How I Got Started In Investing (Part 2)

Fortunately, I met this young lady (wolf whistle) who would come to see me at work so I told her my plan. She encouraged me and that was the push I needed.


I opened up an account with an online brokerage firm with only $3k to get my feet wet. As I continued to read and educate myself I added another $4k. A cash account is very basic no margin I could not buy and sell often. After a sale the money takes 3 days to settle so I couldn't day trade, otherwise I would be freeriding. I believe this was good it allowed me to take a breather on every trade I made as I had no structure. I added another $3k in the following 3 months. That was a lot of money for me at the time, being young it was a tough decision.  I had always wanted a flat screen TV but I passed it up so I could invest.  


Eventually I opened a margin account although some recommend not to.  I made sure I understood the dangers of buying with borrowed money. I also learned to buy options contracts as a way to hedge from high risk investments such as pharmaceutical companies going through the clinical trial process.  Yes, I did take big losses but I managed to recover. It was like a very expensive class that ended up paying off.  I made plenty of mistakes, I am not perfect but you don't need to be to make money trading stocks. I was fortunate enough to have bought at a time when everyone was selling and scared to invest but that is another topic I will discuss on a later post.  Young adults should not evade stocks. Being young is a good thing, we have time in our favor. Older people can also benefit from the use of stocks especially those that pay dividends.

How I Got Started In Investing (Part 1)

When I was a teen I felt attracted to the stock market but I didn't have any money to invest and I had no clue about how to invest. Growing up in a humble home I had no access to anyone that could help me I tried to ask teachers but they did not know how and were of little help. This was years ago when stocks traded in fractions and back when online trading was not popular it wouldn't have mattered I did not own a computer.  Not having the right computer skills and guidance I wasted a lot of time reading the wrong books and going to see the wrong people. I did know that blue chip stocks were considered safe and at the time I looked up a few companies to get better acquainted.  I knew I should buy at least 100 shares.  Blue chip stocks were pricey and even 100 shares would cost me about $7K too expensive for me at the time.


While working at a computer lab during my sophomore year in college I met a young math professor who was an investor.  He had made a $30k profit investing in solar power but ended up turning it into a $40k loss. Yikes! He was the only person I had met that actually risked his own money and chose his own stocks through an online brokerage firm.  Finally the right information I needed but now I felt a bit skeptical to invest my money.  How much of it should I put into an account? I had worked so hard for my money and I had never invested in securities I didn't know what to do.

to be continued ...

How To Write A Budget

I think people have a hard time saving and investing due to the fact that they don't write down what they have and what they spend. If you write down what you will spend you are more likely to stick to what you write down. If you are sloppy with your finances you will end up losing money it's simple you have to learn to respect money. Before you right down your budget make sure you keep your money safe in a neat and tidy manner have a change jar and count it up at the end of the week; nothing must go to waste. Use your budget to reach a goal. The goal can be to buy a house, to be financially free, to get married or just to have extra cash so you can retire young if you like. This an example of a monthly budget for someone making $2500 after taxes:

Rent/Mortgage  - $1000
Food                    - $500
Clothes               - $200
Utilities                - $120
Entertainment   - $300
Car                       - $300
Misc                     - $100

Yes, writing a budget is good but if you are spending more or close to the amount of money you are making drastic changes need to be made. Don't ever use a credit card to buy more than what you can afford. If you don't fully understand how to use a credit card wisely then please consider not having one or only using it until you do some research on the dangers of using credit. If you have debt pay it off ASAP, there is no point of getting 1% interest on your savings if your debt comes with an 18% APR. Assuming your debt is paid off this is what your budget should look like:

Rent/Mortgage - $750 (rent should be about 30% of monthly income)
Food - $250 (don't eat out as much/pack healthy lunches)
Utilities - $100 (energy saving light bulbs and energy star products,unplug appliances not in use)
Entertainment - $0 (YouTube, Hulu, Library books/movies, museum)
Car - $300 (you should buy used,if you live in the city that should be the last thing you buy)
Misc - $50 (clothes should be bought as a need not as a way to feel good or splurge)
Savings - $1050 (this can be used for emergencies but mostly to be able to invest later on)

If you are not saving a good amount of money you must make changes quickly. Get another job if you have to and find other sources of income. A budget will help you keep track of expenses and make you more accountable. Saving and being strict about not spending in excess will make the difference whether you live a life free of unnecessary stress that comes with living paycheck to paycheck or whether you stay stuck in a job you don't like for life.