Hi,
Someone has said, investing should be boring. Which basically means, invest regularly in low cost index funds and avoid stocks as far as possible. My advice to everyone is that first thing you need to do is make sure you have invested for your retirement, invested for kids education, saved for emergency, saved for a house/car etc. and after all this if you have extra cash, then think of investing in stocks. Also, contrary to what some are suggesting, never try to 'time' the market.
When you are investing for your retirement, you have a long time horizon. Time is your best friend in investments. (read about compounding if you do not know about it). My advice to everyone is to first max out on retirement accounts, for example if your employer allows 401k, contribute to the max allowed by law. If you can, open a ROTH IRA or simple IRA. Make surer you a) choose low cost funds (typically) index funds, and a mix of diversified funds that suits your age and risk tolerance. I will also suggest vanguard,as they are known for low cost funds offering good returns. If you are in 30's you can be more aggressive and have more stocks versus if you are in 50s, you need more bonds and short term investments.
Now, if you have cash left over after all this, by all means invest in stocks. But first get some knowledge, do some research. Don't buy a stock because a 'friend' told you it is a good stock to buy. Above all, understand your risk tolerance. Stocks can go both up and down. When they go down, do you have enough tolerance to hold onto them until they recover? And how low can they go until you press the sell button? Buy low and sell high, easy to say, but tough to implement !
Just my 2 cents  ! |
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