I'm a baby in this field. Currently reading Buffet, Motley Fool's Investment Guide, and the Intelligent Investor (Graham) simultaneously.If I were to start with a bare minimum with Ameritrade, in order to feel out the new arena, how much would you recommend to start with? $2000, $2500 or $3000?dumbererr
Hi Dumbererr,I'm a baby in this field. Currently reading Buffet, Motley Fool's Investment Guide, and the Intelligent Investor (Graham) simultaneously.Since you are new to investing; definitely, the minimum $2,000.It is far more important to contribute regularly. If you can after sending in your $2,000 to open an account send some monthly money up this would be the best way to go. Be patient, read those books you mentioned and begin to form a system. 1. It is important before you invest that you have establish some way to value a company.2. You need to be able to locate debt on the balance sheet as well as cash which is also located on the balance sheet of the companies' financial statements.3. Find some good sources of information by checking out your local libray. They carry an archive of financial magazines as well as some heavy duty financial publications like Value Line.4. Immediately start a notebook. Take notes on any investments that you make. Before investing a dime in a company, make sure you jotted down in that notebook why you invested in that particular company and what you reasonably expect as far as returns from that company and why.5. Understand at least the basics facts that the income statement, balance sheet and cash flow statements are telling you about the companies you are investing in. 6. Continue to study as you invest; grow your knowledge along with your investments. Organize what you learn about investing and let your notebooks grow along with your investments. It will be fun to look back on your beginning notes 20 years from now.7. Learn the difference between a falling stock price due to degrading company fundamentals and a falling stock price due to the general market going down.8. Don't borrow to invest; don't go on margin9. Never invest so much you cannot sleep at night. If you have invested wisely and slowly your investments will begin to grow faster than your monthly allotment to investing. Your portfolio will grow because the stocks you bought our appreciating in value not because you are adding more monthly money to your investments.10. Don't invest money you will need in the short-term. In fact, ideally, you want to invest only the money you will never miss till your retire.11. Don't worry about mistakes, if you are investing slowly through monthly contributions and diversifying wisely as you go, a few mistakes will not harm your portfolio.12. Don't give up. Many people give up long before they have a chance to learn how to invest properly and benefit from the rewards of an appreciating portfolio.13. Read these articles - The Motley Fool has provided many good articles on how to value a companyInventory Ins and Outs by LouAnn Lofton TMF Bling – March 20, 2003http://www.fool.com/news/commentary/2003/commentary030320lal.htmThe Inventory Story by TMF Orangeblood Rex Moore – July 15, 2002http://www.fool.com/news/foth/2002/foth020715.htmInvestigating Inventory by Rex Moore TMF Orangeblood – July 8, 2002http://www.fool.com/news/foth/2002/foth020708.htmIndecent Inventory Exposure by Mike Trigg TMF Tonto – March 14, 2001http://www.fool.com/portfolios/rulemaker/2001/rulemaker010314.htm?source=EDNWFHEBITAhttp://www.fool.com/news/indepth/telecom/content/ebitdalimits.htmThe Value of Cash flow By Vince Hanks – June 8, 2000http://www.fool.com/dripport/2000/dripport000608.htmLucent cash flow and calculating Lucent cash flowhttp://www.fool.com/news/foth/2000/foth001219.htmhttp://www.fool.com/news/foth/2000/foth001128.htmThe Motley Fool on valuationIntroduction to valuationhttp://www.fool.com/School/IntroductionToValuation.htmEarnings valuationhttp://www.fool.com/School/EarningsBasedValuations.htmSales valuationhttp://www.fool.com/School/RevenueBasedValuations.htmCash flow valuationshttp://www.fool.com/School/CashFlowBasedValuations.htmEquity-based valuationshttp://www.fool.com/School/EquityBasedValuations.htmYield-based valuationshttp://www.fool.com/School/YieldBasedValuations.htmMember-based valuationshttp://www.fool.com/School/MemberBasedValuations.htmThe following series was written by- Randy Befumo TMF TemplrHow to read a balance sheethttp://www.fool.com/school/valuation/howtoreadabalancesheet.htmCurrent Assetshttp://www.fool.com/School/Valuation/CurrentAssets.htmCurrent liabilitieshttp://www.fool.com/School/Valuation/CurrentLiabilities.htmDebt and equityhttp://www.fool.com/School/Valuation/DebtAndEquity.htmCurrent and Quick ratiohttp://www.fool.com/School/Valuation/CurrentAndQuickRatio.htmWorking Capitalhttp://www.fool.com/School/Valuation/WorkingCapital.htmPrice to book - DSO and Turnshttp://www.fool.com/School/Valuation/PriceBookDSOAndTurns.htmBeware the bloated balance sheetBy Bill Mann TMF Otter - August 16, 2000http://www.fool.com/news/foth/2000/foth000816.htmCurrent assets on the balance sheet – Our likes and dislikesBy Phil Weiss TMF Grape – June 27, 2000http://www.fool.com/portfolios/rulemaker/2000/rulemaker000627.htmThe Many Faces of Debt By Phil Weiss TMF Grape – August 4, 1999http://www.fool.com/portfolios/RuleMaker/1999/RuleMaker990804.htmBeware of Inflated earningsBy Richard McCaffery TMF Gibson – August 17, 2000http://www.fool.com/news/foth/2000/foth000817.htmStatement of Cash FlowsVince Hanks – June 1, 2000http://www.fool.com/dripport/2000/dripport000601.htmSeries of articles by Vince Hanks 1-12Intro to SEC forms By Vince Hanks (TMF Elwood) Jan 6, 2000Back to basics Part 1http://www.fool.com/dripport/2000/dripport000106.htmConcepts and Definitions by Vince HanksBack to Basics Part 2http://www.fool.com/dripport/2000/dripport000113.htmThe Balance sheet by Vince HanksBack to Basics Part 3http://www.fool.com/dripport/2000/dripport000120.htmNon-Current Assets by Vince HanksBack to the Basics Part 4http://www.fool.com/dripport/2000/dripport000127.htmCurrent Liabilities Explained by Vince Hanks – Feb 3, 2000Back to Basics Part 5 http://www.fool.com/dripport/2000/dripport000203.htmUnderstanding Non-Current Liabilities by Vince Hanks – Feb 10, 2000Back to Basics Part 6http://www.fool.com/dripport/2000/dripport000210.htmFinishing the Balance Sheet by Vince Hanks – Feb 17, 2000Back to Basics Part 7http://www.fool.com/dripport/2000/dripport000217.htmFun With Numbers by Vince Hanks – Feb 24, 2000Back to Basics Part 8http://www.fool.com/dripport/2000/dripport000224.htmBalance Sheet Finale by Vince Hanks March 2, 2000Back to Basics Part 9http://www.fool.com/dripport/2000/dripport000302.htmIntroducing the Income Statement by Vince Hanks March 16, 2000Back to Basics Part 10http://www.fool.com/dripport/2000/dripport000316.htmIncome Statement demystified by Vince hanks – April 6, 2000Back to Basics Part 11http://www.fool.com/dripport/2000/dripport000406.htmThe Cost of Doing Business by Vince Hanks – April 13, 2000Back to Basics Part 12http://www.fool.com/dripport/2000/dripport000413.htmIncome Statement Odds and Ends by Vince Hanks April 20, 2000Back to Basics Part 13http://www.fool.com/dripport/2000/dripport000420.htmToday's Buzzword EPS by Vince Hanks April 27, 2000Back to Basic Part 14http://www.fool.com/dripport/2000/dripport000427.htmFinding Financial Information by Matt Richey TMF Matt July 14, 1999http://www.fool.com/dripport/2000/dripport000427.htmCash Flow Headaches by Richard McCaffery TMF Gibson April 10, 2000http://www.fool.com/news/2000/foth000410.htmThe Statement of Cash Flows by Matt Richey TMF Verve – Aug 23, 1999 http://www.fool.com/portfolios/rulemaker/1999/rulemaker990823.htmCapital Assets – What are they Really? By Roy Lewis TMF Taxes http://www.fool.com/school/taxes/1999/taxes990507.htmDollar Machine Part 1 by Randy Befumo – June 20, 2000http://www.fool.com/news/2000/foth000620.htmDollar Machine Part 2http://www.fool.com/EveningNews/1997/EveningNews970912.htm#fothDollar Machine Part 3http://www.fool.com/EveningNews/1997/EveningNews970915.htm#fothDon't Forget Debt by Whitney Tilson Oct 16, 2001http://www.fool.com/news/foth/2001/foth011016.htmDebt is not always Bad – Brian Graney TMF Panic April 23, 2001http://www.fool.com/news/foth/2001/foth010423.htmDebt; The Good, The Bad and The Ugly- Phil Weiss TMF GrapePart 1 Aug 31, 1999http://www.fool.com/portfolios/rulemaker/1999/rulemaker990831.htmPart 2 Debt; The Good, The Bad & The Ugly -http://www.fool.com/portfolios/rulemaker/1999/rulemaker990901.htmReturn on Equity a Definitionhttp://www.fool.com/school/returnonequity/returnonequitypartonedefinition.htmReturn on Equity – profit marginhttp://www.fool.com/School/ReturnOnEquity/ReturnOnEquityPartTwoProfitMargin.htmReturn on Equity – Asset Managemenethttp://www.fool.com/School/ReturnOnEquity/ReturnOnEquityPartThreeAssetManagement.htmReturn On Equity Leveragehttp://www.fool.com/School/ReturnOnEquity/ReturnOnEquityPartFourLeverage.htmReturn on Equity – An examplehttp://www.fool.com/School/ReturnOnEquity/ReturnOnEquityPartFiveExample.htmA Look at ROIC - introductionhttp://www.fool.com/school/roic/roic.htmA Look at Roic – Better than ROE by Dale Wettlaufer TMF Raleghhttp://www.fool.com/School/roic/roic01.htmA Look at ROIC An example by TMF Raleghhttp://www.fool.com/School/roic/roic02.htmA Look at ROIC True Performance TMF Ralegh http://www.fool.com/School/roic/roic03.htmA Look at Roic – A declining ROIC TMF Raleghhttp://www.fool.com/School/roic/roic04.htmA Look at ROIC – Equity isn't free by TMF Raleghhttp://www.fool.com/School/roic/roic05.htmA Look at ROIC – Cash Role by Tmf Ralgh Dale Wettlauferhttp://www.fool.com/School/roic/roic06.htmSecurity Analysis – Introduction by Randy Befumo TMF Templrhttp://www.fool.com/School/SecurityAnalysis.htmSecurity Analysis – A crazy lil thing called stock by Randy befumo http://www.fool.com/School/SecurityAnalysis01.htmSecurity Analysis – Valuation The price paid to the Cash Createdhttp://www.fool.com/School/SecurityAnalysis02.htmSecurity Analysis – Quality the Measure of Excellencehttp://www.fool.com/School/SecurityAnalysis03.htmSecurity Analysis – Depth of Knowledge: The Circle of Competencehttp://www.fool.com/School/SecurityAnalysis04.htmSecurity Analysis – Time the Ultimate Arbiter of Returnshttp://www.fool.com/School/SecurityAnalysis05.htmFinding Information by Randy Befumohttp://www.fool.com/School/SecurityAnalysisFindingInfo.htmThinking of ROA by Paul Lawson June 21, 1999http://www.fool.com/EveningNews/foth/1999/foth990621.htmThe Uselessness of PSR by Paul Larson TMF Parlay Aug 1, 2000http://www.fool.com/research/2000/foolsden000801.htmP/E Is not a Magic Number Zeke Ashton TMF CentaurPart 1 March 23, 2000http://www.fool.com/research/2000/features000323.htmP/E Is not a Magic Number Part 2 TMF Centaur March 30, 20000http://www.fool.com/research/2000/features000330.htmCalculating Cash Flow Ratios Phil Weiss TMF Grape July 7, 2000http://www.fool.com/research/2000/features000707.htmDebt Beyond the Balance Sheet by Richard Mccaffery May 2, 2002 TMF Gibsonhttp://www.fool.com/news/2000/foth000502.htmBeta http://www.fool.com/FoolFAQ/foolfaq0045.htmDividend Discount Formula – John Del Vecchio TMF Fuz http://www.fool.com/research/2000/features000406.htmCash Flow and the Federal Reserve by TMF Otter Bill Mannhttp://www.fool.com/portfolios/rulemaker/2000/rulemaker000517.htmPEGulatorhttp://www.fool.com/pegulator/pegulator.htmReturn on (Marginal) Invested Capital by Bob Fredeen (TMF Bobdog)http://www.fool.com/research/2000/features001019.htm14. If you do not understand them thoroughly ask someone from the boards to help you with what is not clear.tom
Before U become a total mass of confusion and walk into a wall,pulling your hair out.Go and either buy or get hold of some books on Index Mutual Funds.A good book to start with has been written by the Father of Indexing John Bogle,Common Sense on Mutual Funds. Don"t get boged down with the TEchnical junk in the book.Just catch as much of the guidance stuff as best U can .I can"t believe that some one would introduce to investing the way 1000 has.What he has proposed and presented to U as a newbie would frighten and scare the hell outa me. Good Luck and may U become 1of the super rich. A reader
Thank you sire!
If I were to start with a bare minimum with Ameritrade, in order to feel out the new arena, how much would you recommend to start with? $2000, $2500 or $3000?IMO, as much as you feel you can currently put in without leaving yourself with no emergency funds. IMO a better thing to get into the habit of is regularly contributing to the account. Try and start with a fixed percentage of each pay check, say 5%. And pay that first above all things.Then as a practical matter, don't buy a stock with less than about 100 times what you pay for two trades. If your broker charges $6.95, no less than $1400. That's how much you need to make the fees (commissions, spread, etc) come out to be about 1%. Assuming you hold any stock for at least a year.A couple of comments on 1000's excellent post:4. Immediately start a notebook. Take notes on any investments that you make. Before investing a dime in a company, make sure you jotted down in that notebook why you invested in that particular company and what you reasonably expect as far as returns from that company and why.Set a certain period (3 months) where you go back and review the company to see if it still meets the criteria you chose it for.Also, when you record your investment decisions, also record the alternatives. If you decide to sell a stock, try and keep track of what would have happened had you kept it. You'll often learn more from your mistakes as from your successes. And you'll also tend to sweat those mistakes more. Try and keep sight of the overall picture.You've got 20+ years of investing in front of you. Take it slow.I can't believe that some one would introduce to investing the way 1000 has.What he has proposed and presented to U as a newbie would frighten and scare the hell outa me.When you consider that most of what 1000 recommended are 2-3 page articles, then that list could be easily read in a weekend.doc
I would recommend that you first start with a long term savings strategy, and that your initial investments are primarily indexed mutual funds. These require a lot less work and you lose a lot less money while you learn the ropes.A good mix might be 80% indexed funds and 20% individual stocks. Therefore, I would invest all of it, and put 2400 into VTSMX (vanguard total stock market) and 300 bucks each into two stocks you have researched. Yes, the comissions are high and you will lose a lot just on that (go with Scottrade or another really cheap comission place). However, your real money in the market will make you pay attention and you will learn fast how things work on a simple level.Meanwhile, continue contributing, and keep up the 80/20 split, and don't invest the 20 part until you have enough in there to make it worthwhile for a particular stock.
Greetings!Education comes first; you're on the right track.I have an account with Ameritrade and like them very much. $2000 is a good starting amount for an investment account, AFTER you have done two important things: established a 3-6 month emergency funds account, held in something liquid and safe like a money market fund or short-term CDs, and eliminated your credit card debt. I highly recommend Bernstein's book, 'The Intelligent Asset Allocator.' Read it thru at least twice. In the long run, you will be well-served by:- Dividing your investment account(s) between non-correlated asset classes, and changing the stocks-to-bonds ratio as you get older towards less stock and more bond/fixed income.- Investing long-term by indexing via low-cost (e.g. Vanguard) mutual funds or exchange-traded funds instead of individual company stocks (it's easier, simpler, cheaper, and reduces risk)- Rebalancing your account(s) periodically (once every 12 to 18 months)- Ignoring day-to-day market fluctuations and especially 'noise' in the financial press.- Staying away from options, futures, margin investing, commodities, full-service brokers, and 'hot tips' from your friends and relatives.- Taking it all in stride and enjoying life. I also highly recommend Scott Burns' column in the Dallas Morning News on Couch Potato Investing: http://www.dallasnews.com/business/scottburns/Regards,Frank
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