Some free advice on free stock advice
A: Really, I don't. I'm not a "stock picker" -- I'm an "asset allocator" and a "dollar-cost-averager" -- so these sites don't even tempt me! I've known so many traders from the floors in Chicago, for so many years, and don't know a stock picker who has beat the market consistently over the years. It's just not my style.
And have you ever thought if they were so smart at picking stocks, why would they sell newsletters or even post them for free on a Web site? Maybe the "free posts" are just an incentive for you to buy, so their positions will gain value!
Q: I have followed you from the 700 Club with Pat Robertson. I am 40 years old and have a 401(k) plan at work. I also have about $1,000 I want to invest in stocks. Now that the stock market is down, would you give me some advice on what I might want to buy?
I have heard about drip investing. Should I do that? Invest in blue chip stocks in drips? Or are there other options, such as investing in small cap stocks of new companies that might be up-and-coming? I know there is more risk in that.
Could give me some guidance? I am totally new to this.
A: I'd have to know more about your financial situation to give you any good advice. But for sure, you need some "chicken money" in savings before you start an additional investing program outside your 40l(k). And I presume you've diversified your 40l(k) and have plenty of diversified exposure to the stock market, since you're only in your 40s. And that you're contributing the max possible to your retirement plan each year.
If you've done all that, I'd suggest you go to http://www.usfunds.com/. You can invest half in the All-American fund, reserve half in savings or money market account at your bank, and then ask them to take $50/month out of your savings account every month to add to your investment in the All-American Fund. You'll read about the fund -- it's call the All American Blue Chip fund because it invests in large companies. Spreading out your investments, means you'll never buy at the top!
This is a good way to get going. And if you quality for an IRA, especially for a Roth IRA (with less than $100,000 of income if single) then that would be a great type of account to put this investment into. Call them at 800-US-FUNDS and they'll help you set it up, or you can do it online.
Terry Savage is a registered investment advisor and the author of the newly published The Savage Number: How Much Money Do You Need To Retire? (256 pages, Wiley, $24.95).