Dividend stocks?

[wifeytini]

Hi all!

OK - so before I ask a question, I need to preface by saying I know NOTHING about the stock market, bonds, etc. Literally. I know virtually nothing. However, I would really like to learn! Oftentimes I need a "hands-on" approach to learning a new concept, so I was thinking of taking a small amount of money (very small, like less than $100, if that's even possible) and buying some individual stocks. I am NOT looking to make a quick buck or anything like that - but I would like to see firsthand how the stock market works and how investing plays out in real life, versus simply reading about it.

With that said, what individual stocks would you recommend buying? I have been looking at dividend stocks and I think those might be fun to play around with - but how would I go about buying them? How do I go about CHOOSING them? Can anyone on this forum suggest a place for me to start, or has anyone used this approach to learning about the stock market?? I would LOVE to hear from you

Please let me know!

[disneysteve]

I need to preface by saying I know NOTHING about the stock market

With that said, what individual stocks would you recommend buying?

Well, my knee-jerk response is that if you know nothing about stocks, you shouldn't be buying stocks. You can learn how the stock market works without putting real money at risk. Plus, with you only wanting to invest less than $100, what exactly do you hope to learn?

All of that said, there is certainly no reason why you can't buy a few shares of something and watch how it does over time, get the company's annual report each year and see how their performance results get reported and all of the data that the company shares with investors, etc.

What company? I would pick a company that is meaningful to you. Forget about whether or not it is a "good buy" at this point. You aren't putting up enough money for it to really matter. If you only invest $100, the most you could possibly lose is $100. Think of a company that you deal with regularly. For me, my first stock purchase way back when was Disney and I bought 3 shares. Of course, that was back before discount online brokers so the commission was significant. Now, you can buy stock for less than $10. In fact, I'd suggest sharebuilder.com where your trade will cost just $4. So find a company you like and know, a company whose products or services you use regularly. Think household names - Nike, Starbucks, McDonalds, Disney, Time Warner, Comcast, AT&T, etc. Then go online and find out what their stock is selling for. As long as the share price is low enough that it will allow you to pick up a few shares for your $100 investment, go for it.

As for dividend paying stocks, I wouldn't focus on that. Again, your investment will be so small that it really won't matter and for your purpose of just learning how things work, it isn't important.

[bjl584]

I'd start by doing some reading and research on the stock market before jumping in.

$100 won't get you much to matter, especially after you pay commissions. Even the highest dividend payer that you can find won't pay you more than a few dollars a year if you only put in $100.

There are tons of good companies that pay a dividend and that have been around a long time. Look for companies that not only pay a dividend but also have a history of regularly raising their dividend. Companies like Coca Cola or McDonalds.

But, I wouldn't buy anything until you first, know more about what your doing, and second, have $1000 to invest.

[Nika]

Even with a very cheap brokerage you have to pay commission - when you buy and when you sell.
So say $4 to buy and $4 to sell. If you invest $100, your stock have to go up 8% before you break even. And than, what do you plan to make? Even if it is a stellar performer and goes up over 25%, it will still not be worth all this trouble.

Plus, there is RISK. (I've just learned it the hard way with a bunch of short-term AAPL calls)

All that being said, I can't recommend any stocks.

I don't recommend any stock ever, because it is risky even when a company has extremely solid fundamentals -- stock price is unfortunately not determined by cold hard facts, it is also moved by expectations, general feelings, manipulation, fears, rumors, and irrational and hard to predict emotions of the general public.

But for reference, I own Apple, Qualcomm, Mattel, Facebook, and Nokia(buying NOK was a mistake, but they do pay good dividends).

[Petunia 100]

Hi all!

OK - so before I ask a question, I need to preface by saying I know NOTHING about the stock market, bonds, etc. Literally. I know virtually nothing. However, I would really like to learn! Oftentimes I need a "hands-on" approach to learning a new concept, so I was thinking of taking a small amount of money (very small, like less than $100, if that's even possible) and buying some individual stocks. I am NOT looking to make a quick buck or anything like that - but I would like to see firsthand how the stock market works and how investing plays out in real life, versus simply reading about it.

With that said, what individual stocks would you recommend buying? I have been looking at dividend stocks and I think those might be fun to play around with - but how would I go about buying them? How do I go about CHOOSING them? Can anyone on this forum suggest a place for me to start, or has anyone used this approach to learning about the stock market?? I would LOVE to hear from you

Please let me know!

I don't buy individual stocks, so can't suggest a good method to set about selecting them. (I stick to broad market index funds.) I did years ago when I first started investing, but soon realized I was no stock picker.

However, I suggest that you set up a portfolio on Morningstar or Yahoo Finance or any place you choose, and just pretend to buy stocks. Pick a dollar amount, pick your stocks (remember to deduct commissions) and then watch your portfolio and see what happens. You can learn just as much by doing this as you can by using real money. While you are learning, save your investment dollars. When you feel ready to begin using real money, you will have some available.

Good luck and happy investing.

[kv968]

In fact, I'd suggest sharebuilder.com where your trade will cost just $4.

Sharebuilder would be $4 to get INTO the trade but $9.95 to get OUT of the trade. On a $100 investment that's 13.95% so that's a pretty steep hill to climb to start out with.

[disneysteve]

Companies like Coca Cola or McDonalds.

Of course, the problem with companies like this is the share price. Coke is at $37/share. McD is at $88/share. You won't get far with $100 even with a $4 commission.

Still, if you just want to play, which I'm not opposed to, there is no reason why you couldn't buy 2 shares of Coke which would run you about $78 right now at Sharebuilder.com.

[disneysteve]

Sharebuilder would be $4 to get INTO the trade but $9.95 to get OUT of the trade. On a $100 investment that's 13.95% so that's a pretty steep hill to climb to start out with.

Agreed, but this isn't really an investment. It is more of an exercise and learning experience. It doesn't sound like OP is concerned with the financial performance of this stock as much as with getting into the system and seeing how things work.

[bjl584]

Of course, the problem with companies like this is the share price. Coke is at $37/share. McD is at $88/share. You won't get far with $100 even with a $4 commission.

Still, if you just want to play, which I'm not opposed to, there is no reason why you couldn't buy 2 shares of Coke which would run you about $78 right now at Sharebuilder.com.

Yes I agree. That's why I also suggested to OP that he doesn't buy anything until he has $1000 set aside for the purpose of investing in the stock market. That will give him time to learn how to save and also time to learn how the stock market works.

[disneysteve]

I suggest that you set up a portfolio on Morningstar or Yahoo Finance or any place you choose, and just pretend to buy stocks. Pick a dollar amount, pick your stocks (remember to deduct commissions) and then watch your portfolio and see what happens. You can learn just as much by doing this as you can by using real money. While you are learning, save your investment dollars.

Good idea. You can virtually "buy" and track stocks without actually spending a cent, and the learning experience would be the same.

Then, once you have money saved up to invest, forget about individual stocks and buy mutual funds.

[BuckyBadger]

Then, once you have money saved up to invest, forget about individual stocks and buy mutual funds.

Best advice so far!

[bjl584]

Best advice so far!

eh, my stock portfolio outperforms my mutual fund portfolio. But, it is a lot more of a "hands on" style of investing, and that isn't for everyone.

[BuckyBadger]

eh, my stock portfolio outperforms my mutual fund portfolio. But, it is a lot more of a "hands on" style of investing, and that isn't for everyone.

I'd say that -- on average -- most people can get into a lot more trouble investing in stocks than they can in mutual funds. (Caveat: by mutual funds I mean broad index funds with low costs, such as Total US Stock Market, Total International Stock market, and Total Bond Market.)

Some people -- you among them -- can make money with individual stocks. Most people can't!

[disneysteve]

I'd say that -- on average -- most people can get into a lot more trouble investing in stocks than they can in mutual funds. (Caveat: by mutual funds I mean broad index funds with low costs, such as Total US Stock Market, Total International Stock market, and Total Bond Market.)

Some people -- you among them -- can make money with individual stocks. Most people can't!

I agree, even though I also have individual stocks that have done very well. But my stock holdings are not the basis of my portfolio. The vast majority of our money is in mutual funds.

[baselle]

go for it - directinvesting.com

A woman after my own heart. For those who truly interested and go to it with the right attitude one can get a lot out of buying individual shares. For example, a little bit of individual stock will really tell you how you handle risk. It also adds a little spice to reading the business pages.

She sounds like she should look into DRIPs (Dividend Reinvestment Programs). A great place to start would be directinvesting.com. One can search for DRIPs that have no fees or the company pays the fees. When you are paid a dividend, the program will reinvest it, often also with no fees. For example, 3M is a great company that pays investing fees.

DRIPs are a little bit different than Sharebuilder. Sharebuilder is basically a brokerage where the broker holds shares for you (Broker really owns it). To set up a DRIP, you have to buy the share in your name, then set up an account with the company share's transfer agent which operates a bit like a bank. You can then add to your stock position by sending money to the transfer agent. Temper of the Times (an arm of direct investing) can help you buy the first share and set things up with the transfer agent.

FYI - transfer agents manage many companies. For example, Bank of New York Mellon is the transfer agent to International Paper. It is also the transfer agent of Target. If you set up a DRIP of one, very easy to contact the transfer agent to set up a DRIP of the other.

FYI - I put in some money, sometimes routinely, sometimes when I get a windfall, etc, in my portfolio of 8 stocks. Its been a lot of fun watching it grow, and I've learned to not panic when prices crash as they did in 2009.