| |
| |
|
|
Stocks and Mutual Funds |
|
10 Tips For Creating Wealth From the Stock Market
1. Do not spread your money too thin. My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual funds is 27 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 dong 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 making a buck in the stock market (Instead of trying to bend the spoon, that is impossible, instead just think of the spoon as - 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 dividends each 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). 10. Read my book 'the Stockopoly Plan' soon to be released by American Book Publishing. I believe it will profit you and your family for the rest of your lives. For more excerpts from the book 'The Stockopoly Plan' please visit http://www.thestockopolyplan.com About The Author You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way (grammar and typos, excluded). Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where the article was published. Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book 'The Stockopoly Plan', soon to be released by American Book Publishing.
MORE RESOURCES:
Stocks-Mutual-Funds - Google News |
|
|
|
RELATED ARTICLES
Stock Valuation using the SMP Model Disclaimer: Please note that I do not necessarily purchase, own, or partake of any of the securities or other financial instruments mentioned in this article. I also do not take any responsibility for any actions resulting from any actions taken by anyone who reads this article. Your Job There are so many kinds of work that needs to be done and you are doing one of those jobs right now - unless you are one of those two and a half million that have been laid off during the past 3 years. The press continues to blame China and India for stealing away all these forms of employment, but they don't have it right. Trading Tips No 2: The Big Lie in the Stock Market It is commonly reported that the stock market averages about 10% per year return over the long term (decades). So the investor that buys and holds a diversified portfolio of stocks or mutual funds is led to believe that their portfolio will grow by 10% per year on average. Investing in Dividend Paying Stocks I was recently interviewed for a press release through a financial question and answer format. One of the questions asked of me in the interview was:Where do you think the stock market is headed over the next five years?My Answer!Charles M. Mousetrap The spring-loaded rat catcher is the ultimate low-tech device invented more than 100 years ago and remains the best demouser in the world. It is so simple anyone can master it and best of all you can keep on using it year in and year out. Structured Settlement; Lawyers in NY and Mutual Funds Minority Report the movie may not be far off if the Head of the SEC has anything to say about it. At a Senate Banking Committee hearing on CSPAN, William Donaldson said that the beloved SEC can no longer sit back and "mop-up" after scandals break. Stock Insurance You have a lock on your house. You have a lock on your car. The Stock Market is a Roller Coaster: Prepare for the Ups and Downs IT'S REMINISCENT OF THE OLD children's tale about an old Chinese farmer who tells his friends his story, and they enjoin with "That's good" or "That's bad" on alternating lines:Farmer: My horse ran away.Friends: That's bad. Stock Trading Secrets? How often have you come across an advertisement or e-mail proclaiming to "teach" you the stock trading secrets that Wall Street Insiders don't want you to know? Usually included in the descriptions of these trading products are claims such as "Make 10K monthly in minutes per day", or "Learn the secrets of Professional Stock Brokers", etc. etc. Hedge Funds: the Good, the Bad, and the Ugly Alfred Winslow Jones started hedge funds in 1949. He was a pioneer of non-traditional investment strategies. Perfect Storm Having lived aboard a sailboat for 2 years I was stricken when I saw the movie "PERFECT STORM". I know these are things you want to avoid at all costs. Dont Lose All Your Money That sounds like good advice doesn't it? Don't lose all your money.After all what is an investor without funds in the brokerage account? Hint: BROKE!On the subject of investing, this means getting out of a trade when it goes against you. A Personal Stock Market Investment Philosophy ∙ Make every investment in the stock market a long-term investment.My Mother worked as a teller in a small bank in Dover, New Jersey. Enron Cure Let's hope you did not have any of the Enron stock. Maybe you know someone who did and lost everything, but you certainly might know several people who owned stock that lost almost everything. Emotional Maturity If you are going to be a winner in the stock market you must have emotional maturity. I did not say you had to be smart or know how to pick stocks and mutual funds. Stock Market Investments If there is one term over-used when talking about making investments in the stock market I would think that term would be: buy low, sell high.Buy low? Sell high? How low is low and how high is high? I like the term buy low, sell dear, much better! But better still are the terms buy and hold, and dollar-cost-averaging (buying the same stock at different prices through the years). War Market There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. E-mini Day Trading - Day Trading for Beginners - Stock Market Timing Software I mean it when I say that. While plastic silverware is fine for picnics and parties, it is totally inappropriate in a surgeon's hand with an open brain in front of him. Managing Investing and Stock Market Risks Reduce your investing and stock market risks by:Setting your sights on the long term, patiently riding with the ups and downs!If you have the time to be patient, you can benefit from time diversification. The more numerous good years for stocks outweigh the bad, pulling your return up. Buying Mutual Funds It looks like the market is ready to start up again so it is time to buy mutual funds, but you only want to invest your money in funds that go up. First, you don't want to start with a loss so be sure to purchase no-load mutual funds.
|
|||||||||||||||
