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Personally, I do better than Mutual Funds. I purchase individual stocks that pay dividends. However; when the stocks go up as they have over the last few months the dividends go down but I am still making 6 to 10 percent on them. All of my stocks are up. Averaging 3 percent dividend. Works for me.
I know I will sound like a broken record....but very few people should be buying individual stocks because you must have all 3 below:
1. You have to be smart.
2. You have to have the time.
3. You have to have the temperament (psychologically and emotionally).
It's absolutely essential to have all 3 or you won't do well.
Otherwise, just invest in one of the better performing balanced funds that buys a mix of stocks and bonds. They generally do just as well as the S&P 500 stock index (sometimes better) with less volatility.
Pick one of these funds. Invest regularly for decades without pulling anything out until you retire. But extra shares when you can, especially if the fund is down.
T. Rowe Price Capital Appreciation (PRWCX)--An absolute top notch performer in the category.
Vanguard Wellington (VWELX)--Long term performance in the top 10%...Very low expenses at .25% means it's likely to have above average performance. Expenses drop further to .17% when you have 50K in the fund.
Mairs & Power Balanced (MAPOX)--Been around for 50 years. Also usually lands in the top 10% for long term performance. A small asset base gives it flexibility. Expenses a little annoying at .74% but have been dropping as assets have increased.
If you don't have a lot to invest (say only $1000) you can try:
Vanguard STAR (VGSTX). Not an absolute top notch performer, but well above average and consistent.
Oakmark Equity and Income (OAKBX). Expenses are a bit annoying (.78%) for such a large asset base, but good long term performance and a low account minimum.
You should probably be setting up your investment account as a (tax sheltered) retirement account (either ROTH or Regular).
One last comment....Successful investing is BOOOOOORRRRRING....like watching paint dry. The main thing is to save and invest a good portion of your income (10% minimum, ideally 20% or more...as long as you enjoy life a little along the way).
This is some terrific advice and soooo much better than researching stocks. Please don't pick stocks.
Location: Prescott Valley,az summer/east valley Az winter
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As Warren Buffet says~ take a good look at the company (that's what you are buying).
Purchase a company that you would do business with. Considering what he is worth today its probably good advice. in the long run I've done better with stocks than mutual funds that year after year take a percentage of your money for themselves whether they picked good or bad. Over the years that adds up (50+ years of .5 to 1% /year) I've still got it. Don't put all your money into one company, ask the guys that put everything into Enron. Don't sell into a bad economy, although I've sold a bad company. By never giving it much thought and reinvesting the dividends I now can supplement my retirement.
If its like paint drying you've got it about right.
Any advice for a beginning stock investor would be great (yes I am reading a lot of finance books, I'm thinking about adding an econ minor, and I have been reading a lot of articles on investing) but what else is out there in terms of advice?
Open you a roth IRA and buy the vanguard target retirement fund. no work to do !
to be honest a target fund would not be my first choice if i wanted little to do with my portfolio.
they get worse and worse performance if you dollar cost average in as time goes on.
because when you dollar cost average in you are buying higher 67% of the time and lower only 1/3 of the time when you couple that with the fact the fund is cutting allocations to stock over time you can end up with much lower long term performance than the fund itself gets.
long term performance can be diluted to much .
still better than most americans will do on their own but not the best choice if you do care about long term performance.
As Warren Buffet says~ take a good look at the company (that's what you are buying).
Buffet regularly visits the companies before he invests in them, meets with the leaders, reviews their financials in detail, even speaks with their large customers and suppliers. Basic fundamentals indicate which companies to research, not which companies to invest in. The typical investor doesn't have the time or access to do the kind of research that Buffet relies on.
i laugh when i read these wall street books that tell you anyone can learn to invest in stocks.
noooooooooooo they can't just for the reasons you said. peter lynch mentioned he was on the road visiting companies for most of his career and not in the office.
you as an individual will never have the insight the pro's do.
so if most of them can't beat the indexes over time what chances do we have.
even greats like bill miller eventually stumbled and fell.
you as an individual will never have the insight the pro's do.
That would be a good point if individual investors were competing against them.
Quote:
Originally Posted by mathjak107
so if most of them can't beat the indexes over time what chances do we have.
That would be a good point if individual investors were attempting to manage multi-billion dollar mutual funds. Otherwise, it's an apples and oranges comparison.
It's true that most who invest in stocks don't do a very good job. But the reasons for that often have less to do with the stocks they choose and more to do with basic investing mistakes, such as buying & selling at the wrong times, becoming emotionally attached to their stock(s), refusing to take a loss when they should, etc., etc.
As you know, even mutual fund investors, when left to their own devices, do poorly compared to the performance of the funds themselves, and for many of the same reasons that investors in stocks do.
Yes, investing in stocks does require much more research and attention than investing in funds, but to say that stock investors cannot possibly succeed because of a "research disadvantage" is not accurate, IMO. Even if you hand a large group of typical investors a portfolio of the best stocks out there, the majority will still find a way to minimize returns over the long run. Sad but true.
to be honest a target fund would not be my first choice if i wanted little to do with my portfolio.
they get worse and worse performance if you dollar cost average in as time goes on.
because when you dollar cost average in you are buying higher 67% of the time and lower only 1/3 of the time when you couple that with the fact the fund is cutting allocations to stock over time you can end up with much lower long term performance than the fund itself gets.
long term performance can be diluted to much .
still better than most americans will do on their own but not the best choice if you do care about long term performance.
I use vanguard target funds and I choose the AA I want, and they re balance for me over time. I want retire til 31 years from now and so i fall in the 90/10, AA, I let them do all the work.
They will re balance again til the next 5 years. When i reach 50, then I take over and set my AA accordingly.
Pedal to the metal for now.
If you know something easier and cheaper, let me know. Also, all Vanguard funds are index!
Investing in stocks is a waste of time for the common working man and a family. I tried it and wasted time and still didn't get it right. The only success I had was buying some cheap stocks in 2009 on major sale and holding. Recently sold and paid off student loan. And that was pure luck!!!
I will never buy stocks again unless they are back to 2009 levels, otherwise not worth the time, unless you millionaire and already have retirement account filled for retirement.
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