Investing 102

[PDXFactory]

Greg and all...great thread!

I haven't been here on Lat-g for too long, and I can't say I ever expected to see this sort of discussion going on! You guys think this thread is addicting? Just wait until you start investing and you see that money double (or triple, or ???). Now that is addicting!

I'm guessing that to some even this thread is still making the whole investment 'game' seem intimidating, but really it doesn't have to be. I think there are a few really key points that Greg has made (and others as well):

1. Start investing as early as possible.
2. Only invest money that you don't need immediate access to (i.e. you already have savings/emergency funds).
3. Diversify.
4. Buy what you know.

Honestly, if you follow those basic rules I think you could pretty much get to retirement as a fairly successful investor! You'll be ahead of the vast majority of Americans, that's for sure!

One thing I haven't seen discussed with regards to buying and selling stocks that I thought I would add is the difference between a short term and long term gain. While every investment has its own tax related issues, I would consider this the most basic concept that you need to know. If you buy and sell stocks frequently, your gains (profits) are taxed at a different rate than if you hold for a year or more. Short term is taxed at your ordinary income rate, while long term is taxed at a flat 15% (or 0% if you are in the lower tax brackets). This is part of the reason you should only invest money you don't need immediate access to (the other being that you don't ever want to be 'forced' to sell at an inopportune time just because you need cash!).

The large stocks that Greg mentions are relatively safe, and are a good place to start if you are just getting into the market. Jump in and then continue to educate yourself as your total investment grows! As you learn more you can expand into more advanced investments if you so choose. The more money you have in your portfolio, the more investments there will be available to you.

I'm far from an expert and don't have a ton of money invested in stocks outside of my 401K's and IRA's, but I do find it pretty dang fascinating and fun. Who doesn't like getting 'free' money? There is a TON of information out there online, and the books people have mentioned are all good. It's never too late to start learning!

Thanks to all, and happy investing,
Marcus