So this year the tax return fairy brought you $100, and you finally want to get started with investing the stock market. Good for you!
A friend of mine recently posed a similar question to me about how he can get started in with investing with a small sum. This, in short, was my answer.
The best way to get started in a hands-off way is to buy a stock or instrument that will closely mimic of the stock market as a whole. Because the market as a whole has increased in value over the years, they best you can do is invest in everything. Because you can’t do that, you’ll need to buy shares of an index or spider vehicle. Here are a few suggestions:
- Vanguard Total Stock Market VIPER
- iShares Lehman Aggregate Bond
- iShares Dow Jones US Real Estate
- iShares Dow Jones US Basic Materials
- S&P 500 Spider
Now, if you’d like to take a little more hands on approach, I would recommend putting 50% of your available cash in one of the above vehicles. This will help to ensure that you don’t lose everything.
To pick stocks for investment first make a list of companies you’d like to buy. Once you have a list of 10-15 companies you’re interested in, head over to your favorite finance website (Yahoo! or Google are good choices) and look them up. What you are looking for is a stock with a P/E ratio under or below 15. This basically means that the stocks are undervalued compared to what the company earned in the most recent period.
(For a more in depth explanation of P/E ratios, see http://en.wikipedia.org/wiki/Pe_ratio)
Buy a few of the stocks on your list that meet the P/E requirement and hold them for 1 year. At the end of the year check the stock’s stats again. See if you think you’re going to make more money in the next 12 months, if not, wait for the opportune time to dump the stock. If so, hang on to it!
Whenever you have some extra cash for investing, put half in the spider, and the other half in the next stock on your list.
Try it out and see how it works for you!
April 27th, 2007
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Yes you can. There are two ways to make a mortgage payment with your credit card.
The first way is to use the convenience checks that credit card companies send out every so often. These checks work like those you would write from a checking account, but they draw against your credit rather than available bank funds. You can write, sign and mail these off to mortgage companies.
The second way is to use an online billpay feature (such as the type available at MBNA). This allows you to pay a certain amount to the specified company. The amount will be drawn out of your available credit and paid to the mortgage company similar to a check.
The downside to these two methods?
You won’t receive any cashback, miles, points or other credit card rewards for these transactions; which is the main reason for paying with a credit card anyway.
So, is there a way to pay with a credit card and still get the bonuses?
Yes there is. Well, there was.
There was a time when you could purchase Charter One gift cards using your credit card. These worked just like ATM/Debit cards and could be loaded with up to $500 each.
Basically you just needed to purchase these gift cards, take them to an ATM and pay the withdrawal fee (around $3) and pocket the $497 cash, while still receiving your credit card bonuses. You could then deposit enough cash to pay your mortgage and write a check to cover the payment.
Of course, this all required a lot of planning, but being able to get cash from a credit card without paying huge cash-advance fees AND still getting your bonus rewards is a huge plus.
Naturally, this program was abused in this way, and when they realized they weren’t going to make much money from it, the program was cancelled.
But be on the lookout for another loophole like this, because they come up all the time!
April 28th, 2006
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