re: Stocks and where to start

quote:

---

Don't save up a huge amount & then invest all at once. Put a little here & a little there....this will go w/ the natiral ebb& flow ofbthe market. Chevron, exxon, coke....good luck!

---

Be aware that brokerage fees will eat into your return if you invest too frequently with small amounts of money. For instance, let's say for easy math that your brokerage charges a $5 commission per trade. Also, let's say you are buying a product that is $100 per share (assume it doesn't fluctuate in price until well after you buy to keep the math simple. Now, let's say you want to buy four shares. If you buy one share per week, it will cost you $105 to purchase each share and pay the commission. After a month, you will have spent $420 to hold $400 worth of stock, meaning that the stock has to rise 5% in value just to make the money back that you spent on commission.

If, however, you put $100 into your brokerage account each week and held it as a cash position until you can get $400 in the account to buy all four of the shares at once, you're still going to pay $5 on the commission. So, if you buy all four at once you will have paid only $405 for the four shares not $420, and the stocks only need to rise 1.25% for you to recoup the cost of the commission.

If you're doing a lot of small trades, those commissions can absolutely crush your returns. Just something to be aware of, and get thee to the money talk board.