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Figuring Out How to Invest in Stocks  




You might have taken notice of the most recent stock market meltdown. You might also have noticed that there is no lack of advice of how to invest in stocks. Yet one thing remains true, NO ONE knows what the heck is going to happen with the market and stocks. However, of all the stock investing advice I see out there the last week and even today looks to me like a great opportunity to buy stocks, period.

Just like in real estate investing when learning how to invest in stocks you always want to look for an opportunity to buy low. If you are a long term investor, looking at several forms of investing as part of your plan to build wealth, then you will see that this seems to be a great opportunity to buy some good stocks at good prices.

When trying to figure out how to invest in stocks, I have no idea what the stock market is going to do tomorrow, much less the next couple of weeks. However, I have been investing in stocks for more than a decade, I have no fancy strategies and do not buy any ”hot stocks”. All I do is buy mutual funds and exchange traded funds (ETF) that are representative of market segments. That way I have built a portofolio that is representative of 90% of the industries that compose the market with the intent of long term investment and growth.

You see… my goal is years away, I am working to having a lot of money down the road not now. That is why I believe in paying yourself first,every month, year after year and then putting that money to work in investments - with the intent of making it grow…a lot. At least that is the plan…

Soooo… much like I have carefully studied and little by little have taken advantages of opportunities in real estate I am taking advantage of this latest down swing in ways I had never done before.

How?...

You see, I have always held my investments through thick and thin…I did not sell back in the dot.com bust of 2000, or in the downturn after September 11, or the market implosion of 2008….in turn I have seen my portfolio go way up and way down.

Having learned some lessons on how to invest in stocks this time I saw the writing on the wall and did something about it...

You might remember the debt ceiling debacle of the last month. Well, I sat down with my “crystal ball” and tried to figure out what was going to happen to the market if the debt ceiling did not get raised. Obviously I assumed the market was going to tank. So I went ahead and for the first time ever, I sold 80% of my stocks, but…I did not sell any of my bonds and kept the little gold I own.

We commented on this on our Facebook page over the weekend. I had a strong feeling that the rating downgrade was going to cause the market to tank and sure enough when Monday rolls around, what does the market do?...exactly, it tanks again!

By the way, it would totally rock if you click on “Like” on our FB page so we can hang out over there and I can get to know you a bit better Smiley Faces



Lo and behold the debt ceiling gets raised and here I felt like a dummy thinking I sold all my stocks for nothing…but what do you know, the market tanks anyway…and then the US looses it’s AAA+ rating last Friday.

The point I am trying to make is that in figuring out how to invest in stocks, I sold my stocks for a reason BUT that turned out to be a good move for a completely different reason. If there is some stock investing advice I can give you is that NO ONE knows what the market is going to do and why.

On the other hand I am jumping back into stocks with both feet to take advantage of these low prices. I encourage you to start if you haven’t done so yet.

In case you are curious of what I sold and bought or how it works here is what I have done in the last week:

Many people think that you need to have lots of money to invest but that is not true at all. Today you can go and open up with $100 an account with Charles Schwab and purchase some shares of the Schwab S&P 500 index fund. That funds invests in the 500 biggest companies in the US. You don’t have to worry about picking stocks or timing the market.

You can then set up an automatic transfer so that every month $100 goes automatically from your checking account and into this fund. It does not get any easier than that.

You set it and forget it and you keep putting money away like this for a long time.

On the other hand I sold SPDR Gold Trust (ETF) at $172 per share because I bought at the beginning of the year for $113 (a 35% gain). That way I can lock in some of my gains. Who knows how much higher gold will go…Smiley Faces

Now, no one knows what these prices are going to do in the next couple of weeks, especially with all the bad economic news going around. But since you and I should have a long term focus it really does not matter much what they do. The plan is that over the long haul (5, 10+ years) they will keep on going up. You also have to factor in other growth opportunities like dividend income, capital gains, and the all important compound interest.

If you are trying to figure out how to invest in stocks don't pay too much attention to where the market is right now but where you want the market to take you. Feel free to add a comment below and let me know what you think or how you are taking advantage of this market right now…



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