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What should a newbie to do with 50K?

post #1 of 40
Thread Starter 
What is the best way for a newbie to invest 50K and get a good return with minimum risk? Is a 10% profit a month reasonable without the penny stock risk/return?
post #2 of 40
$50k is a great amount of money to start investing with, HOWEVER you WILL lose it all if you start playing penny stocks right away.

I strongly suggest you start learning about investing first, then options, particularly writing covered calls and naked puts. This can yield you a relatively safe 2%-5% per month if done right. Then with some of the profit, maybe $1000 or $2000 maximum, you can dip into the high risk penny stocks.

Like I tell all the newbs, if you want to risk all your money right now, just paypal it all to me because you are going to lose it all anyway!
post #3 of 40
Take the $50k and buy TIP which is a TIPS Bond Fund. Very safe.

Then open a practice account and begin learning to trade/invest with fake $$$. Do that until you feel comfortable.

Just my .02
post #4 of 40
With interest rates the way they are.... just stuff your mattress with it. The government has run interest rates down so low that they don't even keep up with inflation... VERY SAD!
post #5 of 40
Thread Starter 
I have been doing the practice account thing for a while and see the difference is the different exchanges for volatility, risk, and profit/loss. I traded Forex for a while and got disillusioned as to how much control the MM had over the process. I seems that penny stocks have the same problem. I guess I'll start with the main stream stocks and settle for moderate returns....if any.
post #6 of 40
Thread Starter 
I had a feeling my 10% was too optimistic....thank's for the replies guys. If you can't do it with all all of your experience then I should re-evaluate my options!
post #7 of 40

What to do with 50K

If it were me, I would take 45k to 47k and put it in the bank. Each year put my maximum allowable into an IRA because this reduces taxable income and still will grow. I would then "play" very carefully with the remainder knowing that I could very well lose it all at any minute. It would be a true challenge to build it into another 50k.
post #8 of 40
Wow, some terrible advice up to now.



Don't put your money in options unless you know what you're doing and stay away from pennies. Putting your money in a mattress is what losers and people with no character do.


10% profit is NOT a reasonable at all, it's a fantasy at best. That would mean you would turn your 50K into 156K after 1 year and 1.55M after 3. You would probably be amongst the best(if not the best) money managers in history if you did that.


Read books like the Intelligent investor, read investopedia, open up a paper account.

If you really want to buy stocks, appraise the business like you would if it was a private business. That means, determine how much cash you could reasonably get from the company's remaining life and try to get that cash at a big discount(margin of safety).

The best way to lose your money btw is listening to recommendations from people here and on most message boards. This is something you should do for yourself.

And one last thing, trading and penny stocks have nothing to do with investing.
post #9 of 40
I can offer you this advice. NEVER ever EVER touch penny stocks. Now that you have that out of the way, good luck
post #10 of 40
give some to me
post #11 of 40
Quote:
Originally Posted by MontrealStocks View Post
Wow, some terrible advice up to now.



Don't put your money in options unless you know what you're doing and stay away from pennies. Putting your money in a mattress is what losers and people with no character do.


10% profit is NOT a reasonable at all, it's a fantasy at best. That would mean you would turn your 50K into 156K after 1 year and 1.55M after 3. You would probably be amongst the best(if not the best) money managers in history if you did that.


Read books like the Intelligent investor, read investopedia, open up a paper account.

If you really want to buy stocks, appraise the business like you would if it was a private business. That means, determine how much cash you could reasonably get from the company's remaining life and try to get that cash at a big discount(margin of safety).

The best way to lose your money btw is listening to recommendations from people here and on most message boards. This is something you should do for yourself.

And one last thing, trading and penny stocks have nothing to do with investing.
"Business appraisal", though it works for some, is not entirely necessary if you learn technical analysis. Follow the major indices on a chart. Learn about price movement and market psychology.

Maybe read books like the Idiot's guides, believe it or not they are good comprehensive books for newbs or anyone. There's one for daytrading, one for value investing, maybe read a few books and open a simulated investing account or a sim daytrade account if you are feeling like a real go-getter.

Value investing works for many, personally I prefer swing and position trades based on TA (technical analysis).

Whatever you do, put all your money in a six-month CD or something higher-yielding to earn some interest while you educate yourself and paper trade. I WISH I would have done that, be smart from the start.

Also you can learn plenty from listening to people here, just be ultra discerning and don't "take gospel" or "tips" from anyone. After awhile, with some effort you can find out who the lemmings are and who the smart ones are.

In my opinion...DO NOT dick around with pennies aka OTCBB and PINKS! With 50K to start there should be NO REASON to play in the crap leagues so don't waste your time!

Good luck!

TW
post #12 of 40
With 50K you should be looking to allocate your money into different sectors of the market. Be diversified.

If you want earn consistent returns on your money on a monthly basis, you can diversify into ETF's or big cap dividend paying stocks. ETF's are structured instruments that will earn you consistent returns on a yearly basis. Know how spot sector trends(money shift) between ETF's and know what specific group is receiving the most attention.

Adopt the 20% rule into each investment.


Quote:
Originally Posted by mrduffin View Post
What is the best way for a newbie to invest 50K and get a good return with minimum risk? Is a 10% profit a month reasonable without the penny stock risk/return?
post #13 of 40
I should note.

50K might seem like a lot of money to some but is minuscule to the amount of money that is being move around on a daily basis. Because there is so much money being distributed right now, there is no rush to put all of the money to work right now. Your capital as an investment will not grow much now becuase the general trend is sideways. Just put some money to work on select ETF's that are receiving the most capitla as of late and let the remaining put until you see a definite pattern emerge.

Its a traders market. People rush and get burned. Some might think that they have the market figured out but they'll soon find out that they don't. Wait to see what the trend is.
post #14 of 40
Thread Starter 
Thanks for all the good information!
post #15 of 40
I think you should learn T/A and options first, paper trade for a while, then begin contemplating what you want to do. In the meantimes, I would put money in a high-yielding good quality stock like PFE, or what you can do is mirror the market's performance by buying an ETF like SPY, QQQQ or DIA.

If ya need some1 to help you learn the above topics, feel free to drop me a PM anytime.

EDIT: and don't go ANYWHERE NEAR ANY GODDAMN POS PENNY STOCK. You can return more w/ options then you can w/ any penny.
post #16 of 40
Thread Starter 
You know of a good free ETF screener site?
post #17 of 40
1. Don't touch penny stocks. Not even 10% of your portfolio. Not 5%. Not at all. They are worse odds than gambling at a casino. Look at some charts if you don't believe us. 98% only ever go down. Don't let the occasional 300% pop seduce you.

2. Learn TA, even if you don't plan to be a 'trader'. It will help you with timing your entry. At the very least, don't go against the trend when buying.

3. 50k is a lot of money. Plan to lose everything you start out with. If you start with 50K, there's a very good chance you will lose it all. So, start with only 10k until you know that you can profit consistently.

The toughest battle you'll face, at least for me it was, is learning to control your emotions. Learning TA, making good entries, etc., that's pretty easy. It's fighting off bad emotional decisions that's the tough part. Selling, whether it's selling off a loser, or taking profits, is one of the harding things to master.

Good luck.
post #18 of 40
Quote:
Originally Posted by mrduffin View Post
You know of a good free ETF screener site?
the best ones are SPY, QQQQ, DIA. but i'm sure you can do a google search for them. One I particularly like is the XLF.

EDIT: http://en.wikipedia.org/wiki/List_of...e-traded_funds
post #19 of 40
No, give it all to ME!!!
post #20 of 40
It is interesting reading everyone's reactions to what they would do with 50k. As you can see everyone has very different opinions. This is because we are all very different in our ages, amount of free time, allowable risk, etc. Without knowing what kind of person you are it really makes no sense for me to spout off exactly where you should put your money. Hell, if you are like most of the people I know, I would say take it to a legit financial advisor and let a professional manage your money.

But it doesn't sound like you want to do that. So if you want to actively invest your own money, all I can really recommend you do is 'read'. If I could do it all over again, I would have studied the markets, read books/websites/forums, and paper traded for at least another 3 months before I wired my first dollar to my online broker.

In any case good luck. Stick around and read the endless amounts of threads here in the Stock Market Education section. Just the fact that you are here asking questions is a good sign that you are off on the right foot!
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