Join in an Investment Club

Another way to begin is to join an investment club.

Since members jointly choose stocks to purchase,a club offers you an opportunity to invest and to get experience in researching the market. Determining when to sell and when to hold onto to a stock is another valuable lesson that can be learned in such a club. Most members ultimately gain enough confidence to their own investing .

Once you strike out on your own, you probably will be able to afford only one or two stocks at first. But ultimately you should aim to afford five or ten . that is enough diversity but not too much for you to keep watch over. Balance is important.a quarter of your investments might be in very small companies that give you a chance for big gains, , of course, the possibility of big losses. Another quarter could be in the largest, most conservative companies for stable growth, the remaining half might be medium-size concerns that are growing faster than the economy.

In every case, try to spot companies whose share prices are relatively low compared with their current earnings and future prospects. Keep your eye on investing's early warning system. the market as a whole usually moves about three to six months ahead of chances in the economy. On average, the market begins to rise about six months before a recession ends. Typically, the climb last two and a half years of downturn.

Bear in mind that business conditions affect various stocks group differently. Basic industries such as autos and housing rise and fall along with the economy, so they prosper when an economic recovery begins. but when the recovery is a year or more old, the strongest companies tend to be consumer-goods firms such as retailer,clothing makers and home-furnishing manufacturers. That is because consumers finally feel secure enough to spend freely.

When you buy stocks or bonds, you can choose either to hold the certificates yourself or keep them in so-called street name. That means they are held by your broker. Which is better for you.There is one clear drawback to holding your stocks in street name. if the brokerage firm runs into severe financial trouble, your holding could be tied up for months. you will, however, get them back eventually, because they are insured by the Securities Investor Protection .

But keeping your stocks and bonds in the street name has many advantages. It is certainly convenient. you do not have to worry about losing your certificate or sending them through the mail. If you want to barrow margin--- that is, take out a loan from your brokerage houses also maintain up-to-date records on the value of your holdings, and will reinvest your dividends automatically in, say, a money market account.