Sunday, September 14, 2008

Stock Market for Idiots

Politics and Finances. It's like my blog is getting a life of its own. Don't give up on me though. :) I just wanted to write about how I got started in the stock market because it's something you can do too, even if you don't have any money to invest.

I didn't have any money either!

In 2001 I had just moved from Idaho to Maryland to take a job that quickly folded when the company went under. I was stuck waiting tables and literally living day to day on the money I made in tips and the food I nicked from the kitchen.

I promised myself that if I could just get a regular job again I would invest and make sure I had a cushion, because you just never know when something like this is going to happen to you.

After about 6 months I got a new job and decided to learn about the stock market. I'd always been intrigued but intimidated by it, and I thought you had to have a lot of money to start... It turns out you don't!

I went to Yahoo Finance and made a pretend portfolio. I picked out some companies I knew a little bit about and added them to my portfolio, choosing to own 10 shares of each one. Then every day I'd check my pretend portfolio to see how they were doing.

Some were winners (Netflix), some were losers (Tiffany's) but before long I was wishing I had real money in the market.

After a while I finally had a couple hundred real dollars extra in my checking account and decided to go for it. I went to Etrade and opened up an account. It was so easy. I gave Etrade my bank account number, then waited a day for processing and I was ready to start. I bought maybe 10 shares that day - 2 each of 5 different companies. I think invested about $300 dollars and it was as easy as buying something on Ebay.

After that is where it got fun. I re-did my Yahoo portfolio to track my real stocks and I started checking it at least every hour. It's the closest I've felt to Vegas style gambling without actually being there. Some days I'm up and I feel like I hit a jackpot. Other days are gloomy, but I grit my teeth and hang in there. I'm not going to get rich overnight this way, but I usually average higher than a 7% profit and that's a lot better than my savings account.

Here are some things I've learned:
  • Start small.

  • Don't invest money you can't afford to lose.

  • Don't sell winners. If you have a stock that is doing well, hang onto it. Chances are it will do even better.

  • Buy stock in companies you know something about.

  • Be tough. Don't sell because things are looking down. Grit your teeth and hang in there.

  • Have fun.

I'm certainly not an expert, but leave a comment if you have any questions and I'll do my best to answer.

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