I've gathered my little fortune and am preparing to invest for the first time in stocks. I found a few companies I like and that I'm willing to lose money on (but that I think will gradually make me rich instead), but I don't have a lot of time to watch stocks after I set up a regular investment plan. Is it a bad idea to buy stocks but only pay close attention to them every other month or so? How much attention do you consider necessary for individual stock investing?Min
Min,I would love to reply to your query, but I am logging off for the day. I will reply, next time I am here. This is a terrific topic. I hope to learn something about myself when I post my reply. See you soon.exilion
Here's a quote you might find inspirational:...we'll happily forgo knowing the price history and instead will seek whatever information will further our understanding of the company's business. After we buy a stock, consequently, we would not be disturbed if markets closed for a year or two. We don't need a daily quote on our 100% position in See's or H. H. Brown to validate our well-being. Why, then, should we need a quote on our 7% interest in Coke? --- Warren Buffet, multi-billionaire investing geniusAs long as you read the annual reports as you get them in the mail (skip the glossy color stuff and go straight for the SEC filing, if you're really pressed for time), you should be fine.
Well if you have a long term perspective you can buy it and forget about it since you know about the risk of losing it all (very unlikely).Some investors get too nervous in following stocks every day they might trade out of a position because it is down temporarily (hopefully like Intel last September).You can track your investments by using Yahoo. You can set up Yahoo to look at your positions very quickly. See this example:http://finance.yahoo.com/q?s=Intc+ibm+ene+payx+hd+jnj&d=tOnce you set it up, you can bookmark it to see how your stocks are doing very quickly.It only takes about 10 minutes to scan my investments (around 100).
Hi VulstockI wanted to know how you managed to set that up. It has to be fairly easy but the simplicity of the display impressed me, especially as I own some of the stocks you do or showed in the example.Also I have a question for the wise men of this board: glsmyth,dfish,myadidas,kcourt,etc. about taxes.I admit to plunging into the drip thing after having read as many posts from you guys as possible.I'm a senior in college, fairly young and have sent ocps 2x for jnj and intel. However, I am a bit afraid now with the tax issue. Need I only worry when I sell my stocks, or well on a yearly basis. ANY help or sound advice would be more then welcome.And an extra bonus I suppos would be to know in what manner I can track the %increase and value of my stocks say 5-10 years down the line, to actually be aware of their value. Many thanks for all the help you can provide and continue to provide. I just love this "living education" you all provide us, and I suppose each other.
It is easyGo to the Yahoo Finance Pagehttp://finance.yahoo.com/?uSelect "Detailed" under the words "Symbol Lookup"List your interested stock symbols in the box provided (just to the left of the "GET" button). Make sure that you have a space between each symbolThen hit the "GET" button and you got your related quotes in the Detailed mode.
However, I am a bit afraid now with the tax issue. Need I only worry when I sell my stocks, Yesor well on a yearly basis.The company or broker will provide you a 1099 that indicates the dividends for each stock. You use that data to report your dividends on your tax forms.For tax info go to to the irs web site www.irs.govOne publication you can read (Oh what FUN !!!!!!) is IRS Pub. 550http://ftp.fedworld.gov/pub/irs-pdf/p550.pdfThe version for the 2001 Taxes should be coming out soon.ANY help or sound advice would be more then welcome
Is it a bad idea to buy stocks but only pay close attention to them every other month or so? How much attention do you consider necessary for individual stock investing?I wrote an article on just this point a while back. It can be found at http://www.fool.com/dripport/2000/dripport000606.htm.Cheers -george
Need I only worry when I sell my stocks, or well on a yearly basis.Both, although I would substitute the words "concern myself" in place of "worry".At the beginning of each year, you will receive a 1099-DIV from each of your companies (some don't send them out, so you may need to look at your records). This form will have dividend information and will state what you will need to claim on your taxes. Generally speaking, you will need to claim your dividends.When you sell, you will need to report the gains on your investments.Just go back to your records and get the information from there. If you have been keeping your transactions in a spreadsheet or other method of recordkeeping, then this should be a several minute process.Cheers -george
Yoy should really look at setting up a Roth IRA,I wish someone would of pointed this out to me when I was a senior in college.Then the tax concerns you express would not be an issueTonyOhh
Great idea Vulstock about setting up one's portfolio on Yahoo. I just entered all my stocks, 112 to be exact in about 5 minutes. I will probably add detail later, ie, no. of shares and cost. Yahoo is a lot quicker in bringing up the info than Quicken, which I had been using, I found it tedious though. I've used Yahoo in the past for stock info and research but never used their portfolio service until now.Thanks for the tip.Lou
I like the portfolio on MSN. Anyone with a hotmail account can get one (along with tons of useless spam e-mail), but since my husband and I use MSN as our internet provider, it's even easier with the MSN Explorer. Big advantage vs a spreadsheet: any time I want a mental vacation from work, I just sign on to my MSN account and see what my investments are doing.
Also recognize that it is Capital Gains that will have the most effect on your tax situation. As a beginning DRIPper this should be negligible for you and would only occur if you sold some of your holdings.As a beginner your dividends are going to be small and will only effect your taxable income to a very small degree.OB
Speaking of small dividends . . .Twenty years ago, before I was wise enough to even consider investing, I worked for a subsidiary of A.T.&T. Part of the retirement plan including earning shares of stock. This would have been OK if hundreds of us weren't laid off in 1982. I was left with 5 shares of stock and no money (or desire) to purchase more.I kept getting a quarterly dividend check for $1.66. After several years of paying H&R Block $7 to file a form for the $6.64 dividend income, I finally got smart and sold off my shares.Melissa
Melissa,I started a DRIP with 10 shares in NOVA Chemicals. Just after I started they suspended the DRIP. Every quarter I get a cheque for $1. I always feel guilty when I go to the bank and end up explaining everything to the teller. I keep hoping NOVA will do a small lot buyback so I don't have to sell through a broker which will cost me about $54 here to re-register and sell.OB
OB wrote: "Every quarter I get a cheque for $1. I always feel guilty when I go to the bank and end up explaining everything to the teller."Why are you explaining anything to the teller? Just put it in with other checks for deposit and laugh at NOVA for spending the money to send you a $1.00 check!
By the way, that's what I'm doing with Tyco.
Min...I've gathered my little fortune and am preparing to invest for the first time in stocks. I found a few companies I like and that I'm willing to lose money on (but that I think will gradually make me rich instead), but I don't have a lot of time to watch stocks after I set up a regular investment plan.You've probably already read through "The 13 Steps to Investing Foolishly" by now. But, in the rare chance that you haven't, I would strongly recommend it! Very good information on Index Funds and DRIPs:http://www.fool.com/school/13steps/stepfour.htmIndex Funds require the least amount of "tending", especially the Exchange Traded Funds (ETFs). Individual companies, on the other hand, can be kind of time consuming. For example, if you buy a retail company, then it would be prudent to monitor not only the company, but it's primary supplier and customer as well. I guess you can get as involved as you want. Anyway, there are people on this board that are a lot more educated in investment strategies than I am. I'm sure they will offer you some advice.Good luck...Bill
Is it a bad idea to buy stocks but only pay close attention to them every other month or so? Just my opinion, but in one word: YES. At least in your case as a first time investor you really need to monitor what you have invested your hard earned money into. That way you'll know whether or not you have made a good or bad investment -- and more importantly, you'll know WHY it was a good or bad investment.I like to think of the companies I invest in as Cousins, and the investments I make in them as Loans. Common sense tells you that loaning money to the cousin who has proven to be capable of building and accumulating wealth is a better choice to get your money back (and then some) than lending to the deadbeat cousin who frivilously spends it in needless ventures and hangs out and merges with unfavorable acquaintences and gangs. Even worse if two of your cousins wind up marrying each other producing an offspring that belongs in the videogame Doom.But regardless of what I or anyone else here says, remember that it is YOUR MONEY, and you should feel free to check in on it and see how your money is doing and what those who have your money is doing with it.How much attention do you consider necessary for individual stock investing?I like to think of it like this: you may be willing to buy the stock, but are you willing to pay the price...? You may want washboard abdominals, but doing sit-up crunches once a month isn't going to get you there, although once a month is better than never -- once a week is better than once a month, etc... Uhhhhh, I'm rambling again...If following your stocks isn't too important or too intriguing, then you could do what many here have suggested, invest in an index fund. If a year later you feel like you'd like to step away from the shallow end of the pool and go a little deeper, then go for an individual stock or two to get a feel for receiving quarterly and annual reports in the mail. Before you know it you'll soon be doing Olympic-quality handstand dives off the platform. It was roughly 3 years ago that I made my first leap into individual stocks and since that time, I've changed my investment philosophies. Scratch that -- my investment philosophies have Evolved over that time. I feel confident where I stand today as I think I am now able to profit greatly during a bull run, protect myself during a bear run and make the right investment decisions between those times.But I was only able to do so because I followed the stocks I invested in and found out why my winners were winners and why my losers were losers. It's an ever-growing wealth of knowledge through experience. Take advantage of the fact that you may learn a thing or two along the way to building wealth...It's amazing what you can learn from sit-ups, swimming and hanging out with your cousins... ;)Keith...
Taxes, that's my bag.You will owe ordinary income tax each year for the amount of dividends you receive, even if they are reinvested for you.You will owe capital gains taxes when you decide to sell.Pretty easy, eh? Good record keeping is the key to successful and painless tax returns.Jenn
Jenn,What is the method you use for record keeping??BTW, thanks for the index info!Dave
Dave,I use Quicken since the days of DOS. I have separate accounts for my daughter's investments and banking from mine. I also have a separate account for my tracking using the Index ghost purchases.Jenn
I started a DRIP with 10 shares in NOVA Chemicals. Just after I started they suspended the DRIP. Every quarter I get a cheque for $1. I always feel guilty when I go to the bank and end up explaining everything to the teller. I keep hoping NOVA will do a small lot buyback so I don't have to sell through a broker which will cost me about $54 here to re-register and sell.I'm probably going to chuckle when I get my first dividend check from Tyco...all because they decided to close their drip. How much is their dividend these days...less than 10 cents a share?It's like the library spending 34 cents to send you a 20-cent fine for overdue books.myadidas
I've gathered my little fortune and am preparing to invest for the first time in stocks. I found a few companies I like and that I'm willing to lose money on (but that I think will gradually make me rich instead), but I don't have a lot of time to watch stocks after I set up a regular investment plan. Is it a bad idea to buy stocks but only pay close attention to them every other month or so? How much attention do you consider necessary for individual stock investing?Min =====Min,I have had a while to ponder your question, and I see there have been 110 posts since I replied initially. I am sure these fine people have given you their opinions, probably varying in degree. Here's my take... From that small paragraph, it seems you may be willing to experience short-term losses in exchange for the long run expected rise. Nearly all of them in total should do average. Some will over perform, while others will lag and the rest will break even. Perhaps one will even go out of business while another will outperform by leaps and bounds.Why not just DCA into a broad index fund? Same results. Maybe...I don't know what you have picked as your portfolio either, knowing that I could have greater confidence one way or another. You may have already announced your pucks in a later post, perhaps then I can better comment. Regarding your last two questions...------------------------------Is it a bad idea to buy stocks but only pay close attention to them every other month or so? How much attention do you consider necessary for individual stock investing?------------------------------I would at least get into the habit of reading The Wall Street Journal, or a good business section of another newspaper. At least don't be surprised when you are surprised at a substantial, though possibly temporary loss in your portfolio. If you don't have your eye on the ball, you really can't even swing, let alone standing somewhere outside the batter's box. You have to have some information and working knowledge to make informed decisions.However, if you can pick companies that you believe can weather the worst of circumstances and worst case scenarios and blindly DCA them, I think you are better off than the next person that blindly sticks their money in a passbook savings account. This is easier said than done. It can be done, but there is a lot of distraction, noise, trash, and other insignifica that you have to evaluate and discard along with real important information that you would be better knowing than not knowing. Short answer: Emotion could cause you to do something near term that would completely destroy all you have built up to that point. Knowledge goes a long way in keeping emotion from dominating your actions. The amount of attention necessary for individual stock investing varies according to how many different companies you follow. Company by company, you still have variable guidelines due to the changing or little changing environment they exist in. Tech companies I would tend to devote more time to, only to understand competition, products, and other challenges. A company that makes rocks, or quarries has less to monitor, due to less competition, less change in tech, and other issues. As you become more and more familiar with the stocks you own, the less time you are likely to spend studying at least some of them.Fair enough? You get what you put into it. Maybe you get lucky? Maybe unlucky, but probably average on average the longer you hold the stocks.Please post as time allows and I'll try to address any other concern you have.exilion
Every quarter I get a cheque for $1. I always feel guilty when I go to the bank and end up explaining everything to the teller. ================I wouldn't feel guilty at all. I receive a check periodically when I acquire a new single share that pays out before I get the enrollment processed. I wrote about my Enron checks on the other DRiP board a little while ago. In that case I made more from the dividends over the last year than it is worth today. I still have the loss on the certificate...Cash that check proudly, perhaps give the dollar to a donation can or a kid at the bank if it makes you feel better, or just add a dollar to your next OCP?exilion
Thanks for all you words of advice! I posted several questions on a few other boards as well and have been utterly surprised at the eager helpfulness of the posters' replies.[This is long and the questions aren't until the end, so skip there if you get bored.]Here's a little more background and an update: I'm in the military so I have solid job security at least until my time runs out (2008). I'm getting 23k in February as a mandatory career starter loan at roughly 1% interest. A discussion with Military Fools combined with a wary excursion into the Living Below Your Means board has assured me that I am perfectly capable of starting my career without that loan. I pestered the Index Funds people also and have materials coming from both Vanguard and USAA. Further research into the stocks I thought I wanted to buy convinced me that I didn't have a clue what I was doing, so I have asked for some prospectuses, 10-K's, 10-Q's, and annual reports. I tried to figure out how to get in on United Defense Industries IPO since I know a lot about their product and the future demand for it, but I learned that as a mere investor they didn't really want me. I have been looking at defense stocks under the "buy what you know" theory, but apparantly I know too much. UDI is the only one I like, and I can't have it yet. I thought about learning to short stocks, but it feels like cheering for the away team at homecoming. I just couldn't do that.I have zero investments so far. I'm 21 and I suppose I'll stop working (at least for pay)at some point so I'm goind to put 5k in a Roth IRA. That will probably be a index fund or combination or index funds, so that I don't have to worry about screwing up my retirement money. The other 18k + 2k (from savings)I haven't decided on. My stomach cannot handle 20k in personally selected stock so a lot of that needs to at least start in an index fund of some sort. I don't what to be eaten alive by fees, so I am trying to find a few companies that I like with direct stock purchase options. I still have to swallow the cost of first shares and transfer fees though.[End skiming annoying newbie's over verbous posting here.]Do all first shares of stock have to come through a brokerage? If you set up a drip through a brokerage do you have to pay a fee every month just for owning an account regardless of trade frequency? What's the lowest cost way to get a first share in my name? If I spend more than the Fool recommended 2% on brokerage fees, am I wasting my money? How much is a reasonable amount to invest in a stock? I would like to physically own a stock certificate (just one) but not if it costs me more than $20, am I delusional to think that I can find that price somewhere?Inquisitively yours,Min
Min,Newbie is an honoured word around the DRIP boards. Your post is excellent and well thought out.Being Canadian I won't comment on your IRA.As for owning stock two things we can help you with: How to acquire them? and The difference between a DRIP and a DSP (Direct Stock Purchase Plan). I'll start with the latter first:All DSPs are DRIPs but all DRIPs are not DSPs.DRIPs (Dividend Reinvestment Plans) come in 2 sorts: DRIPs and DRIPS + SPP. When we discuss DRIPs here we really mean DRIPs + SPPs (Stock Purchase Plans). DRIPs + SPPs allow you to make extra cash purchases of stock often in low dollar amounts and with low or no fees. (A pure DRIP only reinvests dividends for free. Extra purchases require a broker's commission).Traditional DRIPs (From now on this refers to DRIPs + SPPs)require you to get your initial share(s) through a third party (i.e. broker). After deregistering the share from the broker and into your own name and the Co. Plan you can now purchase shares directly from the Co. DSPs (Direct Stock Purchase Plans) allow you to bypass the broker altogether and buy initial shares from the Co. After that your shares will be registered in the Co. DRIP. DSps after the initial purchase become DRIPs.The down side is that the majority of DSPs charge account set up fees and fees for OCPs (Optional Cash Payments- the SPP part) and some fees for dividend reinvestment. DRIPs on the other hand after the broker fee can often be fee free.To find a list of Fee Free Plans check:http://www.moneypaper.comandhttp://www3netstockdirect.comNote: MoneyPaper can purchase plans for you NetStock does not unless you opt for their Sharebuilder account (fees).Getting your share(s):We have many ways to keep costs down. My favourite is MoneyPaper. If you take out a "oneday membership" for $10. You can then purchase your first share(s) for as little as $15-$20 each. Buy 5 Cos. that are always on their featured list your commission will work out to $17 per Co. Plus MP will do all the work of setting up the DRIP for you: One Stop Shopping. It doesn't get any easier. But be prepared the whole process can take 6-8 weeks (or more).Others here, with experience, make use of discount broker "specials" to get the cost down even further. As a beginner though I'd favour MP.So, If you picked 5 good "fee free" Cos. through MP you could set your portfolio up for $85-$110 plus the cost of the shares and pay no further fees (unless the PLAN changes things which can happen).Let us know what Cos. you're interested in and we could offer suggestions about the best ways to acquire them.Welcome to the cult!OB
Pam...All I have to say is that you certainly have your "Stuff" together! I admire that!! I don't know of many young people who are as proactive with their lives/future as you are. (That includes my children). Too bad! Your research/questions/open-mindness will all do well for you in your life, as well as your investing.I haven't answered your questions, I know, but, I'm sure that many people will reply. The only advice that I would give you is that you process all advice and information you get through your own set of "Life's Filters"!! (My term for the sum total of your life's experiences, education, and upbringing). Meaning - be appreciative of all that people are willing to offer, but, make your own decisions.Good luck and best wishes...Bill
Thanks, Bill. And don't worry I understand that this my money and if I lose it all because I didn't double check my advice that it's nobody's fault but my own.-Min
MinYour questions:Do all first shares of stock have to come through a brokerage?There's a company called oneshare.com that will do all the work for you, but I think it will cost more than $20. In fact, they charge $39. As another poster mentioned (I believe), there are other ways of starting DRiPs but I don't know if you actually get a certificate in other methods.If you set up a drip through a brokerage do you have to pay a fee every month just for owning an acount regardless of trade frequency?That depends on the brokerage. They come in all shapes and sizes; some charge monthly fees for x number of trades, some charge no fees if you have megabucks with them, some charge fees per trade and then an additional fee if you don't have enough money with them or if you don't trade enough. If you plan to buy stocks infrequently and want dividends reinvested, some brokerages re-invest your dividends for you, others don't. I don't think it's that common (I may be wrong). I know USAA does it, but they charge $24 per trade. That could certainly be prohibitive, if you're not investing large amounts in any one company, or are investing frequent small amounts.If I spend more than the Fool recommended 2% on brokerage fees, am I wasting my money? Maybe. Depends on whether you're receiving anything else from the brokerage besides the ability to invest. I'd say it's likely that you could find a better way to invest the money, though, if you're paying more than 2%How much is a reasonable amount to invest in a stock?That depends on how much you are investing overall. I've heard it said that you shouldn't put more than 4-5% of your entire portfolio in one particular company. (putting most of your money in an index fund which owns hundreds of companies is ok, though). The more you put into one stock, the riskier your portfolio is; it may be fine for you to do so if you understand the risks involved in relying heavily on one stock.I'll leave the other questions up to other posters...Good luck. With your dedication to research I'm sure you'll do fine.-z
Min,Oneshare buys for free I believe but charges $39 to mail the certificate to you. This brings up the question:Can you include the $39 as part of you ACB (accumulated cost basis)?As they claim they do not charge a commission I would assume you cannot claim it! If you can claim it then I assume they are making false claims. Seems gimmicky!Regardless MoneyPaper, even without a membership is only $30 and you can claim it.The advantage of OneShare, as many of us know, is that they will fold your certificate for you for free. Dave, does MoneyPaper charge for that service?? ;-)OB
OB,does MoneyPaper charge for that service?? ;-)Generally, we try not to deal with certificates...but rather enroll people in book-entry form. If we do get a certificate to pass along, we'll fold it for free...:)dave fish/moneypaper
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