Investing in Stocks – Tips on How to Invest in Stocks
Investing in Stocks – Stock investing is one of the leading ways individuals earn income without actually physically working. If you’ve ever thought about investing in stocks either short term or for the long term, you’re already one step in the right direction to making your future better. I’ve created a guide to give you tips, knowledge & education, and insight into the world of investing and stock trading. As a trader and investor for over 15 years, I’ve pretty much seen everything you can possibly see in the stock market and I’m here to help you learn from my investing/trading successes and mistakes. While I wish I had this investing guide when I first started investing, (the internet was just getting started back in 1998 and I used Excite!) I hope I can share some useful ideas with you. Investing in stocks should be fun, exciting, and hard work mentally. When all of your hard work pays off and you see your stock investment start to rise, it is a great feeling! There will always be volatility in the stock market but if you follow certain rules and have done your research, you should fear nothing.
So without further ado, let’s start this journey together!
Invest in Stocks at a Young Age – Investing in stocks at a young age is key because the younger you start investing, the more you will make exponentially. While it is good to start investing in stocks at any age no matter how old you are, the younger the better. What I try to do is to buy companies near the ground floor. These companies have solid business models and will last over time. Whether we look at a company like Apple (AAPL), Starbucks (SBUX), Home Depot (HD), or Google (GOOG), the earlier you invested in these stocks the more you have now and will make in the future.
Investing in Companies at the Ground Floor – I remember when Starbucks (SBUX) founder Howard Schultz came back on as CEO in 2008. The coffee company had been killing it from 2000-2008 and the coffee craze was born all around the USA. Starbucks (SBUX) lost their way in 2007 and the stock crashed from $40 all the way down to $7-$8 in 2008. I remember thinking to myself, wow, this stock is a great buy for the long term because Starbucks isn’t going anywhere! Having been strictly a trader back then and not into investing in stocks for the long term, I missed a 1,000% rally over the next 6 years. I identified a great investment opportunity but failed to act on it because I wasn’t thinking long term. Failing to invest in Starbucks (SBUX) shares at $8 back in 2008 is one of the reasons why I’m a better investor today. But back to the main point, when you invest in stocks, you want to try to buy companies at the ground floor. Whether you plan to invest in an IPO or you see a great deal on a solid company that you researched, when a stock drops, buy with conviction and continue buying it. Recently I’ve been doing that with Twitter (TWTR) below $40. With a market cap of only $25 billion and huge potential growth ahead, I will continue to investing in the company for the long term as I feel one day the stock will be $100-$200+. Another example is Pinterest which isn’t even public yet. Pinterest is going to be a huge brand someday and I would like to buy the IPO.
Investing in Stocks vs Day Trading – Long term investing vs short term trading is a very important topic in my book. Over my first 13 years of investing, I was a day trader and would only invest in stocks for the short term. Buy, sell, buy, sell, hold occasionally, but mainly buy and sell was my practice. After awhile, I was sick of missing the huge moves I was seeing in several stocks like Starbucks (SBUX), Apple (AAPL), Baidu (BIDU), Chipotle Mexican Grill (CMG), and Google (GOOG). I think ever day trader says at one time or the another, ” I wish I would have held on to that stock, I would be rich.” This is when I created two stock accounts, one to invest in stocks over the long term, and one to trade stocks on a short term basis. When you are trading stocks, you are constantly looking at your portfolio and temped to sell your investments when they rise. If you create a long term account and separate investments from trading, you can just let your investments build and you won’t be temped to sell since you aren’t looking at that portfolio all of the time. I trade stocks in my trading account and invest in stocks for the long term in my long term account. The goal here is to build your investment account over time while using your trading account as income or to fund your long term stock account. As I tell my wife, I’m planting the seeds right now to fuel huge investment/asset growth over the next 5, 10, 20 years. This tip is probably one of the most important investing tips I can give! Don’t miss another 500%-1,000% stock gainer again when you know it was a great investment at the time!
Importance of Investing – Investing is important regardless of age. It’s never to early or late to start investing. Only invest money you can afford to lose but try to invest at least 10% of your income. The goal is to be financially set when you retire. Or if you are investing at a really young age, comfortable when you are 30-40 years old. Anyone can be good at investing with a little time, dedication, and hard work. If you have 30 mintues each day to do research, you will do fine. Handing your hard earned money to an investment advisor or stock broker is insane. Take control of your financial future and most importnantly, have fun. It also gives you something to look forward to each day. I enjoy following Twitter (TWTR) & Noodles & Company (NDLS) from both a business and stock perspective each week. I also like buying the stock as cheap as I can when Wall St. gives up on the shares from time to time.
Next – Trading Stocks
Stocks to Invest In – 2015/2016
Twitter (TWTR)
Noodles & Company (NDLS)
Yelp (YELP)
Tesla (TSLA)
SolarCity (SCTY)
Amazon.com (AMZN)
Chipotle Mexican Grill (CMG)