Can investing be safe? Yes, but not free of all risk. Gear up and protect yourself from these risks with the help of Investment Strategies for Life. With his strong desire to help individuals become successful in investing in the stock market, Simmons wea

Investment Strategies for Life

By Walter E. Simmons III

Trafford Publishing

Copyright © 2012 Walter E. Simmons III
All right reserved.
ISBN: 978-1-4669-4773-3

Contents

Chapter 1 Your Foundation for Wealth...................................1Chapter 2 Your Nucleus of Your Portfolio...............................13Chapter 3 Holding Certain Stocks with Dividends........................25Chapter 4 International Stocks.........................................39Chapter 5 New School vs. Old School....................................47Chapter 6 Speculation..................................................55Chapter 7 Don't Invest Your Rent or Mortgage Money.....................57Chapter 8 Dogs of the Dow..............................................61Chapter 9 Stocks Under $12.............................................65Chapter 10 Manage Your Own Money.......................................67Chapter 11 Initial Public Offerings (IPOs).............................71Chapter 12 Timing and Analyzing the Market.............................77Chapter 13 Knowing What You Own (Sin Stocks)...........................79Chapter 14 Giving Back.................................................83Chapter 15 Reflections.................................................85Chapter 16 Conclusion..................................................87

Chapter One

Your Foundation for Wealth (Why is Investing Important?)

What's Important to You?

Everyone wants to be rich or well off. Whether you are born with it or you are struggling to get there. If you are born in America or another country that has free trade and enterprise, you have all the opportunity in the world to be successful and to get you a piece of the American pie, especially if you are investing.

It is important to invest for many reasons. The first reason is to invest for safety and financial security for you and your family. Providing for your family is one of the most important jobs that you will have during your lifetime. Invest to help yourself and your family. Another reason to invest is to have an income when you decide to retire. When you retire, you want to keep the same lifestyle you had when you were working. And some people tend to travel and vacation more in retirement, so make sure you build a good retirement nest egg. Invest for your children's college education. Your child deserves a college education, so while you are maximizing your retirement, put something aside for those little ones running around your legs. The next reason is so you can pass down wealth to your children and your children's children. Teaching your children about wealth and then putting that wealth in their hands is a very powerful act and will be a game changer for them and their children. My final reason, but this should not be your final one, is investing is important to you. That is right, you! You should invest for yourself. I always wanted a BMW, a luxury car that is quite expensive. One way to purchase it free and clear is to invest your money and let it grow. Or that dream house you always wanted, invest and pay cash with a down payment of 20 percent, half the value of the house or even the whole price of the house.

I had my first job, and I couldn't save a dime! Every month, I would go through my whole two paychecks. I paid my rent, food, car note, car insurance, hanging out, cable phone, cell phone, and parties. Until one day, I decided to invest fifty dollars a month in McDonald's (MCD), and after a small number of months, I put another fifty dollars in Duke Energy (DUK). Before you know it, you'll have a few thousands put away. This is something anybody can do, put away a few dollars a month and put youself on the path to wealth.

Does your family live paycheck to paycheck? Are you one paycheck from poverty? If you lost your job, would you be homeless in less than three months? Investing your money can change this. And if you truly care for your family, this step will give you the baseline to achieve security. By investing as little as fifty dollars a month through a brokerage firm or discount brokerage firm, you can change your life. Fifty dollars a month may seem like a lot, but check how much you paid for your cable last month and get back to me about not having any extra money. I started off building my future with fifty dollars a month with an oil company ExxonMobil (XOM). I started a few months after getting my first job in 2002. I invested in a direct purchase plan company called Computershare. I consistently put fifty dollars a month into this account and, sometimes, as much as a thousand dollars a month when I had a high tax return or a promotion at work. By doing this consistently, I amassed a large sum of money close to seventeen thousand dollars by 2005. You can do the exact the same thing through Computershare, with ExxonMobil (XOM), or some other stock company they offer. You can use this money to put a down payment of a house or buy a car.

During these times in 2012 when economic downturns are imminent, investing can be your key to your future. Our economic periods in the United States are cyclic in nature. Consistently investing over time can act as insulation to your investing future. We are going through a difficult time now; prepare yourself.

I beg you in these difficult times to invest. While the overall market and country is down with high unemployment, stocks like General Electric (GE), which have been beaten down during this downturn, are ripe for the picking, and must be bought especially if they pay a dividend. Blue chips that were vulnerable should be bought if the fundamentals are sound and ought to be held long term.

No financial institution wants you to read this book. The American dream is supposed to be dead. You are supposed to be in credit card debt and upside down on your house and car note. You are supposed to work several different jobs in a lifetime; you're not as privileged as your father or grandfather to get a pension from working the same job for thirty-six years. You are supposed to spend uncontrollably and leverage yourself to your eyeballs.

You will not get a pension, so you better learn to invest. If you're working now, you are likely to have a 401K that is matched in some form or fashion. With a 401K, your retirement is what you make it. What you put in is what you get out. It is all up to you now.

What Is a Stock?

Stock = Ownership

Stock is a fraction of the ownership of a usually publicly traded company. If you own stock, you are called a shareholder. Ownership is the cornerstone of life. If you own stock, you own a piece of a company. The more stock you purchase, the more equity you build up in the company of your choice.

Stock, which can be represented by a stock certificate, entitles you to a portion of the profits and assets, or both, of the institution on paper, and this paper gives you ownership of profits and voting privileges on matters concerning the company. These profits are usually paid out in the form of dividends.

Stock certificates can be requested from your brokerage accounts. The certificate is mainly just a physical representation of the company and the number of shares you own. I recommend that you do not keep high-valued stock certificates in your home. Would you leave a large sum of money in your home?

An Old Investing Rule!

In investing there is an old rule for the percentage of stock you should own in your portfolio: the number 110 minus your age is the amount that you should own in stocks. A quick example of this is a twenty-eight-year-old wanting to know...