I just bought my first shares in the stock market. Where do I go next in building a good portfolio?

Question

I have spent $400 in buying stock in my first company through National City bank. I plan to invest in at least 2 other companies, but I am wondering on what makes a good stock portfolio. Is it the amount of money I put in or the amount of companies I own stock in? I am also in college so I have only a little over $1,000 dollars to spend so far.

Answer 1

To build a "good portfolio", you need more money

than 1k $. So you have to start either by buying

a mutual fund (so you get an instant diversified

portfolio, across sectors, countries and asset

classes), or on the contrary by very selective stock

picking (one or two stocks very carefully chosen).

There are no real middle of the road solutions with

such an amount.

Stock picking is more dangerous but more educative.

But after all, you cannot lose more than 1k. Unless

you try to put leverage in the portfolio, which is not a

really good advice to give to a beginner (albeit a thing

many scammers will tempt you into, including those

who sell their soup on yahoo answers with marvelous  

promises).

In the present situation, if you adopt stockpicking,

better buy an "anti-cyclical" stock, that leaves you

sleep at night. The duller, the better. Or maybe, for

more fun, an inflation-friendly one (gold mining ?).

You might be happy to own it once the US dollar,

- around which all the current financial crises revolve

like black planets orbiting a black hole - totally

collapses. But try not to overpay those goodies,

though.

Maybe in, say, two years, when the DJIA reaches,

say, 7,000, you might find more aggressive bargains

(depressed stock) and play on a possible (but not

certain) recovery.

Beware of "sucker rallies" in between, be patient

and disciplined!

.

Answer 2

the quality of a portfolio depends upon the quality of the stocks (companies) u are invested into. Before putting in the money, you shud know WHY you want to purchase a share at its prevailing market price, what i mean to say is, you shud be convinced its worth the value you are paying.

Also, many experts recommend, investing in different companies, from different sectors (not compromising on quality), so that you have a balanced portfolio, n the risk of the portfolio is diluted (diversified)

Answer 3

First of all do not buy penny stocks, banks stocks,or mortage stocks --bad news every week.

try to buy in health care like JNJ,PFE, or medical device corps

try to invest in oil  corpS like EOG

AND PLEASE TAKE A LOOK AT -----CF

MY BEST WISHIES TO YOU..

Answer 4

spread the risk. Don't put all your eggs in one basket, e.g. banking

Answer 5

I would pay off debt before investing.   Second look into a Roth IRA, if you want this for long term because there are no taxes on gains made in a Roth.

GE is down right now, solid company w decent dividend.  If you want more excitement the oil sector is the place to be right now.

Answer 6

I would not buy stock thru a bank.

Go to www.vanguard.com and put it into one of the diversifed

funds.  It is free!  No fees at all.

You can get a fund with oil, healthcare,mining,defense,communications etc.

You are very wise to be doing this.

Answer 7

First of all I agree with most responses here posted and personally believe that if you are new to the idea of investing and looking to enter you must start extremely conservative! There are various avenues you may persue thats doinging very well for most who decided to step into fix-income or defensive portfolios (alternative Ideas). Your money can be liquid along with a comfortable gain. ALong with being FDIC insured!!! I could point you in the right direction should you feel so compelled to learn more!!! [e-mail]

Answer 8

First of all, I have a question.  For someone who have only $1000, individual stock is generally not a good idea because of the commission.  If you're doing it through a traditional back, chances are there is a commission.  

If you spent $40 for your $400 purchase, you immediately lost 10%.  You have to start with climbing out of a hole.  If you insist on playing in the stock market, go for a cheap online broker.  

(or, I could be totally wrong and you bank didn't charge any commission.  In that case, please ignore the above.)

Now, going back to having on $1000, it's not enough to build a good portfolio.  Generally, the typical definition of a good portfolio is one that is diversified.  That means buying say 5 stocks.  However, $1000 split 5 way mean you are only spending $200 in each stock.  Even if that stock raise 10% (which is quite good in this market), you still only make $20.  hardly enough to worth the gas it takes for you to drive to your bank.

Given that, you should probably just keep the stocks you already bot.  Selling probably means another commission fee...

Then, diversify your portfolio through purchasing some no-load funds.  These are funds that has extremely low fees, because it is not managed by a person.  It simply mirror market performance.  No person behind it to come up with great ideas.  But, these fund are still a good choice for people seeking for a diversified base for their portfolio.

I must also disagree with the opinion of you should not be investing.  You are young.  This could be a good time to buy, chances are the market will come out of the current level long before you actually would need this money.

However, I do agree with those who said you should pay off your debt first, if you have any.  If you have a credit card that's charging you 18%, each $ you're not putting toward that, you're losing 18% on that $.

Also, assuming that you work, you should look into a Roth IRA for some tax-free growth.

Answer 9

By selling your stocks back and staying out of the stock market. Spend that money on educating yourself about investing first before you ask for advice on here and just take someone's word what to buy. What ever everyone is buying at that time is what you want to stay away from. When everyone is rushing in to buy, who do you think is selling (the rich). When the herd rushes in, the herd will be slaughtered. You want to buy what everyone is staying away from or selling off, so when that market comes back around and the herd comes to buy....you can sell and make big profits. Remember you have to educate yourself and know what you are doing.