New Investor

[arbass23]

I just opened a Scottrade account with $1000, and plan to add $250 a month to the account. What kind of strategy would you use with the amount of money I am having to start with. Any info or advice would be greatly appreciatied.

[HawgWild]

Is this in addition to a retirement account you have through employment? Is this a ROTH IRA? Saving is step one so congratulations for getting started.

[arbass23]

I am self employed, and don't have any other type of retirement. My accountant is going to set me up an IRA in May when I have my next meeting with him. Just wanted to do something extra.

[widespreadsooie]

Go for maximizing your dividend right now and begin to diversify a bit more once those $250/mo. contributions start adding up

Edit: This is only what I would think about doing without consulting a professional or an experienced investor. I'm somewhat in a similar spot but don't handle it myself.

[Kenny Hawgins]

Right now, investing in market volatility (VIX) is probably a sure thing.  Looks like things may get bumpy.

That being said, you'll need to research and determine what's right for you.  My preference, for instance, is buying and selling index option spreads (SPY, SPX, RUT).  That's not for everyone but I enjoy it and they can be very profitable.  I prefer them because they tend to be more stable than individual companies, which can be subject to bad news or a poor earnings report.

Personally, I've been very underwhelmed by performance in different funds and finally got to the point where I realized a couple of things.  First, it's stupid to buy and hold stocks through major draw-downs (like I expect we'll see soon); even if you just pulled your money out into cash during major draw-downs, you'd come out much farther ahead of if you'd just left your money in the market and took a loss.  Second, no one is going to be more motivated to make me money than me.  I simply don't like the idea of handing my money over to someone and trusting that they're being smart with it.  I'd rather educate myself and control it.  It takes a little more effort but I've found that I enjoy the strategy of it.

[ricepig]

Since you labeled yourself as an investor, stick to it. Study a little and decide what your goals are, find the tool/stock/index that best fits that, then do exactly that. If you wish to be a "trader" then find a different strategy, because 99% of the time, they aren't the same.

[Karma]

I would be careful with some of the more exotic investments being suggested.  Finding a broad index fund or ETF, and dollar cost average.

[arbass23]

Thanks for the advice guys.

[HawgWild]

Since this is your sole retirement account I'd go the conservative route. Max out your IRA first and then open another account for trading if you can spare the money. Back in 2013 I took an on-line course from Stanford, The Finance of Retirement and Pensions. I'm not sure if it's archived there for viewing but I can send you the course transcript if you're interested and pm me. The big take away for me from this class was that index investing beats individual stock picking over the long haul.

Good luck.

[Kenny Hawgins]

I would be careful with some of the more exotic investments being suggested.  Finding a broad index fund or ETF, and dollar cost average.

I guess to some extent, options can be riskier if people are careless.  On the other hand, you could even use them as an alternative to owning stock.  I know someone that has made a killing over the last few years doing nothing but owning long-term call options (LEAPs) on the SPY (etf that follows the S&P 500).  Of course, that was definitely facilitated by a low-volatility bull market.  Personally, the spreads I typically deal with have a very high probability of winning (> 80%), simply because I will generally sell 1-2 standard deviations away from the current price.

FWIW, if I could make some advice besides echoing what a few others have said about dealing in broad ETFs or indexes, take an active role in managing your money, continually try to learn as much as possible, and don't take stupid, unnecessary risks (i.e. "sure thing" lottery tickets). 

[BigBrandonAllenFan]

I'm not buying anything right now.  Sold the last few bits of stocks I had today.  We have seen a 12% or so upswing in the last few months in the NASDAQ composite.  If you are getting in now, you're kinda late for the boat ride. 

History says US presidential election years make the US and world markets shaky.  At some point between now and November, we are likely to see a ten to as high as twenty percent drop.  The market may indeed gain another five or six percent in the meantime (maybe), but it is topping as we speak IMO.  I've got my money is Fed Reserve Cash Funds right now, the safest bet there is next to an FDIC savings account.  I'm betting tomorrow (Friday) we see some significant sell-off (profit taking) happening.

If I were going to buy anything, I'd buy banking shares.

I'm not making any moves until a decent decline happens.

[ricepig]

I'm not buying anything right now.  Sold the last few bits of stocks I had today.  We have seen a 12% or so upswing in the last few months in the NASDAQ composite.  If you are getting in now, you're kinda late for the boat ride. 

History says US presidential election years make the US and world markets shaky.  At some point between now and November, we are likely to see a ten to as high as twenty percent drop.  The market may indeed gain another five or six percent in the meantime (maybe), but it is topping as we speak IMO.  I've got my money is Fed Reserve Cash Funds right now, the safest bet there is next to an FDIC savings account.  I'm betting tomorrow (Friday) we see some significant sell-off (profit taking) happening.

If I were going to buy anything, I'd buy banking shares.

I'm not making any moves until a decent decline happens.

Hmm....today is Friday, and is this an April Fools post???

[intelligence]

Not all tech companies will survive the burst of the tech bubble.

the ones that will are the ones who are developing AI(Machine Learning). Now, taking this into account, what will happen to the job market, and how will that effect other industries when unskilled labor jobs will be replaced by machines (profit in these industries increases dramatically)?

Identitify players in these industries that are publically receptive to Machine Learning applications.

Workers will be displaced from these unskilled jobs and the workforce of future will be of skilled labor, mostly programming, marketing, engineering, data science, and writing. the workplace is shifting from brick and mortar to work from home on online work platforms. the only real player in this sector so far is Upwork Global, INC. which will likely go public soon, and if you can get in on the ground floor of that, you should do very well. There are other minor players that are more notable due to marketing, but Upwork has the market in a stranglehold (3 million contracts per year, 350 million users).

So other than Machine Learning and Online Working platforms, stay away from all tech as the bubble is soon to be bursting. Stay away from all cloud technology other than Microsoft. Apple is gamble. their technology is darn but their marketing is good and consumers line up for their products. i see it as a ticking time bomb but they will probably continue to do well.

Other than tech, just staples and things that are likely to survive the global economic recession that is coming.

[BigBrandonAllenFan]

Hmm....today is Friday, and is this an April Fools post???

Make that Monday, RP.  Next day's trading is what I was trying to convey.  Thanks bro.

[BigBrandonAllenFan]

Not all tech companies will survive the burst of the tech bubble.

the ones that will are the ones who are developing AI(Machine Learning). Now, taking this into account, what will happen to the job market, and how will that effect other industries when unskilled labor jobs will be replaced by machines (profit in these industries increases dramatically)?

Identitify players in these industries that are publically receptive to Machine Learning applications.

Workers will be displaced from these unskilled jobs and the workforce of future will be of skilled labor, mostly programming, marketing, engineering, data science, and writing. the workplace is shifting from brick and mortar to work from home on online work platforms. the only real player in this sector so far is Upwork Global, INC. which will likely go public soon, and if you can get in on the ground floor of that, you should do very well. There are other minor players that are more notable due to marketing, but Upwork has the market in a stranglehold (3 million contracts per year, 350 million users).

So other than Machine Learning and Online Working platforms, stay away from all tech as the bubble is soon to be bursting. Stay away from all cloud technology other than Microsoft. Apple is gamble. their technology is darn but their marketing is good and consumers line up for their products. i see it as a ticking time bomb but they will probably continue to do well.

Other than tech, just staples and things that are likely to survive the global economic recession that is coming.

Good insight, good post.  Totally agree.

[longbore]

I just opened a Scottrade account with $1000, and plan to add $250 a month to the account. What kind of strategy would you use with the amount of money I am having to start with. Any info or advice would be greatly appreciatied.

You could gamble on penny stocks and lose your ass or not.

[Arkansasbeaux]

Shield as much of your money as you can from a tax perspective. Since you are self employed, you should be able to open an IRA as well as a SEP/SIMPLE. This combination will give you the ability to shield a good chunk of money every year. Your accountant should be able to advise you on whether SEP or SIMPLE would be most appropriate for you given your particular tax situation. There are differences on maximum contribution limits between the two, as well as other factors. In regards to the investments themselves, that depends on your risk tolerance, time horizon, etc. The one thing that I pretty much always recommend as a good foundation is dividend growers. Those are companies that pay a decent dividend, have done so for quite a while, have continuously raised their dividend in the past, and are projected to continue to raise their dividend in the future. These types of companies, or the funds that are comprised of them, may not be "sexy", but will give you a good starting point. PG, PEP, KO, MCD, JNJ, are examples of dividend growers. I'm not saying to pick those up specifically, I am just using them as an example of what to look for.

[PEtrader]

Best  advice I can give you is to not listen to the yahoos on Hogville for investment advice.

[HawgWild]

I'll second that! 

[McKdaddy]

Best  advice I can give you is to not listen to the yahoos on Hogville for investment advice.

^^^^^

[BigBrandonAllenFan]

^^^^^

<<<<<<<<

[hog.goblin]

Shield as much of your money as you can from a tax perspective. Since you are self employed, you should be able to open an IRA as well as a SEP/SIMPLE. This combination will give you the ability to shield a good chunk of money every year. Your accountant should be able to advise you on whether SEP or SIMPLE would be most appropriate for you given your particular tax situation. There are differences on maximum contribution limits between the two, as well as other factors. In regards to the investments themselves, that depends on your risk tolerance, time horizon, etc. The one thing that I pretty much always recommend as a good foundation is dividend growers. Those are companies that pay a decent dividend, have done so for quite a while, have continuously raised their dividend in the past, and are projected to continue to raise their dividend in the future. These types of companies, or the funds that are comprised of them, may not be "sexy", but will give you a good starting point. PG, PEP, KO, MCD, JNJ, are examples of dividend growers. I'm not saying to pick those up specifically, I am just using them as an example of what to look for.

Erroneous tax advice with a potential 50% excess contribution penalty

But in all fairness, you said to check with accountant

[BigBrandonAllenFan]

I'm not buying anything right now.  Sold the last few bits of stocks I had today.  We have seen a 12% or so upswing in the last few months in the NASDAQ composite.  If you are getting in now, you're kinda late for the boat ride. 

History says US presidential election years make the US and world markets shaky.  At some point between now and November, we are likely to see a ten to as high as twenty percent drop.  The market may indeed gain another five or six percent in the meantime (maybe), but it is topping as we speak IMO.  I've got my money is Fed Reserve Cash Funds right now, the safest bet there is next to an FDIC savings account.  I'm betting tomorrow (Friday) we see some significant sell-off (profit taking) happening.

If I were going to buy anything, I'd buy banking shares.

I'm not making any moves until a decent decline happens.

Fidelity Select Banking (FSRBX) is up appx 8% in the last ten days.  Other banking stocks are up about the same.

[PEtrader]

Fidelity Select Banking (FSRBX) is up appx 8% in the last ten days.  Other banking stocks are up about the same.

You buy?

[Pulled(PP)pork]

I was told a good rule of thumb was to buy stock in company that produce everyday a used products. All I know is, my retirement ain't gaining squat


PP

[BigBrandonAllenFan]

You buy?

Very modestly. Five whole percent of my portfolio.  Have not sold yet.  I think I can grab another 4%+ in the next week or two.

[Kenny Hawgins]

Very modestly. Five whole percent of my portfolio.  Have not sold yet.  I think I can grab another 4%+ in the next week or two.

Perhaps I'm overly cautious but take a look at XLF since last summer; pretty clear downtrend.  Corporate defaults are increasing significantly and banks will likely continue the downward trajectory, unless something happens to reverse the trend.  The trend seems to be pretty much consistent among Wells Fargo, Goldman Sachs, Citi, etc.

One idea, if you want to stay long on banks, is to buy puts to hedge.

[BigBrandonAllenFan]

...If I were going to buy anything, I'd buy banking shares...

You buy?

Very modestly. Five whole percent of my portfolio.  Have not sold yet.  I think I can grab another 4%+ in the next week or two.

Sold Fidelity Select Banking (FSRBX) today.  I bought it on April 8th.  It finished up 1.8% for the day, and I was able to grab 10 1/2% total profit in just 12 days on the investment.  It will probably continue to rise, but again, I never get greedy.  10% is a solid rake in less than a month.  Naturally I wish I would have bought a much bigger chunk, but that strategy can and will backfire.

Chart shows FSRBX performance>

http://www.marketwatch.com/investing/fund/fsrbx