Investing tips?

[Zkribbler]

Originally posted by Straybow
Invest in Coca-Cola
10-13% per annum for decades.

<-- The Diet Coke addict who is chiefly responsible for those profits.


BTW: One tip on investing: If you lay awake at night worrying about your investment, you need to move to a safer investment.

[Dauphin]

Originally posted by 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.

Do you get an annual allowance aswell?

Here, CGT only kicks in if your total realised gains on all assets is over around £9,000 for example. As a small investor you can easily set yourself up to avoid tax.

[Kuciwalker]

Originally posted by Zkribbler
Ask the investers in Enron.

That would be stupid, since they're obviously the atypical case.

[Dauphin]

It wouldn't be stupid, it proves the point quite nicely. You lose, then you lose eveything. If you invested in two energy giants with the near exact same profile you would still have half your money, maybe more as the other energy giant soaks up business.

[Colonâ„¢]

Originally posted by Straybow
Invest in Coca-Cola
10-13% per annum for decades.

Another tip: past performances are not an indicator for future performances.

[Dauphin]

Chartingism is not dead.

[VetLegion]

Originally posted by Datajack Franit
Save those 1000 € in a Swiss bank account and wait for the next Eurocrash. Do you expect our currency to be valued this high for long?

Italians

[VetLegion]

BTW., here (Croatia) income from dividends and shares in funds is not taxed. And stock exchange index rose 55% in 2006

Damn I missed that train.

[Dauphin]

Watching train wrecks are better when you aren't on the train.

[Pekka]

Someone is always making money. When everyone knows the sure thing, that's when it's not going to go well. When John Doe is investing and everyone does the same moves.. downfall. That's a sign to get off.. when the cab driver gives you investing tips, do the opposite

But the best money is made in difficult situations anyway.. in times of change. When most lose, the skilled ones win even more.

I am not skilled in this though.

[VetLegion]

Originally posted by Dauphin
Watching train wrecks are better when you aren't on the train.

I don't shy away from risk. I'm considering taking out a loan at 10% interest to invest it in stock where I think I can get a 30% return just following the index

[Adalbertus]

Stock trading is composed of two things: a "real" development of value and a zero-sum game called speculation. If you're unexperienced and don't have insider informations, you're bound to lose the zero-sum game.

How to invest depends on your goals. A basic rule is that the higher the (average) profit the higher the risk. Investing in single companies maximises both of them.

The way to reduce risk - and to escape speculation - is to take an average of investments. There are two ways: To invest in many different companies (which is what funds are doing). Generally, those who offer the service of averaging, want to be paid, thus your profit will be smaller. The other way to reduce risk is the time average, i. e. investing for a long time.

So, if you expect to need your money in a few years, stock investment is probably not the right thing to do, except you like gambling (speculating works in time scales of a few years). If you are planning for a long-term investment, e. g. for your retirement, stock investments (or funds) are probably a good idea. Don't expect too much in this case, maybe an average of 8%/year over 30 years (for the DAX, where I have numbers, the minimum is 4,8%, the maximum 10,9% per year over 30 years, starting your investment someyear after 1950).

Another point: Every fund manager tries to perform better than the indices. Most do not succeed for a long time (I've heard there are only two of them). So it is probably more efficient to bet on an index and to try to keep costs down.

Usually speculation taxes are only due if you sell shortly after buying (to punish gamers and encourage long-term investments). Otherwise, at least in Germany, you'll have (effectively) income tax on your profits. But you can't escape that anyway, at least not with different forms of investment. I guess most countries have some or another sort of taxation on investment profits.

A sidenote: The other day, I looked into day trading (which is playing the zero-sum game to the extreme). There is a simple scheme how to make incredible amounts of money without any detailed knowledge (tried the Dow Jones over the last 80 or 100 years or so). Because I was not the first one to see this mechanism I took into account the brokerage fees. They are quite exactly what I gained. Conclusion: To become really rich, you should become broker and convince your customers of day trading.

Sidenote2: The Fugger in the 16th century family experienced the risks of having a fortune which approached the value of a small kingdom - and bought real estate. The family still has it today.

[Carolus Rex]

From reading your post I get the impression you don't intend to trade stocks too actively... If that's the case, I wouldn't worry too much about brokerage fees... Besides, many on-line brokers have very low (or even no) fees... Funds are different and low fees something to consider...

In Sweden we pay a 30% capital profit tax... AFAIK "double taxation" refers (in Sweden, at least) to the fact that first companies pay taxes on their profit, then dividends (after tax-profit handed back to the stock owners) are also taxed at 30%...

I know this sounds boring, but don't disregard dividends... Reliable, financially solid companies are never wrong... Perhaps the share price will not explode as riskier investments may, but over the years dividends add up... Also, IMHO stockowners of well run companies' will over time be rewarded with rising share prices... The trick, of course, is to know which companies are well run...

In Sweden (and I guess this is true for Finland as well), there is much talk of a coming slowdown... The swedish stock market has had four consecutive years of double digit growth (2003, 2004, 2005, 2006)... IIRC five consecutive years of positive growth has only happened once before (early 1980s?)... Many analysts thus propose to switch to defensive stocks as pharmaceuticals for example...

Pessimists say that we're in for a downward correction and that there will be plenty of opportunity then to enter the market (or speculate in the downturn now)... Optimists say that the swedish stock market isn't overvalued yet, interest rates are low, Euro growth high, and firms' profits are expected to be good 2007 (it is believed, however, that the increase over last year's profit will be smaller than they were in 2006)...

As for Chemical Ollie's post about Ericsson... That's with the benefit of hindsight... At the time (Ericsson down to less than 3 SEK IIRC), it was a very risky investment... It wasn't sure the company would survive...

BTW, in what academic discipline will you write your PhD?

Edited: Chemical Olle's -> Chemical Ollie's

Carolus

[Pekka]

adalbertus, so you'd say, that it isn't worth investing in stocks over short period of time because the values change, and therefore it's risky, but in long term, with teh right strategy, you can come up on top with solid and steady growth? Right, my goal is, right now, to look at an investment of .. 3 to 4 years appx. That would be relatively short term? So, if stocks (and funds) are out of the question, what other options there are?

Carolus Rex, yes, I do not intend to trade actively, as I want to learn first. I'm looking at a fairly solid investment, and while building it up, I intend to learn the game, because it would give me time to do that, and a reason as well. I'm not intending to put in money for 3 to 4 years and then quit. My mission is to hopefully after succesful investment for these first few years, to have some money to start investing with the knowledge and experience gained during this first investment period. So that would be the capital I'd be using to really start operating, of course adding more money into it from my own pocket as well.

So brokerage fees are not really that much of a concern.

About dividens though, the way I understand it (I might be wrong!), is that I have to choose between dividens and growth. At least with funds? So, in some cases the other one is better, I just don't know what determines the situation where the other one is better. Should I want dividens or value in growth, since I'm not selling the possible investment for at least few years?

My discipline is computer science. It means that I view this thing as bunch of facts, a structure, where I can perform tasks.

Also, with the funds there's the problem of not knowing which is good. I don't like the ones with like 40% growth in the last 6 months, even more in the 3 year period. The value is starting to get so high, that there's no money to be made there.

I like the low ones, and I'm going by intuition purely, with 0 experience. Like, there's this fund for Turkey's market, that invests in Turkish companies that are solid and big in Turkey. The problem is, it's very unpredictable, the changes can be quite big at all times. However, the value is low right now, extremely low (the lowest if all funds I found), and they're definitely future oriented fund. The middle age of the country is somewhere around 30 or even below, so there's lots of young people (and work force), and there's always the possibility of Turkey entering the EU in 10 years or so. But the point was, the value was extremely low now, so it would be very cheap to buy in now. Is it worth it? No idea, it was kind of risky, and I guess 3 to 4 years investment in that is not a good one, more like 10 to 15 years.

[One_more_turn]

Try read Warren Buffett's letters to shareholders: http://www.berkshirehathaway.com/letters/letters.html

Since you are of computer science major, why don't you contact the big financial institutions such as Barclays and HSBC and apply for "Quant" jobs?