'Tips for Building Wealth'
Top Five Reasons to Run Your Investment Account
When I first opened up my own personal investment account, I wondered if I was making the right decision. After learning the ups and downs of the stock market, I am so glad I decided to start! I started running my own IRA, and I have done so well that I decided to open a non-tax sheltered account as well for my vacation fund. Over the years, I have discovered that I actually did better in my self-run accounts than I did in the accounts I had that were run by money managers! I suggest that you start small, and run an account on your own as well.
Here are the top five reasons for you to run your own investment account instead of paying someone to do it for you:
Just as it is a lot cheaper for you to fix your own car, do your own plumbing, and paint for yourself, it is a lot cheaper for you to run your money yourself. Just think about it. If you pay a man for his advice and fees to make trades, you are paying for his fancy chair, office with a view, hot rod car, etc. If you make your investment decisions yourself, you only pay for the trades you make.
In the information technology age we are in right now, you can find all the information you need online to do research for good investments. There are stock idea blogs, investment tools, stock quotes, educational sites, and advice for best investment. Everything you need to be a great investor is at your fingertips, and most of it is free!
It has been found that only 6% of money managers actually do better than the S&P 500 index fund. So by investing in SPY(S&P index fund), you are among the top 94% of investors!
I don’t know if you realized this, but money managers are the ones that move the stock prices! Because they have to deal with large amounts of money, when they sell, the stock goes down. When money managers buy, the stock goes up! You, as a small investor hardly affect the price at all. Take advantage of this fact! All you have to be able to do is buy the stocks that managers are buying after they sell, and sell them after they buy to make money. Use the stochastic charting tool on most charting software to help you know when stocks are overbought or oversold.
Really, who cares more about your money? If you lose money, it hurts you. If they lose your money, they still get paid. You are better off using that sense of responsibility to your advantage. If you care about your money, you are going to do the work necessary to help you keep and grow that money.
My advice is to keep the money that you would pay an investment professional and invest it yourself. You will be much better off.
Use Internet Tools to Time Your Investments
James Cramer says, “Bulls make money, bears make money, but pigs get slaughtered.” It is so true! People many times miss out on huge gains because they see that a stock has made big gains and refuse to sell. They get greedy. When a stock is up more than 20%, it is time for you to sell.
There is a tool (usually located in the chart section of a stock quote) that can help you time your buys and sells. You don’t have to be a genius to use them either.
Fast Stochastic – This tool is designed to let you know when stocks are overbought, or oversold.
How to use the stochastic tool:
1) Do research on a stock you would like to buy. Check financials, overview, opinions about the stock’s future.
2) Pull up a chart on your favorite investment website (I use ) Marketwatch
3) Pull up the interactive chart (On Marketwatch)
4) Go to “Technical Indicators” and click on “Oscillators”
5) Fast Stochastic is one of the indicators.
6) Check this for a few days and wait until the indicator line is near the bottom. (This indicates a time to buy)
7) If the line is near the top, it is a good time to sell, not buy.
If you use this tool, it will help you buy when the stock price is low, and sell when the price is high.
NOTE: This is only a SHORT TERM indicator. The market will fluctuate every week or two.
Get in the game!
When someone is playing poker, if they fold, what chance do they have of winning? 0%.
You could have the best investment idea out there, but you miss out because you are sitting on the sidelines.
I am not saying that you should always be fully invested in the stock market, but you should have something invested. If you are not in, you can’t win. Get started by opening an account. There are lots of discount brokers you can use. Just look at the ad bar of any financial website. Most discount brokers allow you to trade for less than $10 per trade and with a small account minimum. Do a little research on brokers. It will be worth the time. I was able to find real-time trades for $3, and a $500 minimum and no annual fee at sogotrade.com. You can do it too. I also saved the money to open the account by setting a little aside in a short period of time.
What is the worst that can happen? You set up an account and let the money sit until you get the guts to make a trade. You will be happy that you did.
The best time to invest is now! Do you realize that the longer you wait, the more opportunities that you miss? It is the rule of compounding. The longer you hold an investment, the better chance you have of making money.
Here is an example: Let’s say you open an account today at the minimum balance of $500 and gain 10% for 10 years, and deposit $50 per month. Your account balance in 10 years would be $11,681. If you waited 5 years, and deposited $100 per month (same amount invested), your account balance would be $8630. That is a difference of $3051, or 27% difference!
Get in the game early to maximize your investment money!