Stocks And Money Information

Do not spread your money too thin.

My friend has a little over $300,000 invested in the stock market through 25 different Mutual funds. In my opinion, 25 Mutual funds is 25 too many collecting load fees, management fees, commission fees, operating and advertising fees.

Diversity is important, but just as important is over-diversification. Also, in my opinion, $200,000 should not be put into more than 12 stocks, let alone 27 different Mutual funds.

2. Do not pay commission fees to purchase a stock.

If you are going to invest your hard earned dollars into a company, the least the company could do is provide you a way to invest in their company commission free – and they do!

3. Only purchase those companies that pay a dividend.

The same company that you invest in commission free should also offer you another incentive for you to invest – a dividend for the use of your money.

4. Only purchase those companies that have a history of raising their dividend every year.

The same company should continue rewarding you for your faith in their company by increasing the amount of their dividend every year. Rising dividends are also the proof that the company is doing something right.

5. Dollar-cost average into each stock position.

By dollar-cost averaging (buying the same stock at different prices through the years) you’ll never pay too much for the company’s stock, even if the initial purchase is at a 52 week high. Have all the dividends from each company rolled back into more shares of each company, until retirement. The companies you invest in should do this for you, automatically, commission free.

6. Forget making a profit; instead focus on the income provided from your stock portfolio.

That’s right! Forget making a profit. The burden is now lifted - no more pressure on tryingto make a buck in the stock market. (Instead of trying to bend the spoon, that is impossible, instead just think of the spoonas – omigosh! - I’m in the Matrix!) When you focus on the amount of money your holdings are providing in dividends – and when those companies selected have a history of raising their dividendseach year – a lower stock price allows the dividends that are being rolled back into the stock to accelerate your income. The total value of your portfolio may go lower, but your income from that lower priced portfolio would increase dramatically. Profit by income!

7. Make every stock purchase with the intent that the purchase will be a long-term investment.

Do not trade in and out of your holdings. There have been many up and downs in the stock market. The down markets only accelerate your income. GE has raised their dividend for 28 years in a row. Why sell it? 100 shares of GE ten years ago has turned into 1200 shares today due to stock splits, and that is not counting how many shares you would have now if the dividends were being rolled back into more shares of the stock through those years.

8. Understand that a lower stock price, after your initial purchase may be a blessing in disguise.

The income from your stock holdings should grow every quarter, no matter what the total amount of your stock portfolio is worth. (If your Mutual fund declines in price from one year to the next and if your income is not increasing (accelerating) from that fund, why are you in that fund?) A company pays their dividend not on how much their stock is worth in the market place. For example, a company pays a quarterly dividend of 50 cents a share. A company has little control on how much its stock price is worth in the market place on any given day. You will receive 50 cents a share per quarter whether the stock price is at 50 dollars a share, or drops to $40 a share or goes up to $70. While the stock is down at $40 a share your dividend reinvestment is loading up on more shares.

9. Develop a savings plan to add to your holdings each quarter to help your dividend reinvestments to accumulate more shares on a dollar-cost averaging basis.

The savings could be as little as $5.00 a week. Why put that savings in a savings account at 1.2 percent, when there are so many companies out there that are paying a 4 to 5% dividend yield and increasing their dividend every year? And since none of the companies you are investing in charge a commission, all of that $60.00 a quarter you saved and invested would help your dividend reinvestments to dollar-cost average into your holdings. Every cent you save and invest would work toward your ROI (Return on Investment).To read the PREFACE from the book ‘The Stockopoly Plan’ please visit http://www.thestockopolyplan.com.About the Author: Charles M. O’Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book The Stockopoly Plan – Investing for Retirement; published by American-Book Publishing. To invest in a copy of the book: http://www.pdbookstore.com/comfiles/pages/CharlesMOMelia.shtml

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The stock market always presents an intimidating and confusing environment even for an expert investor and trader. For a beginner in the stock market it could be daunting task to invest or trade.  Many people form a kind of association to invest in the stock market. This is similar to a mutual fund the only difference being unlike mutual funds the group may not have large number of investors  and huge financial resources. The plus points are you avoid paying huge management and entry fees associated with Mutual Funds..

Many of these stock market investing clubs are close knit entities and getting an entry into existing associations may be difficult. So you may consider forming a stock market group yourself. There are various benefits to being part of stock market investment club. You can take advantage of combined stock market investment knowledge. Two head are better than one and when you work with an association of investors who have a similar interest in the stock market you’ll have a huge resource of knowledge and experience at your hand. Even those who are novices and beginners to the stock market will have very valuable ideas and information that can be very beneficial. With such a participative group approach to making decisions best stock market investing and trading choices can be made.

Many studies and past experiences have shown that when a group of people make investment choices after a series of discussions and debates, the profit potential is far higher. There is a significant risk reduction in stock market investing after such group interaction. Each individual’s fund contribution may be small even though the combined investment pool is large. If your group has say 100,000 dollar fund and there are twenty people with equal contribution you get a chance to learn how the stock market works and profit from it with a contribution of mere $5,000.

 With such an association of stock market investors you can make some great stock market investments but losses would be lot more palatable and manageable. Profits would of course be distributed among the club members on proportional basis. The resource pool of the group would be higher than an individual so the group has the ability to invest even in falling market. Many times even in a normal bear phase or crash in the stock market many individual investors have their investments or derivative positions wiped out as they are not able to meet the margin calls. In group investing huge personal losses are not likely. In worst cases some members who are more resourceful can pool in more funds to meet margin call requirement.

An individual with limited resources can have only a limited number of stocks in portfolio but as an association of investors can diversify stock market investments to a wide range of stocks and sectors. It has also been observed that those who invest in groups pool their profits and dividends back into the stock market which results in greater returns in the long run. Individual investors normally books profits faster and do not reinvest dividends.

Forming a stock market investment group can be huge learning opportunity and give you a chance to socialize apart fetching you good profits in stocks.