Investing A Guide For The Novice

INVESTING

A GUIDE FOR THE NOVICE

COVERING STOCKS, MUTUAL FUNDS, IRAs

and WHOLE LIFE ANNUITIES

By R. John

Copyright © 2017 by R. John, All Rights Reserved.

First ePUB Edition September 2017

Made in U.S.A.

CONTENTS

FOREWORD

THE FOUR COMMANDMENTS

INVESTMENTS

THE MARKETPLACE

BROKERS

RESEARCH

MARKET VOLATILITY

MUTUAL FUNDS

Types of Funds

Growth or Capital Funds

Equity Funds

Balanced Funds

STOCKS

Dividends

Research

RETIREMENT ACCOUNTS

Roth IRA

Traditional IRA

401k

WHOLE LIFE INSURANCE ANNUITIES

TO DO NOT TO DO! THAT IS THE QUESTION!

About the Author

FOREWORD

This booklet is directed at the person who has never bought or owned a share of stock in their lives. Never invested in a Mutual Fund and has absolutely no idea what the initials EFT means.

This booklet is NOT going to tell you how to make a million bucks in one week. That’s virtually impossible to do, but it will give you some instructions that may help you get far better than bank interest on an investment of any size.

I am not a stock broker, accountant or financial adviser. I will not be offering hot tips but I will help you find your way through the marketplace for those who have no experience at all. I am an investor and a writer who has written non-fiction articles and fiction books over the last fifty years. I'm putting my own experience with the stock and fund marketplace into your hands.

Investing in stocks and funds is risky. You can lose some of your money. It's like gambling. Don't take anyone's advice – including mine – to be gospel.

You never know when or why the stock market is going to go down. My experience shows this to be twice a week minimum, with major drops once or twice a year. I went through a mini-recession twice in one year watching my stocks and funds drop ten percentage points and they took 18 months to get back to the amount I had originally invested. However, after getting burned a few times, doing research and taking some responsible chances, I invested in a few stocks that went up 10% or more and this brought my total portfolio back into the black. After two years of making a few mistakes and patiently waiting on my long-term funds, I managed to make a 16.25% return on my initial investment

Understand this going in: You can invest in stocks and funds, then something could go wrong like another country leaving the European union, an unhappy American election, China or Japan adjusting their money or markets. This could send your $1,000 investment on Monday down to $750 on Tuesday and it might take 18 months just to get it back to $1,000. This is life in the stock market. If you can’t deal with that, don’t invest!

What's the alternative? There are a few insured bank Certificate of Deposits (CDs) or money market accounts that are now paying 1% (but these can go down). As an example, I put some money into a bank money market account at 4% several years ago, and the interest rate has since dropped to less than 1%. At 1% your $1,000 is making between $10 and $11 a year. Typical insured bank interest is currently making far less than that. $1,000 might get you 35 to 75 cents per year. But, that account is backed by the U.S. Government and you will always make a few cents per year in a savings account.

Now, you must decide: Do you want to make $1,000.45 each year in a savings account? $1010 each year in a CD that you must keep for maybe 3 years. Invest $1,000 in a mutual fund that can make anywhere from $1 to $25 in dividends each year? Watch it drop in value to $800 when the market is bad and take 18 months to get back to $1000 (plus your $1 to $5 in dividends) and in 36 months – barring a new recession – have that $1,000 turn into $1,040 (plus $3 to $15 in dividends for a potential total of $1,055)?

If a recession happens your $1,000 in mutual funds or stocks becomes $800 while your bank savings after 3 years becomes $1,001.35.

These are the chances you take investing in a volatile marketplace versus a stable, reliable but low paying alternative.

Ultimately, YOU must decide which way to go. All I can do here is help you learn the ropes, advise you about some of the pitfalls I faced and some of the things I did to make better