Basic Investment Questions

[Maikeru-sama]

I just have some questions about investing:

1) If I wanted to invest some money in stocks, theoretically, what is the lowest amount of money I could use to expect to make a pretty good profit in the long run. For example, I always heard you need alot of money to make money. So is alot of money 5k, 20k, 100k?

2) If I wanted to invest some money in stocks, what is the best place to use to buy them. I have heard of places like scottrade, etrade etc etc are those places safe and have people made money in the past?

3) I posted earlier that I have a 401k from my previous employer that I can't roll over to the new company (tomorrow is my first day ), would it be foolish to cash that 401k out and invest it in the Stock Market? The 401k only has 20K in it so it is not really that much.

4) Where is a good place to learn about stock? Has Warren Buffet wrote a book or something as well?

5) Lastly, anybody want to offer some free advice on stock to buy that are low right now but will probably go up in the long run?

If you don't feel like answering each question, #1 and #2 are the most important.

[DHK]

My response is in red below:

I just have some questions about investing:

1) If I wanted to invest some money in stocks, theoretically, what is the lowest amount of money I could use to expect to make a pretty good profit in the long run. For example, I always heard you need alot of money to make money. So is alot of money 5k, 20k, 100k?

The "secret" to long-term investing is to double the amount that you save for your ongoing investments. If you're saving $100 per month, I can guarantee that you'll have DOUBLE the money if you begin saving $200 per month.

If you're looking to make enough money in a year to LIVE on, then you need a lot to invest.

If you're looking just to GROW your money, all you need to do is get started with whatever you have.

Some companies will have a minimum transaction amount or minimum balance in order to open the account, so check with your institution.

2) If I wanted to invest some money in stocks, what is the best place to use to buy them. I have heard of places like scottrade, etrade etc etc are those places safe and have people made money in the past?

I personally don't advise ANYONE to do their own INDIVIDUAL stock investing. Even Cramer (Mad Money guy) said that to do it right, you would need at least 2 dozen stocks properly correlated and allocated. You would need to do the research - and assuming that you know how to analyze a stock - would take 3-5 hours PER STOCK.

However, if you are set on buying individual stocks and you know what you want to buy, just find the places that will let you do "what you want" for the lowest transaction costs.

Are they "safe"? I don't know what you mean by this.

Have people made money in the past? Absolutely... but they didn't get any HELP from these places - except to do the transactions that they wanted.

If you wanted ADVICE, be prepared to PAY for it.

3) I posted earlier that I have a 401k from my previous employer that I can't roll over to the new company (tomorrow is my first day ), would it be foolish to cash that 401k out and invest it in the Stock Market? The 401k only has 20K in it so it is not really that much.

You can do a 401(k) rollover to an IRA at a brokerage company. Within the IRA you can invest in whatever you want.

Call the old company and ask what it would take to roll over this account into an IRA. Open the IRA at your chosen institution and bring in the check when it arrives.

Yes, it would be foolish to "cash it out" when you can invest in the market within the current tax advantage state that this money is in right now.

4) Where is a good place to learn about stock? Has Warren Buffet wrote a book or something as well?

Good luck on that one. Just remember that you can't "time the market" but you can control your "time IN the market".

I think you can get your BEST education by pursuing the CFA financial designation. It will take you a MINIMUM of 3 years to complete, but it's the most intensive program to learn about individual securities. Once you pass this, you'll have a certification that you can use to help you get in the door of mutual fund companies and manage a few mutual funds!

www.cfainstitute.org

5) Lastly, anybody want to offer some free advice on stock to buy that are low right now but will probably go up in the long run?

Sorry, can't offer any advice on this one either. I do more "MACRO-economic financial strategies" than stock market speculation.

If you don't feel like answering each question, #1 and #2 are the most important.