How I would Invest $1000

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Hey there,

I saw a post on here asking how to go about investing $1000 and it is also a popular topic so I thought I could contribute! I recently saw a video on this exact topic so here is a quick writeup:

Step One

• First, find a company that you think is successful. A company that is also very very large because these companies have a lower chance of going bankrupt.
• This is not a company that people think is good, its what you think is a good company. And this way the responsibility in choosing this stock is on you which is what will give you the most experience.

Step Two

• Second, spend $100 a month on buying the stocks. You buy more shares when its lower and less shares when its higher this is called dollar cost averaging because the dollar amount is fixed as in not changing.
• Do this for 3 months while watching the stock very closely. After three months you will have 30% of your portfolio allocated to the stock!
• Do not get scared if the stock price moves down, paper losses are losses you seem to have but havn’t actually made final and many beginners get scared at these paper losses.

Step Three

• Third, with 30% allocated to this stock this is when you make your first decision.
• This decision is difficult, it is if you want to allocate more, keep the stock as is, or sell the stock. If you aren’t confident making that decision just keep the current stock you have and watch it for a few months while you research a new stock.
• If you feel strong about the stock then allocate another $300 over 3 months. If you do this then now you have allocated 60% of your portfolio into this stock.
• If you have made profit so far don’t get too excited! But also well done. Gains and losses are not final until you sell.

Step Four

• Fourth, hopefully you allocated more to your first stock, you search for the next investment of yours!
• This time we will diversify slightly, and so you will pick a company in a separate sector. A sector is an area of the economy like banks or retail or real estate.
• With this second stock allocate $100 a month for 2 months. You now have a portfolio with 60% in primary stock 20% in secondary stock and 20% cash, liquidity.
• Liquidity is important to have as a new investor in case you need money to take out of the account, or want to invest in something you found right away.

Step Five

• The final step is to find a price you wish to sell the stock. This is up to you and how much you want to earn.
• Keep in mind average returns on the stock market are 8%. 8% of $600 is almost $50. Sell when your stock you paid $600 for is worth $650. This is more than an 8% return.
• A return is your money + a little extra.

TL:DR

• Find a big company, allocate 60% of your portfolio into it. Find big company #2 and allocate 20%. Allocate $100 on a monthly basis, ‘dollar cost averaging’.

Happy Investing!

submitted by /u/Noqt
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April 28, 2017 at 04:44AM

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from /u/Noqt

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