Investing tips?

[Pekka]

Well, I must admit, I don't have any experience with investing, in fact, I should learn about it. But I know one thing, I need to start investing soon, so I'll have something to look for when I graduate, since it looks like I'll have extra 3 to 4 years with PhD studies. So that combines to 4 years, appx.... all this time, I will be paid, so I'm enjoying a salary. Rather low one, but I live cheap so.. doesn't matter.

OK so I was thinking, I should start low, I don't want to be investing loan money, it must be money I can afford to lose. So, I figure I can start investing in 2 months, with the initial sum of 1000 euros. That's all I have extra then, but I can add another 1000 euros every two months.

So, 1k start, with 1k added every 2 months. I think this gives me some chance to learn few basic ropes as well, so I'll be learning as I'll grow.

Where should I invest? I figure I SHOULD use services, like the ones who take care of your portfolio, but then again, with such low figures, I'll be losing money on it. Then again, maybe they won't charge me much because my investment is kind of low.

What should I invest into? I'm looking for steady growth, relatively stable/risk. I'm willing to hold the money in at least 5 years, all of it, and grow the investment.

I was thinking I should get a loan and buy an place, then start renting it straight out and keep my cheap rent place for myself. But, I figured with the interest rate, it would still take so long that I'd be paying so much to the bank, I'd rather just... invest in something else right now, plus I don't want to be stuck in this place for another 20 years with the loan.

So stock market it is. Any good tips, for the basics? Any basic tutorials on how it all works? I was thinking that I might want to look some of the balance analysis thingies, find myself top 5 on where the price is relatively cheap, the company is stable, and the risk is from low to fairly low. Get TOP 5 of that (should give me big and known companies) and invest it all according to that, then start adding up every two months. Check back in another 6 months to 1 year to make changes according to the new list.

You see? I have no idea how to do this stuff..

[Chemical Ollie]

Koskenkorva

[LordShiva]

Don't invest in individual stocks. Brokerage fees will eat you alive.

[Pekka]

Yeah, but investing in funds with such low investment will give me nothing in return, also considering sales tax for them, I'll be killed there as well me thinks.

Or? I don't know. I might be wrong. So, LordShiva, other suggestions?

[Chemical Ollie]

More seriously, energy is the future of the world. Anything energy is a safe investment. Oil, nuke, biofuel, solar, anything.

[LordShiva]

A low-load index fund or three will keep fees down. I didn't think about sales tax though. Do they charge sales tax on fund purchases in Finland?

[Pekka]

LordShiva, yes, and that tax is ****ing huge if you are investing with little money.

CO, yes, that is very true. I just think I should stay out of investing in fields like that for a while, until I gain more experience and knowledge with this whole thing, when I know my moves and how I make them. You know, so just for now, I want to get in, invest all I can afford, and learn as I go and grow as I go.

Then, after some time and after hopefully accumulated money, I can start doing real moves like that. But energy for sure, I'd be tempted to look everything that has energy and Russia written all over it.

[Chemical Ollie]

In Sweden, you pay a 30% tax on the gain when you sell off funds or stocks. And if you lose money on an investment, you could exchange it for gains on other stocks you sold, and end up paying zero tax, as long as the events happen within the same fiscal year.

[Pekka]

I wonder what the real risk is to invest in one single company. Say, I check out one of them balanced ones, cheap price, good economy and low risk, put it all in there. I wouldn't get so killed in brokerage fees, I think I'd pay 1%, so that's 10 euros for 1k. Not too bad in fees, but that's not the only cost, plus, there's always a risk with investing in one single company, even if it has been stead for few years.

[Chemical Ollie]

In my opinion, you should only invest in single companies when the index is low. There is normally an overshoot of both highs and lows. Investors act like idiots, they pay anything for a fancy stock. One example is Ericsson. If you look at historic dividend, the true value of the Ericsson stock is about 1€ (which would result in a direct annual payoff at about 5%). But there was a time when it was valued above 20 €. Then came the IT stock crisis, and the Ericsson stock fell to 25 c. That was the time to buy. Just a few months after the crisis, the Ericsson stock was at 2-3 €. Today, I think it's even higher, haven't checked in a long time. Too bad I had no money to invest when the time was right.

[Zkribbler]

Originally posted by Pekka
I wonder what the real risk is to invest in one single company.

Ask the investers in Enron.

In the U.S., real estate is historically the best investment...first, for your own residence and later for income property. Lots of tax breaks, good leverage, little risk. But it takes lots of money money.

Second, IMHO, is long-term no-load mutual funds investing in small cap stocks. You can get in for cheap and you get diversity, low management fees, a generally a good return on your investment. Invest steadily, set a minimum for yourself and stick to it. Pretend you investment porfolio is a creditor which you have to pay every month, six month, whatever.

[Pekka]

Right, I mean, 'common' people will buy stocks that are already in their prime. They look at the growth index of last year or 3 years, looks good, let's put money in it, without knowing the overall situation. If companies would double their growth every year, especially big companies, well, that would be kind of weird.

Get it low, sure.. I was thinking, one company, but relatively low risk. This is because I could get in pretty soon and learn my way while doing it. So after I learn some, then I can do things that acquires more knowledge.

But yeah. It's funny, because everyone knows the rule, buy low, sell high, yet people buy high, if it's a good company, because 'it made so many people rich'. Of course, because they bought in EARLIER

[DanS]

Pekka: I don't know what's readily available to you as a Finn, but I suggest investing in a no load index fund. In the States, there are some online brokerages that allow you to invest very small amounts on a regular basis, without exorbitant fees. F.e., Sharebuilder.

http://www.sharebuilder.com/

You invest in an index fund, because it has built-in diversification. As a very small investor, it is most difficult to diversify.

I'm not sure how taxes are calculated in Finland, but that's a consideration for you.

[BlackCat]

If you want to do long term investments, then try Maersk - only problem is that a single stock goes for about 5.000 euros

[Pekka]

I would have an access to online brokerage that seems pretty decent, at least it is recommended by many people, plus a friend of mine who works in this field also uses it as his own personal place of business (ironically not using his money where he works, that does investing). The fees are better in there.

What is a no load index fund? I know what a fund is, but what is no load index fund?