Questions tagged [investing]

Investing is the process of buying assets such as securities, real estate and other items of value that will hopefully increase in value over time, providing a return in the form of income payments or capital gains.

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350 votes
18 answers
71k views

Best way to start investing, for a young person just starting their career?

I am young, just started my career, and looking to begin investing so I can make my money work for me. I'm still living like I did in college (occasional purchase on myself, but most of it goes into ...
Eric's user avatar
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245 votes
22 answers
102k views

If a stock doesn't pay dividends, then why is the stock worth anything?

I read somewhere that companies are not required to pay dividends to shareholders (this is correct, yes?). If so, then if company A never pays dividends to its shareholders, then what is the point ...
extremeaxe5's user avatar
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214 votes
13 answers
60k views

Why would a company care about the price of its own shares in the stock market?

After a company has issued shares, why should it care if the value of the shares fluctuate? Since the shares are now publicly traded, if the value fluctuates, that is strictly a transaction between ...
Victor123's user avatar
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173 votes
3 answers
698k views

Can someone explain a stock's "bid" vs. "ask" price relative to "current" price?

In my online brokerage account, I want to buy a particular stock and I see the following: Bid: 13.20 x200 Ask: 13.27 x1,000 the current stock price is 13.22. Can someone explain what ...
Amir's user avatar
  • 2,205
52 votes
4 answers
8k views

Recent graduate with new job: Choose Roth 401(k), or traditional 401(k)?

I just graduated, and I'm starting a new job soon. My employer has pretty good policy for matching 401(k) contributions, so I want to invest as much as possible, especially during this first year. My ...
Jay's user avatar
  • 675
46 votes
7 answers
6k views

In general, is it financially better to buy or to rent a house?

I know this differs from country to country, from person to person (depending on how much you already have saved), but I'm curious about the simplest example. Let's say I have little to no money. I ...
user avatar
55 votes
7 answers
10k views

What is the best asset allocation for a retirement portfolio, and why?

Based on financial conversations I've had with trusted family members, I believe that asset allocation is one of the more critical things to "get right" during retirement savings. Based on an ...
CrimsonX's user avatar
  • 3,397
25 votes
5 answers
7k views

Why are daily rebalanced inverse/leveraged ETFs bad for long term investing?

I was reading this article about S&P 500 short ETFs: https://www.zacks.com/stock/news/176217/4-ways-to-short-the-sampp-500-with-etfs and I was confused when it said: "investors should note that ...
glen4096's user avatar
  • 353
22 votes
9 answers
7k views

Investing in a leveraged index ETF for retirement. Risky?

Let's say someone has a few thousand saved in an IRA. Right now I have it sitting in Treasurys earning around 3%. Over the past 50 years the S&P has averaged around 11% per year in total returns. ...
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33 votes
6 answers
5k views

Strategies for putting away money for a child's future (college, etc.)?

So my wife and I will be having our first child at the end of the year, and I'm trying to devise a strategy for things like putting money away for the little person now, while I have the time and ...
duffbeer703's user avatar
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35 votes
2 answers
3k views

What are the important differences between mutual funds and Exchange Traded Funds (ETFs)?

I've been considering, but haven't committed myself yet to investing in Exchange Traded Funds (ETFs), but have to admit that I don't yet fully understand the use-case for them. What factors are ...
JohnFx's user avatar
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23 votes
5 answers
4k views

Book or web site resources for an absolute beginner to learn about stocks and investing? [closed]

I'm completely new to the world of investing and stocks. Knowing that I shouldn't invest or buy stocks until I know it well enough, I was wondering which cheap or affordable resources would be the ...
YOMorales's user avatar
  • 333
19 votes
2 answers
2k views

How would bonds fare if interest rates rose?

The first thing I learned about bonds is that when interest rates rise, the price of existing bonds tends to fall. Unfortunately, I didn't learn much else about bonds. So I have a couple questions ...
Stainsor's user avatar
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255 votes
22 answers
85k views

Why isn't everybody rich?

This question came up after reading this question (stock market long term risks), in which it is re-iterated (as it has been many times on this site), that investing in the stock market, especially an ...
Cloud's user avatar
  • 3,655
31 votes
2 answers
4k views

What to do with sudden wealth?

I am about to receive a considerable(for me, anyway) amount of money- about $100k- and really have no idea what to do with it to make it grow even larger. Of course I want to pay off credit card debt(...
user1255049's user avatar
21 votes
10 answers
5k views

Can you really always yield profit if you diversify and wait long enough?

It is a common assumption (and, as far as historical stock market data goes, also proven) that the stock market is always growing if you enlarge the time window long enough . In other words: The stock ...
Stefan Woehrer's user avatar
9 votes
4 answers
3k views

Does a stock really dip in price on the ex-dividend date? And why would it do this?

As per this Investopedia article: Because the stock price is expected to drop by the amount of the dividend on the ex-dividend date, Why is a stock expected to fall on the dividend date? Does it ...
Victor123's user avatar
  • 16k
5 votes
1 answer
737 views

Pay off mortgage or invest in high value saving account

I have a mortgage of 30 yrs amortization and have 290k left on the mortgage. It suddenly hit me that with my bi weekly payment of 620, it would take forever to pay it off. I need some help deciding if ...
Victor123's user avatar
  • 16k
168 votes
11 answers
39k views

Do I make money in the stock market from other people losing money?

Basically I am new to stock trading and neglect to see the differences between trading stocks and betting on sports. Basically I am "betting" on which company will do well, and this can ...
Asleepace's user avatar
  • 1,993
132 votes
13 answers
29k views

Why does gold have value?

I'm curious about why is there so much financial interest and news coverage about gold. It's hard to do things like buy food or pay the rent with gold, but I can do this with cash. Gold doesn't yield ...
Stefan Lasiewski's user avatar
81 votes
11 answers
22k views

Why does a company pay dividends at all?

If a company can lower the dividends and even stop paying them at all during hard times, why would they re-install them at all? If I understand correctly a company pays dividends so that investors ...
Pablo Fernandez's user avatar
45 votes
7 answers
6k views

Ethics and investment

I am a young man who has recently reached a point of financial stability. I'm starting to think about long-term plans which may one day buy a home, or provide for myself in old age. This raises the ...
AJFaraday's user avatar
  • 589
23 votes
5 answers
20k views

Do stock prices drop due to dividends?

From Personal Finance for Dummies, page 209: Dividends Dividends are income paid by investments. Both bond funds and stocks can pay dividends. Bond fund dividends (the interest paid by the ...
lamwaiman1988's user avatar
23 votes
8 answers
2k views

Does dollar cost averaging really work?

Does dollar cost averaging really work? If I have money available now, why shouldn't I invest it all at once? If the market's going up, wouldn't that be better?
user avatar
10 votes
2 answers
2k views

Effectiveness of technical analysis techniques: Any supporting studies? [closed]

Do you find Techical Analysis to be an effective way of increasing the returns on your investments? This can be either by itself, or in combination with other indicators. If so, what techniques do ...
DanTilkin's user avatar
  • 1,698
5 votes
9 answers
15k views

How do you take profit from stock trading while keeping capital invested?

Suppose you buy stocks from company FOOBAR at price X. After a while, the price is Y = X * 1.25, so you decide you want to collect that 25% profit. You sell the stocks, cashing out your original X ...
jotadepicas's user avatar
26 votes
10 answers
10k views

Why do investors pay trillions for minority stakes in companies, when their only potential payback is modest uncertain dividends? [duplicate]

I'm struggling to understand the core reason to invest in stocks as a minority shareholder. Majority shareholding makes more sense as you effectively control the company, so you can pay yourself ...
Jin Long's user avatar
  • 464
22 votes
8 answers
3k views

How do I get into investing in stocks?

How do I get into investing in stocks?
Sam's user avatar
  • 221
14 votes
2 answers
4k views

What is a large sudden jump (or dip) and instantaneous recovery in a stock price [duplicate]

So why did the price tank all of a sudden and then came back to normal? What does it mean?
user1801879's user avatar
7 votes
1 answer
1k views

"Cap gains exposure" of an ETF -- what does it mean?

Morningstar provides an ETF data point called potential cap gains exposure. For example, here is Vanguard's Europe ETF (VGK): This value is negative 78% for VGK. I understand that this is a good ...
Tony the Pony's user avatar
6 votes
2 answers
2k views

What happens to your investment if the broker (which acts as a custodian) goes bankrupt?

For instance, you purchased ETFs using a broker that also acts as a custodian, what will happen to your investment in case the broker / custodian goes bankrupt? Will you lose all your investments? (...
catandmouse's user avatar
3 votes
1 answer
5k views

Investment options for f1 visa students in USA

I am foreign graduate student in USA. I recently completed my undergrad (from USA) and have a bit of money saved up. I know that F1 students cannot work off campus and other business activities such ...
anon_945500's user avatar
69 votes
11 answers
15k views

Stock market long term risks

This question has been spurred by the following question which was on the 'Hot Network Questions' Is it a lie that you can easily make money passively in the stock market? . The answers to that ...
ispiro's user avatar
  • 1,253
48 votes
7 answers
13k views

I'm saving money too fast. What should I do?

[Apologies if this sounds (and is) like a first world problem] I get a very generous salary and I am not a spender. I am able to save $2000-$2500 every month. I've invested part of my money in some ...
Rajesh K's user avatar
  • 489
37 votes
10 answers
9k views

Should a high-school student invest their (relative meager) savings?

I am a high school student, I don't really have much money, between one and two grand in my savings account. However, I have friends who are investing in both penny stocks and stocks. I do not really ...
Pablo's user avatar
  • 503
23 votes
10 answers
7k views

How can I determine if my stock picking performance was due to luck or due to skill?

From 2000 to 2020, the S&P 500's compounded annual growth rate (CAGR) is about 6-7% (assuming dividend reinvestment). With a CAGR of 6.5%, every $1 invested in 2000 grows to about $3.50 by 2020. ...
Flux's user avatar
  • 17k
22 votes
7 answers
18k views

Is it true that 90% of investors lose their money?

Many investment gurus state that majority of investors fail and then offer a proven "[insert fancy name] investment strategy" that will make you successful. The number usually starts at 90% and often ...
user avatar
20 votes
4 answers
14k views

Why would anyone buy a government bond?

In my country, the interest rates on government bonds are currently 2 - 3%, but I have money in a term deposit at the bank which earns 4% interest. I don't understand how this can be possible. Why are ...
Flounderer's user avatar
17 votes
5 answers
2k views

Is there any benefit to investing in an index fund?

Does an index fund comprise of stocks that mimic the index? So when the index is altered to include new players/exclude old ones, the fund also adjusts? But how can this be, since index funds are not ...
Victor123's user avatar
  • 16k
13 votes
1 answer
1k views

Any Experience with the Gone Fishin' Portfolio?

In doing research on How to Select IRA Investments, I stumbled across the Gone Fishin' Portfolio. This link where I found out about the portfolio claims that it is based on the 1990 economics Nobel ...
justkt's user avatar
  • 4,114
12 votes
2 answers
635 views

How do I account for newly added money when computing my rate of return?

I have a simple spreadsheet where I track the balance in my investment account. What should I do to handle new deposits in the account? For example: End of Day 1: balance = $100 End of Day 2: $...
Jer's user avatar
  • 2,974
12 votes
6 answers
2k views

Buying gold / silver as a hedge against hyperinflation

I'm becoming more interested in buying gold / silver coins as a hedge against inflation and especially hyperinflation. I know very little about this, and there are thousands of sites on the internet ...
Randy Minder's user avatar
11 votes
4 answers
3k views

Over how much time should I dollar-cost-average my bonus from cash into mutual funds?

I just cleared about $65k from my bonus. I don't want this sitting in cash, but at the same time prefer to move into stocks/bonds over time (e.g. I don't want to invest all $65k at one price, and ...
Jer's user avatar
  • 2,974
10 votes
2 answers
5k views

How does the purchase of shares on the secondary market benefit the issuing company?

Purchasing common stock is often described as making an investment in the company. In exchange for this investment, you receive shares of the company's profits and, hopefully, you see some capital ...
bill's user avatar
  • 1,027
8 votes
2 answers
3k views

Pros & cons of buying gold directly vs. investing in a gold ETF like GLD, IAU, SGOL?

Google search brings up some articles on this topic, but they can be biased, so: What are the advantages and disadvantages of buying physical gold vs. investing in a gold ETF like GLD, IAU, or SGOL?
morpheus's user avatar
  • 953
7 votes
2 answers
2k views

How to automatically reinvest in non-dividend paying funds

I've read Einsteins quote stating "The most powerful force in the universe is compound interest." However, everywhere I read this is basically only possible with dividend paying stocks and then ...
Markinson's user avatar
  • 215
6 votes
4 answers
2k views

How to rebalance a portfolio without moving money into losing investments

I've read a number of conflicting opinions on whether portfolio rebalancing is a good idea. The question of whether rebalancing is a good idea has been addressed in some questions here, too, such as ...
EJoshuaS - Stand with Ukraine's user avatar
3 votes
1 answer
1k views

What do the components of the taxable income in the Schedule D Tax Worksheet mean?

The Schedule D tax worksheet calculates the tax on the taxable income by first decomposing the taxable income in line 1 into lines 19, 20, 28, 31, 37 and 40, then taxing on them at different tax ...
Tim's user avatar
  • 5,883
3 votes
3 answers
714 views

Does dollar cost averaging apply when moving investments between fund families?

We'll likely be moving ~$100,000 (two Roth IRAs, about 80k/20k split) from a mix of Nationwide funds to a combination of Vanguard whole-market stock and bond index funds (details below). All else ...
Jeff Levine's user avatar
0 votes
4 answers
552 views

Are there any non-decreasing securities on the stock market?

Are there any securities traded on the stock market (i.e. ETPs) that never decrease in value? As an aside (in case anyone mentions bonds): I'm aware there's ETFs for AAA-rated government bonds, but ...
Lawrence Wagerfield's user avatar

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