After 241 posts since this blog started, we think it is time to go back to basics. How does a single individual get over the fearof investing in the stock market? After all, even the great Dave Ramsey says it is “too risky” to invest in individual stocks. He advises buying mutual funds.
As if! Sure, IFO advised it for beginners, but she is changing her mind.
Do you know how many mutual funds there are out there? Thousands! So, how can you do the research on those funds to find out the best one or ones for you? And after you find one, do you know what happens? They charge you a fee for managing those funds. Then they, too, lose money in every downturn, just like the individual investors, who do it at no charge to themselves.
So, IFO recommends: either go to a full-service stock broker and check your brain at the door or do it yourself, using a discount broker.
You can let the full-service broker, who charges fairly hefty commissions, do all your thinking for you. What does it matter that they all lost money in every one of the last downturns? Using a discount broker, you can do it yourself at a much lower cost.
Okay, let’s admit it – it’s kind of scary to just jump in. So, don’t jump! Just tiptoe. Do research into few conservative stocks that appeal to you. Then, BUY ONE. Then, watch it.
How do you pick? Maybe you want a good, steady dividend return and and low P/E. There are many postings on financial blogs that talk about dividend champions. Or, maybe you are familiar with a particular industry or two. Look for stocks in that area and apply the dividend-P/E criteria.
Ready? Set! Go!
Tomorrow IFO will be back with good sources of information. We’ll go through all the steps one at a time.