Expert: Steve Hach - 6/23/2008

Question
Hi Steve,

I have about $5000 in my bank account right now, and I want to invest it in stocks.  I'm debt free, and make a bi-weekly RRSP contribution, but I have no idea where to start or what to do in order to buy shares.

I hope you can offer some advice and point me in the right direction.
Mike

Answer
Hi Mike,

There are a few books that can really help a new investor.

One is "Investing for Dummies" and it is just like every other book in the "for Dummies" series, a good basic outline.

This book covers a lot of topics and despite its insulting title, it is a good read.

I would also suggest some of the books by Suze Ormond on how to handle money and invest.

William O'Neill is also a good author to look for if you want a more advanced discussion of the technically-focused approach to investing.

In addition to these books, you may find that reading a good newspaper like the new york times and wall street journal is very helpful.

I also like some of the financial blogs like this one:
http://bigpicture.typepad.com/

Hope this helps, and remember that if you are trading online it is best to reduce your costs as much as possible.

We like this place:
http://www.foliofn.com/index.jsp
many others also like scottrade or etrade.com.

I would spend a few months learning about stocks and then make some moves when you feel comfortable with the market.

The easiest place to start for many investors is their own IRA or company 401k plan.  That is usually a no brainer.

You could put the $5000 into a broad-based indexed fund or ETF for an easy investment that would just track the market.

Also, if I could also provide some general advice:

AVOID DEBT
cut up or do not use credit cards
do not fall for "get rich quick" scams
save as much as possible from your paycheck
start now, even if you save a little bit per week--25-50$-- in 35 years this will be a huge sum of money.

Best,

Steve