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Oya Adisa Oshun November 21, 2015 -
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Rayet Intro To Investing
By William Mason Jr.
1. Get a brokerage account.
I recommend etrade & scottrade. Don’t get the account until you’re ready to buy. Once you open an account (the offer comes & goes) it comes with free trades for a limited time, so don’t waste free trades. Once you start buying, keep the commission below 1% if possible. I.e., commission on a brokerage account may be $8 per transaction, so make the entire transaction $800 or more. It’s not very beneficial if you buy a share for $ 92 and the commission is $8, your giving away 8% of the profits from the start. If the company goes up 9% in the year, you’ll really only walk away with 1%. You’ll learn more once you read The Intelligent Investor.
2. Books
I recommend The Intelligent Investor by Benjamin Graham. Read up on Graham’s & Peter Lynch’s books. Make other literature secondary to these.
3. Get familiar with investing criteria.
Fundamental criteria
Return on capital
Return on equity
Return on assets
Etc…
Valuation ratios
p/e (rarely if ever buy a share over 15)
price to book
etc…
Profitability data
Margins:
Gross, Operating & net
Etc…
Growth over 10+ years
Eps growth
Revenue growth
Etc…
Historical price data
Dividend data
Payout ratio
Dividend growth rate
How many years of consecutive increases?
Companies with 20+ years of uninterrupted payments are great to choose from.
It’s a never ending learning process, so your judgment of the above criteria will be developed from practice.
I recommend that once you start investing, to stay with an index fund. Buy individual companies once you build a solid foundation based upon the index fund(s). Sector etfs are also great and safe. Index funds & sector etf’s are the absolute best avenues for the investor who doesn’t want to put in the hours and hours of daily studying. Even those who study for hours a day will still go with an index fund(s) and/or sector etf portfolio.
Sector ETF’s
1. Xly – consumer discretionary
2. Xlp – consumer staples
3. Xle – energy
4. Xlf – financial
5. Xlv – healthcare (my favorite)
6. Xli – industrials
7. Xlb – materials
8. Xlk – tech
9. Xlu – utilities
Index Fund (etf’s)
1. Spy – S & P 500
2. Dia – dow jones
Leverage plays
1. Short – spxu
a. Spxs (3x’s)
2. Long – spxl (3x’s)
Be familiar with “Dollar cost averaging”. But still adhere to only buying @ a p/e of 15 and less. Reinvest every dividend received.
Websites
Google.com/finance
Investopedia.com
This site has a practice account, I strongly recommend you using this for at least 6 months. Considering the current state of the market, it’s not a wise time to buy, so only practicing now is best.
Stocksplithistory.com
By all means, review other sites, these are just a few.
Ask any questions. I’ve learned that there are 2 main types of people when it comes to investing…the fearful and impatient. I’ll choose the impatient over the fearful 100% of the time, keep that in mind.
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