Skip to main content

Ask SunFyre: "If I only had $250 to invest, were should I start, and is it even worth it?"

Our very first Ask SunFyre Anything question comes to us from FerdiFred... "If I only had $250 to invest, were should I start, and is it even worth it?"

Investing is definitely worth it. Whether you have $250 or $250,000, the same rules apply. I started investing when I had $2000, and I only invested half of it, nine years ago. Today I have substantial assets by following a few simple rules that I created for myself.

RULE #1 -- Never invest money you can't afford to lose. While investing is certainly less risky than lottery tickets or online poker, it is possible to lose your money. It is possible to lose ALL your money. Don't invest any money you absolutely can't afford to lose.

Invest in what you know. I know a lot about technology, therefore the first two stocks I bought were Apple Computer and Unisys. At the time both were extraordinary investments, and I took my initial investment of $2000 and doubled it in a short period of time.

Decide if you're investing for long term or short term.

Long-term investments require patience and courage. When the stock market goes down, by more. Don't think about the money you're losing, think about the future money you will be making. Remember you only actually lose money if you sell.

If you're investing for the short-term, set very precise goals and execute. I have a small amount of money, about 10% of my assets, in what I call my "play money" account. I invest in stocks that I expected change rapidly, I get in, and get out with very precise numbers in mind. Typically if the stock goes up by 20% or down by 20% I get out.

One of my first investments was in WorldCom shortly after they bought MCI. One of my best friends also bought the stock. I sold my stock after WorldCom had made about 25% in only about six weeks. I took my profits and was happy. My friend ridiculed me because his portfolio went from $90,000 to $225,000 in approximately 2 years, mostly because he kept buying WorldCom and another highflying stock. In 16 weeks his portfolio was virtually gone after WorldCom went bankrupt.

I only buy stocks that I can afford to buy 100 shares. If I have $10,000 to invest, that means I'm only looking at stocks below $100. If I have less money to invest, I'm only looking at stocks in my price range. If you follow this rule with your $250, you should be looking at very inexpensive stocks. The benefit of this is if the stock moves slightly, it amplifies the movement by 100%. Be very cautious, however when looking at inexpensive stocks. Generally they are inexpensive for a reason. If it's a stock that has split multiple times, that could be a very good sign. If it's a stock that was very high but is dropped to bottom dollar, it may be on its last legs.

Final rule... keep feeding your portfolio. If you take a flat amount of money and invest it once, if the stock market goes stale you have to buy and sell to continue to make profits. If this happens, you're more likely to create losses by being forced to sell when things are slow. (Ask yourself why 75% of "professional" mutual fund managers don't beat the S&P 500.) If you constantly put a little bit of money away out of your regular income and invested at regular intervals, you can leave your stocks alone when they are flat because you always have a little bit of money to invest. When stocks are flat and the market is down, this is typically a great time to be buying and a horrible time to be selling. If you contribute a little bit each month out of your income, you can buy without selling during these times.

Definitely invest... if you can afford to lose.

Last but not least, the best investment is in yourself. Take that $250 and invest in a college course to learn a new skill and you could get far more than your stock market portfolio would ever produce. However, if you want to learn to invest in the stock market, $250 is a good price to pay.

Comments

Popular posts from this blog

Friday Funnies: Funny Retail Signs

Well, it's Friday so maybe you're planning to do a little shopping tonight. Watch carefully, and you might find some entertaining retail signage such as these. Here's a collection of funny retail signs from around the globe, mostly from the good old USA.

If you're planning to stay overnight, make sure you have a shilling and a few extra pence if you need to stable your horse. Here are the Rules of Inn.


After Christmas wrapping paper goes on sale, and so does Rapping paper, apparently.


Special offers are everywhere! You can get two drinks for the price of two! Don't worry, after four you won't notice how much you're spending anyhow.


Sometimes no caption is necessary.


But I'm so hot.  I'm sure everyone inside doesn't mind looking at me.


I didn't even bother going inside.  Clearly I would violate several of these store rules.


This was seen on a Dairy Queen drive through.  I always keep my secret ice cream money in my underwear.


You should pay a…

More Realistic Anniversary Gift Traditions

New Anniversary Gifts Destined to become Traditional My wife and I have been married for 20 years today. Over the past 20 years I made efforts each year to observe the traditional anniversary gifts. Some of them are certainly more difficult than others, and many of them are hard to find gift worthy in the modern age.
Therefore, I offer you a modern take on anniversary gifts. How many of these will become traditional?
First Anniversary – The Ramen Noodle anniversary. Let’s face it, you blew $30,000 on the wedding, and your student loan debt hasn’t gone anywhere. Share a Cup O’ Noodles. Eat with chopsticks on the floor because you can’t yet afford a couch.
Second Anniversary – The Puppy Anniversary. She’s been looking at you with those eyes that say she wants to start a family, but you just bought a new couch. Get her a puppy instead.
Third Anniversary – The Kinky Lingerie Anniversary. Leather, silk or lace can re-fire the engines after a year of flannel pajamas that smell like the puppy,…

An open letter to Emmanuel Macron, President of France

Dear Pres. Macron,

The President of the United States, Donald Trump, has been invited for the celebration of Bastille Day, a day for celebrating democracy and independence of the French people.

As a citizen of the United States, I encourage you to revoke the invitation. Donald Trump does not represent the vast majority of the American people. As you have stated publicly, if the United States is not going to support science, you have offered US scientists the option of emigrating to France for the continuation of their studies on climate change.

Additionally, Donald Trump has made his nationalist and blatantly racist feelings known on multiple occasions, again something I know that you personally find offensive.

The majority of Americans would support the decision for France to revoke his invitation. Citizens of the United States need to take responsibility for removing their country from a position of influence on the world stage. Our previous president, Barack Obama, strived to be a …