Tilted Forum Project Discussion Community - View Single Post - I want to invest in the stock market, what should I do?

Yakk · 01-31-2007, 09:40 AM

That PM mutual fund has a problem. It costs, say, 2% of assets every year for overhead.

The same problem happens with buying and researching your own stocks when you have a small amount of money. 1 hour per week per stock is 52 hours per year -- if your time is worth 10$ per hour to you, that's 520$ per year.

If you manage to pull off a 6% real return on your investment (after inflation and any taxes), you break even with a 8600$ investment. If you invest 20000$, get 6% real return, and spend 500$ of your own time working on it, that's 1200$-500$ = 700$ net profit, or an actual return-on-investment of 3.5%.

You could probably have done better, on average, just by buying the market.

As your pile of savings grow, so does the leverage for doing stock research yourself grows. Funds with minimium investments that have less load costs start to open up. So this doesn't mean you shouldn't have savings -- rather, you should place your savings into low-management fees low-self-research investments until you start having a real nest egg. Spend your time ratcheting up your salary and working rather than playing the market.

You can play the market for educational reasons -- but there is little reason to actually commit your real savings when learning about playing the market. Play with a small amount of money, and/or play using fantasy investment systems.

01-31-2007, 09:40 AM	#7 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	That PM mutual fund has a problem. It costs, say, 2% of assets every year for overhead. The same problem happens with buying and researching your own stocks when you have a small amount of money. 1 hour per week per stock is 52 hours per year -- if your time is worth 10$ per hour to you, that's 520$ per year. If you manage to pull off a 6% real return on your investment (after inflation and any taxes), you break even with a 8600$ investment. If you invest 20000$, get 6% real return, and spend 500$ of your own time working on it, that's 1200$-500$ = 700$ net profit, or an actual return-on-investment of 3.5%. You could probably have done better, on average, just by buying the market. As your pile of savings grow, so does the leverage for doing stock research yourself grows. Funds with minimium investments that have less load costs start to open up. So this doesn't mean you shouldn't have savings -- rather, you should place your savings into low-management fees low-self-research investments until you start having a real nest egg. Spend your time ratcheting up your salary and working rather than playing the market. You can play the market for educational reasons -- but there is little reason to actually commit your real savings when learning about playing the market. Play with a small amount of money, and/or play using fantasy investment systems. __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.