So I decided to start gambling

[Red Squirrel]

Opened an account at Virtual Brokers. A coworker was showing me that site. I always wanted to get into the stock market but was never sure how. Think I'm going to dump a chunk of my tax return into oil companies. For now I'll probably mostly play with cheap stocks. This will be just for fun to get extra play money. If I lose I lose, but if I win, then great. Not going to put my life savings into it or anything.

I have a lot of reading up to do on actual trading, as to be real good at it you need to understand the markets more and various concepts of how to know when is a good time to buy/sell, noticing trends etc... Not going to put any crazy amounts of money into it till I understand more what I'm doing. Should be a fun ride.

 

[Markbnj]

It's a casino and you're the guy from Indiana who's there with the wife and the year's savings to have some fun.

I assume you already have investments and you're just playing around. If not: stop now; buy index fund; profit.

 

[turtile]

You should check out Robinhood. It's completely free (it has less features, but nothing but DRIP is needed for a beginner - you just have to reinvest the dividend manually).

A good ETF to trade for energy is VDE.

 

[Nograts]

Investing is super easy if you're just talking about equities and bonds, gets a little more complicated when you start doing options and other stuff. I took a few grand (tax return like you) years ago and jumped in the pool at TDameritrade.

I started off buying what I knew (had some MSFT, ATVI, INTC etc. etc.). I think I made like $200. After capital gains taxes It left me with chump change. I remember I made out like a bandit owning Ford for about two months, made like 3g's.

Really what you need to do is read a book on an investment strategy. Specifically this one:

Linky

Made about 9 grand last year off of my piddly 60k in the market. Granted I think everyone is doing well since we're coming out of the recession.

 

[Rumpltzer]

Good luck! Make good choices.

 

[brianmanahan]

are you maxing out a TFSA?

it would probably be more advantageous to use up that space before investing in taxable.

 

[holden j caufield]

You should check out Robinhood. It's completely free (it has less features, but nothing but DRIP is needed for a beginner - you just have to reinvest the dividend manually).

A good ETF to trade for energy is VDE.

Looked into Robinhood but it's only been around a short time. Anyone use Interactive Brokers, it's way cheaper than the $8 most places charge for trades.

 

[pete6032]

Why do you plan to invest in oil?

 

[Crusty]

Looked into Robinhood but it's only been around a short time. Anyone use Interactive Brokers, it's way cheaper than the $8 most places charge for trades.

Does IB allow retail traders? I always thought you had to be licensed, hence the lower fees.

 

[Charmonium]

The OP should know that even experienced fund managers rarely beat their benchmarks such as the S&P, in any sort of consistent manner. There are a handful at any given time that have beat in multiple consecutive years but it's a tiny fraction of the total.

That stats for individual investors is even worse. In fact they're so bad that it's unlikely you would even do as well as your benchmark.

The investments that do the best are the ones people forget about. Put your money into a low fee fund like Vanguard and then forget about it. Don't try to time the market or pick the winners and losers because you WILL fail. Maybe not right away, but sooner than you think.

 

[kranky]

Well, you know it's gambling so at least you're going in with your eyes open.

 

[holden j caufield]

Does IB allow retail traders? I always thought you had to be licensed, hence the lower fees.

I've heard they do allow retail traders. I even remember being one last step from registering with them but at least with my current brokerage I can walk in to one of their offices if I have an issue. I'm not sure that is an option with IB or RH.

 

[edro]

I created a taxable account a few months ago and put a few thousand in.
I picked a handful of stocks I have an interest in.
I am down about $80 after taxes.
2 are up ~10%, 1 is down 20%.
I have found it to be too nerve wrenching for my tastes.

I sold the few that were up and plan to buy into a large sector ETF (S&P500?), so I can forget it.

I can stomach the entire S&P dropping 10% (since everyone is in the same boat), but I can't stomach a stock I personally chose dropping 10%.

The bad things about small potatoes investing are:
1) taxes
2)broker fees
3)need to see big increase to be "worth it".

$1000 investment - $7 broker fee = $993
$993*10% increase = $1092.30
Sell $1092.30 - $7 broker fee = $1085.30
Taxes (25% estimated) = $21.33
Final after fees and taxes, a 10% increase (which is big), equals a profit of $64.00 (6.4%).

To me, $64 is not worth the daily anxiety of watching $1000 in a volatile market.

 

[nickbits]

I put 20K in my "play" account in 2008. It is worth about 60K right now and peaked at 70K at the beginning of the year before the markets started tanking. It's fun.

I'm not sure oil companies are the best bet right now. None of the ones I checked have gone down very much (compared with the decrease in crude). However, I did decide to invest in Canadian currency since it's value is directly related to oil prices.

 

[pete6032]

The OP should know that even experienced fund managers rarely beat their benchmarks such as the S&P, in any sort of consistent manner. There are a handful at any given time that have beat in multiple consecutive years but it's a tiny fraction of the total.

That stats for individual investors is even worse. In fact they're so bad that it's unlikely you would even do as well as your benchmark.

Don't be such a debbie downer, OP can do it! OP is way smarter than the hundreds of thousands of people who spend 60 hours per week watching the markets. He's chosen oil so he must have some specialized knowledge of the industry that gives him an advantage over everyone else in pricing oil stocks. He will deliver and beat everyone else!

 

[JulesMaximus]

One of my co-workers is a heavy gambler. He was just over here gloating about how he made $700 with one of his retirement accounts.

 

[ScottFern]

I got all my money tied up in Axe Capital. Great Hedge Fund.

 

[Red Squirrel]

Why do you plan to invest in oil?

It's super low right now, it's going to go back up as it usually does. But of course I could be wrong. That's why I call it gambling. I'm not sure yet if I want to invest directly into specific oil companies or some common stocks that have multiple companies in it. Still have to read up more on how all that works. Of course look at graphs and stuff too.

I need to read up more on stock market before I actually make any major transactions though. I just at least wanted to open the account, probably play around with penny stocks for now.

Debating on making it a TFSA as that is an option. I already have a TFSA with my bank though so I'd have to transfer it out. The downside of TFSA is that it's capped, and it's hard to know really when you're at the cap since it's accumulative and not based on balance. I don't imagine I will actually hit the 10k cap in a single year just from trading though so it is an option. I think the key to TFSA is to not dip into it too often, so that way your balance is close enough to your cap and it's an easy way to tell. You can always take some out at end of year when it resets. How much do you get taxed on stocks usually, is it half? Is it also just the profits that get taxed or everything you take out? Ex: I invest $50, it's now worth $60, and I take it out, do I get taxed on $60 or on $10?

 

[pete6032]

It's super low right now, it's going to go back up as it usually does.

So you're saying it is undervalued? At what price point is a good exit strategy for oil then?

 

[alien42]

if you want to invest in oil, KMI is a great option, they are the largest infrastructure company in NA and not a producer.

 

[Blackjack200]

Does IB allow retail traders? I always thought you had to be licensed, hence the lower fees.

Browsing the site; looks like it's open to small investors.

 

[Humpy]

So you're saying it is undervalued? At what price point is a good exit strategy for oil then?

Since he's just starting you can assume the "strategy" would probably be to sell it at some point higher than he bought it for. No need to get all technical LOL.

 

[Charmonium]

if you want to invest in oil, KMI is a great option, they are the largest infrastructure company in NA and not a producer.

Kinder Morgan is a master limited partnership (MLP) so ther are tax handling considerations.

http://www.forbes.com/sites/baldwin...-to-master-limited-partnerships/#2505f0ae7b60

 

[pete6032]

Since he's just starting you can assume the "strategy" would probably be to sell it at some point higher than he bought it for. No need to get all technical LOL.

If your goal is to buy something and sell it for a higher price, you should probably understand what a good buying and selling price is eh?

 

[DaveSimmons]

It's a casino and you're the guy from Indiana who's there with the wife and the year's savings to have some fun.

I assume you already have investments and you're just playing around. If not: stop now; buy index fund; profit.

That's just crazy talk! Real Americans know Gut Instinct wins out over "facts" and "sense" every time!

If I'd listened to nonsense like that, I'd have all my stock money in index funds and ETFs, and I'd have enough spare money to buy toys for children's hospitals every Christmas!

Stay the course Red Squirrel! Get rich quick!!