Stock Market: First Time

Stock Market: First Time

Recently I was gifted some company stock as a bonus at work. Outside of a pension and 401k's I have never held shares and experienced the market. I find myself debating what to do with them...sell? buy more? Should I use this as an opportunity to gain experience? The idea of a nice handful of cash for fun is enticing as well. For now it's nice sitting back and watching the market. Warren Buffett better be looking over his shoulder. I'm moving up!

 

Anyone have stock market stories? Experience good or bad?

7 REPLIES 7

Re: Stock Market: First Time

How cool, @Jotun! What a nice gesture from your company. Smiley Happy I have shied away from holding stocks myself, mostly because everytime you talk to someone about them they just make it sound so DANGEROUS to invest.  "Put your money in and lose it all" type talk. The only stock experience I have is the funds that my 401K invests in, lol. Afraid I don't have any personal experiences to share but looking forward to reading responses to this topic!


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Re: Stock Market: First Time

I have two basic pieces of advice on the stock market. First, unless you know something others don't know, don't expect to beat the experts. The way to make money in the stock market is to buy low and sell high, but most mutual funds and most small investors buy high in times of optimism and sell low in financial panics. You need to be patient. Even the experts can't time the market: If they could, why would they reduce their profits trading in the stock market by telling you? Second, diversify. Don't bet everything on a single stock. Mutual funds let you invest in the overall market as cheaply as investing in a single stock, and market averages like the Standard and Poors 500 Stock Index tend to do well compared to many other mutual funds at low cost. Compare the alternatives and see what is right for you. Or seek out an adviser for help. The long term returns in the stock market are so high that it one would be crazy not to be in the stock market for the long term, but the stock market is very volatile within a few months.One has to be patient and wait for those long term gains to materialize: If you panic you will lose money. I started saving for retirement in my twenties with everything in the stock market, and I expect to retire without reducing my standard of living.

Re: Stock Market: First Time

Thanks for sharing your experience, @john_garrett! This has definitely given me some first hand insight into the market and I'm excited to see where this takes me. I'd love to continue to invest and use this account as a supplement to my 401K.  Sitting on the beach doing nothing in my 60's isn't going to pay for itself.

Re: Stock Market: First Time

It is important to put a little bit into the stock market every month. If you have a 401k or an IRA, put money in it every month. That way if stock price fall you will be buying stocks when they are cheap, and if stocks rise your investment increases in value. If you save a good percentage of your income  every month, your retirement savings will build up.

Re: Stock Market: First Time

My husband is at the same cross road right now as you are @Jotun and our attitude towards is, he can play with stocks but only with money we won't be sad to lose. I think everyone interested in learning about stocks and the market should try their luck rather then second guess themselves forever. But make sure you only use money you can qualify as learning cost in case you loose it. 

Re: Stock Market: First Time

If your parents had invested $1000 in the Standard and Poors 500 stock index in 1957, their investment would be worth over $200,000 today, with average annual returns over 9% over long periods of time. The stock market is volatile and in some years drops 30%, and the long term returns may not match history. However over long periods of time the rewards to patient investors who contribute steadily to their stock market portfolio are large. Trying to speculate on the market is always a bad idea, but consistently investing every paycheck in a diversified portfolio of stocks like an S&P 500 index mutual fund makes sense. (An Standard and Poors 500 stock index mutual fund simply matches the market value of 500 large US companies.) Playing it safe with 2% annual returns will simply not generate enough income to retire at your normal living standard even saving 25% of income over a lifetime, and around 2008 many supposedly very safe mortgage bonds defaulted. Having a retirement plan based on regular consistent contributions with prudent stock market risk taking can generate enough income to retire. Don't ignore the stock market. Get advice if you don't know what to do.

Re: Stock Market: First Time

As of today (November 27, 2017), the Standard and Poors 500 stock index is up over 18% since the start of the year. It rose 16.00% in 2012, 32.39% in 2013, 14.98% in 2014, 3.08% in 2015, and 13.43% in 2016. A mutual fund would have let you match those returns at minimal cost. Yes, stock market returns are volatile, but they beat the alternatives when you consider retirement savings. Make sure you consider including stock market investments in your financial plan. If you don't know how to invest, seek out trusted, expert advice.