Re: How do I buy investment stocks?
You've gotten excellent advice to invest through mutual funds. I've never really had the time nor interest to become a stock-picker. I figure by the time I could research something and buy a certain stock, the experts would have beaten me to it and I'd lose any advantage. So I let the experts manage my money for me (i.e. mutual funds). Yeah, it costs me a little, but in the long run it pays off, I think.
Start really basic. If you aren't familiar with it, there are excellent primers at "www.morningstar.com" or "www.forbes.com" or any of the big fund families (vanguard, fidelity, T Rowe Price) that can help you. Read through a couple. Then I'd suggest reading through a general money-oriented magazine like Money, Kiplinger's, or a couple others. Consumer Reports also evaluates mutual funds at least once a year; I'd consider that a must-read, also. They have different slants, so spend an afternoon at the library and read a month or two of each.
With that background, you're almost ready to do some research. Another poster indicated that most funds do not do as well as 'the market.' There are reasons for that, the least of which is they have to cover their own expenses. Generally, certain fund managers have a better track record than others at picking stocks. Other funds say to forget stock picking and track a broad index. Both have their place. Everyone agrees that the worst thing to do is merely buy last year's star performer, because stellar performers rarely repeat.
Experts write that research shows that funds that are'no-load' (ie do not charge a sales commission) almost always do better than 'load' funds. They also tell you to diversify into different types of funds (stocks, bonds, styles, sectors, etc). Experts also have been saying that low fees are important.
All that said, how do you pick a fund? Here's what I do. Forbes rates each fund based on performance in both up and down markets, giving letter grades A - F, just like school. As far as I know, Forbes is the only one to rate this way -- the others just evaluate performance over a given time frame. Anyway, I go to "http://www.forbes.com/finance/screener/Screener.jhtml" and select only funds with greater than B up / greater than C down (ie to get ratings of A/B), having zero sales loads and an expense ration below 1.5%. I copy those off to a spreadsheet. Then I do the same thing to get B/A -rated funds. For myself, I eliminate funds that are closed to new investors, or focus on specific sectors (i.e. energy, health care, real estate, etc) because I want them to diversify for me. I put the two lists together, and ended up with a short list of about 30 funds to choose from. Then any fund fund I invest in must be also recommended by at least one other source (Money, Consumer Reports, or Kiplinger's). I can be relatively confident that any of them would be ok, although some might be a bit better than others, and some meet my own philosophy better that others. If your amount to invest is really tight, you might go even further with a target-retirement fund where the managers do all the diversification and balancing for you. One even met my screening criteria, as I recall.
HTH
