are down over 25%, then it may be time to sell and take the hit. Keep in mind that farther it goes down the more it has to earn to bounce back to your entry point.
Can you off set your winnings with this loss? Taxes! Uncle Sam gives investors some breaks. One is that you are taxed on your profits minus losses. Check the tax law or a trusted accountant for more details.
If you have other suggestions, please leave a comment below!
Don’t count on your 401k
401k is the new Social Security. That comment is not a good thing. The reason anyone has a 401k is because we can’t depend on having social security when we retire. We will still be paying for it, but it just won’t be there. The people counting on their 401k to be there when they wanted to retire in 2008-2009 were let down. The recession killed many people’s retirement plan. This is a wakeup call to everyone. DO NOT count on your 401k; take charge of your finances now. Its time for everyone to become personally responsible for their own retirement. Start a savings account, open a CD, and/or get an IRA. Its time! Don’t wait until the next recession to find out that you have to wait on retirement. After working hard your whole life, you deserve some financial security. Create it!
The Best Time To Invest – Recession!
I know everyone has lost money in the stock market due to the recession, but this is the best time to get started. The news has calmed down and found other things to blast us about. Companies appear to have stabilized, unemployment is starting to ease (or at least not making a sky dive into the metaphorical ground). The best part of this is that once things turn around, they go up. Up is good! Getting in the market now means you are getting in the ground floor. Remember the oft and over used saying, “Buy low, sell high”. Its low, time to buy.
Get in and get started. Learn the ropes and make some money. And of course, check back here or subscribe to the RSS for more articles and tips!
4 Tips For Buying a Certificate of Deposit
Certificate of Deposit (CD) is one of the easiest and safest ways to earn interest. With a little work on your part, small amount of time, and a little cash you can be earning interest with your hard earned money.
1. How much and how long?
These are your first decisions. Depending on how much and how long will determine your APR (annual return of premium). Maturity time can range from 6 months to 60 months. Remember, you will be penalize if you cash in before the maturity date. Only deposit money that you don’t need during your allotted time period.
2. Compare rates
Check your local banks web sites. Most list the current rates and a few have helpful calculators to show how much you can earn. Some have a minimum amount to open an account. You can also use web sites like Bankrate.com or a brokerage service like Scottrade.com.
3. Check the bank for FDIC deposit insurance
The FDIC insures your CD up to $250,000. If the bank is not FDIC insured, DO NOT buy a CD from them. You can LOSE all your money. Check FDIC.gov for more information.
4. Buy and enjoy earning interest.
Got other tips to share on CD’s, leave a comment!
6 Steps To Buying Stocks
The first time I bought any shares of a company I was terrified. I had no idea what I was doing and if I was doing it right. Believe it or not, it’s not painful and it’s very easy to do.
I use Scottrade, so my steps are more geared toward their service, but its similar for most places.
Step 1:
Log into your brokerage’s web site and click buy. Scottrade’s option is on the left side. Be sure you have enough money deposited into your account. If you do not, deposit the money and proceed to step 2.
Step 2:
Enter the stock ticker symbol. (Example: GE is General Electric and PG is Proctor and Gamble)
Step 3:
Enter the number of shares you are buying. To find this number you take the amount you are investing divided by the current share amount.
$1,000 (amount invested) / $10.00 (the current share price) = 100 shares.
Be sure to leave a little extra available for the commission and price changes.
Step 4:
Market vs. Limit
The “Market” options buys the stock at the current price or close to it when you click buy.
The “Limit” option allows you to enter how much you are willing to pay for the stock.
I used to use a limit on all my buys until I figured out that I was wasting more time chasing a stock within pennies of where I wanted to buy. I now only use the “market” option. Those few penny changes doesn’t worry me as much. If I was trading millions (I wish), it would be different.
Step 5:
Click Review/Buy (wording may vary by service).
Step 6:
Celebrate! You bought stocks and are on your way to accomplishing your financial goals!
Happy Trading!
How to Find Companies Worth Investing – Part II – Components
In my post, How To Find Companies Worth Investing – Part I, I talked about investing in companies that make the products that you use and love. Now let’s look at companies that help make those products happen.
Let’s say you don’t want to invest in HP or Apple. What about the companies that make the components of their products?
Typical Components Inside a Computer:
CPU – Intel (INTC) or AMD (AMD)
Video card – Nvidia (NVDA), ATI (part of AMD)
Monitor – HP (HPQ), LG (KRX)
There are plenty of excellent companies that you can find that make the bits and pieces of your favorite products. Do a search on google or wikipedia to find who makes what.
Happy trading!
How To Find Companies Worth Investing – Part I
Peter Lynch is well known for saying, “Invest in what you know”. With that in mind, one good place to find companies to invest is the grocery store or mega super store that is the size of a small country. The products that you buy, use, consume and generally can’t live without are made by some of the best companies to invest. List your 5 favorite products and do some homework.
Here are my 5:
1. Tide
2. Starbucks coffee (it helps me write)
3. Coke Zero
4. Doritos
5. Cheez-its
What companies make these products?* A quick search on Wikipedia shows:
1. Tide – Proctor & Gamble Co. (PG)
2. Starbucks – Starbucks Corp. (SBUX)
3. Coke Zero – Coca-Cola Company (KO)
4. Doritos – PepsiCo, Inc. (PEP)
5. Cheez-its – Kellogg Company (K)
That was easy! I now have 5 companies to do my investing homework. On your next visit to the grocery store, check out a few of your favorite products. Who makes them? Leave a comment below and have fun trading!
* These stocks are listed for example purposes only and I do not endorse these companies. Remember to always investigate and consider the risk before investing.
