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notes on investing
Oct. 2nd, 2011 06:22 pmI got started with investing recently. I've been building up for it for about two years now: I have a cash balance I feel comfortable with, and I've got a 'spare cash' slice right now that I can put into investing without feeling like I'm throwing money away.
Investing is full of funny little ways to fleece the less-wealthy and the newbie, besides the "The company I invested in was a Ponzi scheme! and now I'm broke!" kind of sillyness.
* Diversification is good. Holding only one company's shares is a recipe for ruin. All companies go under.
* Mutual funds are a quick way to diversify.
* Most (All?) mutual funds require at least a 1K buy-in, and the better public ones are 2.5K-3K at least.
* Some mutual funds do worse than the market, regularly. I think these companies/funds are stupid. At least be able to ride the market.
* Mutual funds often have an annual flat-rate cost for people with less than $ginormous amount to put in them.
* ETFs/Stocks have a transaction fee that is non-negligible for people trading less than 1K per trade.
* ETFs are a way to indirectly trade mutual funds without the yearly fee.
* Stocks can be segmented into a myriad of ways, based on 'cap', or Share Price * # of shares, versus their current estimated growth potential: Value or Growth, aka "undervalued" or "someone believes this stock will go crazy high"
* Shorting a stock involves a 3-way dance where the investor takes out a loan to buy shares, and repaying the loan is done with shares... or money if the share price jumps.
* Holding for under 3 years is not productive.
* Nearly all the finance 'help' websites are selling something.
* Run a costs vs. years calculation for investing if you don't have enough money such that the fees are rounding errors. I found you really want about 5 years at least.
* I had to write my own finance calculations. I'll release the source code sometime.
* Some market segments do better than others, on average.
Investing is full of funny little ways to fleece the less-wealthy and the newbie, besides the "The company I invested in was a Ponzi scheme! and now I'm broke!" kind of sillyness.
* Diversification is good. Holding only one company's shares is a recipe for ruin. All companies go under.
* Mutual funds are a quick way to diversify.
* Most (All?) mutual funds require at least a 1K buy-in, and the better public ones are 2.5K-3K at least.
* Some mutual funds do worse than the market, regularly. I think these companies/funds are stupid. At least be able to ride the market.
* Mutual funds often have an annual flat-rate cost for people with less than $ginormous amount to put in them.
* ETFs/Stocks have a transaction fee that is non-negligible for people trading less than 1K per trade.
* ETFs are a way to indirectly trade mutual funds without the yearly fee.
* Stocks can be segmented into a myriad of ways, based on 'cap', or Share Price * # of shares, versus their current estimated growth potential: Value or Growth, aka "undervalued" or "someone believes this stock will go crazy high"
* Shorting a stock involves a 3-way dance where the investor takes out a loan to buy shares, and repaying the loan is done with shares... or money if the share price jumps.
* Holding for under 3 years is not productive.
* Nearly all the finance 'help' websites are selling something.
* Run a costs vs. years calculation for investing if you don't have enough money such that the fees are rounding errors. I found you really want about 5 years at least.
* I had to write my own finance calculations. I'll release the source code sometime.
* Some market segments do better than others, on average.
