Beginner Investing/coke


QUESTION: hi..i am thinking for getting an early retirement from the va after 27 years of service at age 60. right now i dont know how much the pension is since i have a hard time getting the right person in the right dept. anyway, i am wondering if it would be a wise move to buy stocks in coke or pepsi now. i was reading those are good for kids to start, but also for retirees. so, do you think this would be a good move? if not, could you please recommend something with a good return for retirees? thank you!!

ANSWER: James,
  Thank you for your question!
Yes, I think buying a large cap, dividend paying stock like coke is a good idea for your situation. However, the most important thing about investing is to diversify.  If you do buy individual stocks, you should by several, ideally 10 or more, in different sectors. Some should be large cap, and a few should be smaller in market cap size.
  You should also have less risky investments like bonds. You can buy bond mutual funds or ETF's (exchange traded funds) to do this, you don't have to to research and buy individual bonds. Ticker AGG for example is an aggregate bond fund. The usual consensus among financial advisors is to subtract your age from 100, and that is the percentage of your funds that you should have in stocks. If you are 60 years old, that means only 40% of your investments should be in stocks. This is because stocks are risky.
   If you are a risk taker, you could increase that percentage, or if you prefer less risk you could reduce it. But that is a guideline to start.
  To diversify in stocks, you could also buy a general mutual fund or ETF that tracks the S&P500, an index of large cap companies.  Ticker symbol SPY for example does this.

I hope this helps, please do not hesitate to follow up with me if I can be of any additional service.

Paul Henneman
ValuEngine Inc

---------- FOLLOW-UP ----------

QUESTION: oh sorry; thank you for your answer, but i dont know the terms cap and sectors. what are they?

Thank you for the follow up!
Market Capitalization (shortened to market cap) refers to the size of the company. It is number of shares times the price of each share.  Large cap companies (big market cap) are typically 5 billion or more, and tend to be much more stable investments.  They also tend to have slower increases in stock prices, but do offer dividends (a small payment for owning their stock) that serves to stabilize the investment even more, and offer a small additional return. But even large cap companies can go down in price.
Sectors refers to different groups of similar companies in the markets. For example, the technology sector is made up of technology companies, the Medical sector is comprised of companies like hospitals, medical devices, and other medical related companies. There are different lists of sectors, depending on who compiled it, but the general concept is the same. To diversify your investments properly, you should not simply buy 10 technology companies. The stock prices would be very correlated, meaning that if overall economic conditions were such that one technology company had trouble and the stock price dropped, so would the others.
It is better to invest across several sectors by buying a few technology companies, health/medical companies, energy, utilities, consumer goods, and other sector groups.

If you are interested, you can go to my research company's website and sign up for a month trial.  You can access a list of the sectors, and see which ones we feel are the most attractive, or search for stocks in many different way such as by market cap, forecasted return, or other things.

I hope this helps, please do not hesitate to reply if I can offer anything additional.

Paul Henneman
ValuEngine Inc

Beginner Investing

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Paul Henneman


I can answer any questions on investment strategies. Specifically, my expertise lies in long term investment strategies designed to beat market performance while reducing risk. Not get rich quick schemes, but solid investing strategies. DO NOT SEND ME YOUR HOME WORK QUESTIONS! Over one half of the questions I receive are clearly students in finance or economic classes asking for answers to their homework questions. Most of these come from India. I won't answer them, do your own work. However, I welcome all investors trying to negotiate how to invest in stocks, mutual funds, ETF's, and other investments.


15 years in a leadership role at a financial research company. We sell research to institutions such as Wells Fargo, Fidelity, Thomson Reuters, Bloomberg, Bank of NY, Scotia Bank, and others.

Florida International University, University of Florida

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