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Does anyone know of a good stock or fund for a beginning investor?

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7:43 pm
August 2, 2013



posts 27

I have the impression you're a responsible and thoughtful person who's opening the investment chapter of his or her lifetime. This can be a long and fascinating venture, one that will eventually reward you well in retirement.

There are some good suggestions here from other posters and some perfectly dreadful spamming from salesmen.

Do you see the suggestions about ETFs? These are ultra low-cost investment vehicles where you can accumulate your savings for a while without having to spend too much time on active management. I'd look for broad-based ETFs such as those based on the S&P 500, or the 100, or even the QQQQ. I'd avoid Vanguard's VOW (the emerging market fund) for now, as many believe these markets have rushed up too far and very fast and now require a breather. And I'd put some money in plain old money market deposits or funds, for the time being.

Meanwhile – and here begins the interesting part of the voyage or venture – I'd start learning about the stock market by researching the companies that are already in my life. Where do I bank, for example. Is this bank a good investment? Where do I work, what publicly-traded companies are associated with my employer, my business or my profession? Where do I go on holiday, and what businesses might be involved with my travels? Are there any factories or light industries in my neighborhood? Are their parking lots full, sometimes even on Saturdays? Are there any products or services I use everyday, whose quality I understand, that are manufactured or provided in China or in India? Are shares of these Asian companies traded here in the US?

It's the old buy-what-you-know story. As my knowledge grew, I'd start buying individual stocks. In the end, these will permit good control over taxation, something that is lost when you entrust management to a mutual fund. Remember, countless studies have shown that the median mutual fund underperforms the relevant index while charging a fee for this insult; and remember also, that an ETF cannot outperform its own index.

At the present time, I wouldn't accept or follow any specific stock tips from posters onYahoo message boards. I might listen respectfully, but I'd learn to research and develop my own ideas.

Lastly, there are a couple of spammers right here who should be ignored. The Forex blatherers. It's an ugly trap for naiive newbies. And the top10traders. It's high time Yahoo put these posters, who get paid for trolling their ads, off the answer boards.

Good luck to you. I have a feeling you'll succeed, and your lifelong adventure in finance will turn out well.

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