Investing, trading or speculation?

Since you are reading this, I assume you have some interest in investing. I hope you have your savings cushion and you are now wondering about next steps. Before we start I want to make sure you understand some very important distinctions. Investing is something you do for the long term; five, ten even twenty years or more. Trading is something you do short term, usually keeping a stock or option for a couple weeks or even a couple of hours. Speculation, which has been in the news a lot lately, is different. Whereas investment and trading are usually based on facts and data, speculation is largely based on hope and guesses. I don’t speculate - no Reddit trades or meme stocks for me. I like to work with something that gives me a statistical edge, some real known facts. It moves the odds in my favor. This approach has worked very well for me. I may not make a killing on a sexy stock, but I do enjoy steady returns.

I invest for our retirement and, as I am in my 60s, I have an emphasis on income producing stocks. If you are younger, you can afford to forgo a focus on income and look for stocks that might appreciate a good deal over the years. You should consider your investment time horizon before you start buying any stocks.

If you only have small amount to invest, say less than $5,000, I would suggest you look first at an index fund. Index funds are baskets of stocks, you buy the fund and get a diversified mix of stocks. If you have more than that, you may be ready to start building a portfolio of stocks. I will talk tomorrow about how to get started.

I would be happy to answer any questions you may have about investing. You can use the ‘contact us’ button above to ask them. I will answer questions as they come.