Online Stock Market Investing

Let's kick off my blog by talking about my son and what to do with some of his money we have gotten saved up. I'm thinking that it's time to look into doing a little stock market investing. He's gotten over a thousand dollars saved up and it's time to start looking at options above and beyond those high paying savings accounts. You know the one's at our local banks that pay like .000001 percent interest. And, the banks can't make any money, go figure!

Over the last couple of years, we've been putting his money into a savings account we found that has earned around three percent. Over a long period of time, stocks as a group have historically earned a higher return than any other investment. The question is which ones?

We begin our journey by going down the online stock market investing road to find the best stock market investing advice.

Beginner Stock Market Investing

Before we get started, I think it's important to talk about how he got to the thousand dollar level. A few years ago, I set him up with an allowance equal to his age and he has to save a dollar or ten percent whichever is greater. In addition to that, I set up an automatic payment of ten dollars to go into his account each week. That combined with a few gifts here or there, and it quickly added up. Last year, he made $27 bucks in interest which is more than a month's pay for him. The key then is to get started setting a regular amount aside into your account. It will add up over time.

Now, though, we are at a point where it's time to start looking at other options. Although he did make money this year, over a long period of time, the market will outperform a regular savings account even with ups and downs. Our first issue will probably be that are current investment amount is below the minimums to establish an account or invest in any kind of fund.

Before we do that we need to decide where we want to put his money. For this kind of research, I usually check out books at the bookstore first to look for some stock market investing books. I'm sure that there is probably a Stock Market Investing for Dummies book and I know that a long time ago I read a book called the Neatest Guide to Stock Market Investing but I can't really remember what it recommended to do or if it was even any good.

After that, I'll probably do some research online to see what websites are out there and what kind of advice that they recommend. As part of that, I'll also consider investing in some precious metals like gold and silver.

The hard part about deciding what to do is that there are so many choices to invest in, and that right now does seem like a scary time to enter the market because most investment accounts have fallen by about 40%. I know that some of my money and many people I know have lost a lot of money this year. It really makes you question the logic of the buy and hold strategy that has been passed down the mountain on a set of stone tablets when that much money is lost.

It's my personal opinion that this type of market we are in now also leads the skeptic in me to think that maybe the market was manipulated to create a fall in values that substantial and over all industries where complete confidence has disappeared but that is another story.

For now, I think that what we have to realize the possibility that the market might be more easily manipulated now than in the past. And, that maybe it was and that's going to affect our stock market strategy from here on out. I think it's necessary to avoid the kind of decline in values we have experienced this year. There has to be a way to put in some safeguards.

Most people I know have taken the losses in stride although it does make them sick. But, for someone just starting out, it's probably an excellent time to buy because so much of a price decline has taken place across the whole spectrum of investments from housing to stocks.

With that in mind, it's time to get started.

Stock Market Investing Basics

I've always been told that to make money in stocks, you've got to do three things:

1. Buy and hold
2. Diversify
3. Use a mutual fund

I think that what was always thought that if you diversify across a bunch of different stocks in a mutual fund that not all the stocks would go down at one time which is exactly what happen this year.

If your investment time horizon it really long term, buy and hold does seem to make sense if you are in a strong companies stock or a mutual fund where they do the buying and selling for you but not in a market where the bottom falls out.

The downside to a mutual fund to me is that they are always fully invested whether the market is horrible or not and that many of the mutual fund managers can't even outperform the S & P 500 index fund over time.

The other thing that happens over time, is invariably, people you know might give you stock market investing tips or you might even get an email that says buy stock this or stock that and you have to avoid that.

The real key here is that you can make money in stocks following the stock market investing strategies that were outlined above. The question is can you do better with another approach? Do you need fancy stock market investing software or can you get by with basic tools to guide you that do not cost you anything? That's what we are going to find out here over time.

Stock Market Investing 101

If you have read this far, then you should know the only way to find out what works is by putting real money on the line. That is the best education you can get by learning from your mistakes. And, that's what my son and I are going to do here.

Above, I've put his current investment account value so you can track it and see if what we end up doing is successful or not. I invite you to follow along and see what happens. Feel free to make comments on Stock Market Investing Today. It's an open forum.