How do you make money if you buy stocks at $3 a share and how do you buy mutual funds?

I would like to buy stocks and need layman terms on how to go about it properly. I get the idea, but can someone tell me about selling the stocks after time. Also how do you buy mutual funds and whats the benefits of the buying them. How do you make money at it.

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This entry was posted on Tuesday, August 17th, 2010 at 2:53 am and is filed under stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “How do you make money if you buy stocks at $3 a share and how do you buy mutual funds?”

  1. ONLY use your “spare” money to buy stocks as it is all a big gamble. If you buy at $3. a stock, you hope the stock goes up and you then sell it at the higher rate. Sounds simple but often the stock doesn’t go up, or it goes lower. Sometimes they plummet in an hour – as we’ve recently seen. You can use a stocl manager but you have to pay them a wage/cut. A mutual fund is really a mix of stocks that a financial company has put together. A mix that they feel is safer then plain stocks as it combines foreign and home companies and is watched carefully by fund managers. You purchase these through a financial adviser/fund company. The reputation of the company ( and their financial balance) is crucial in attracting clients. Nothing is insured. PS Insider trading is when someone “in the know” – who has secret info. ) warns a friend that their stock is going to crash because something is going to happen. Blue chip stock is stock that has traditionally grown. Hard to purchase and not as reliable to-day.

  2. Well first, you’d need to open up a brokerage account with someone like E-Trade, Sharebuilder by ING, Charles Schwab, etc. They act as a liaison between you and the financial markets (you can’t just go to Wal-Mart and buy a stock or corporate bonds).

    One thing I always tell people is to mind the fees. These brokerage companies are COMPANIES. . . and they’re out to make a buck. For example, E-Trade charges $12. 99 per trade (the fee gets smaller with the amount of money you have invested). Therefore, if you buy one share of a stock at $60, you would pay $72. 99. . . therefore the stock price would have to reach this level before you saw any gains. However, if you bought 100 shares of that same stock, you would pay $6,012. 99 total, and the stock would only need to rise $0. 13 before you started seeing gains.

    For mutual funds, instead of buying shares in a single company, you buy shares in a pool of companies (a portfolio). This portfolio of stocks is professionally managed so that it’s well-diversified and provides a fair return for the risk involved. Since it’s professionally managed, there are fees. The funds are highly regulated. It can be less risky than individual stock investing, so therefore provides less of a return. You can buy shares in a mutual fund either through a broker like E-Trade, or you can go to the specific fund’s site (direct investment usually involves a minimum investment. . . usually $2,000+).

    Hope this helps!

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