Wednesday, October 15, 2014

Women and Investing (Part Two): five simple steps to get started *Plus* five great companies under $100

...felt this quote would be perfect for the purpose of this post:


One of the very first posts on the blog emphasized the fact that stock market investing is not rocket science. This is something I have tried to explain to ‘skeptical’ people time and time again. In this blog post I’ll try to narrow down the instructions on how to get started and offer a list of 5 individual starter stocks which you can purchase for well under $100. I want to make it known that you aren’t going to become a millionaire from investing in one single stock. The point is to get.you.started. I truly believe that taking that first step can significantly lesser (or eliminate) the fear many of my fellow ladies (or people in general) have in starting to participate in the stock market. So, without further ado, here are the steps. Straight to the point:

1. Open a brokerage account. I recommend Tradeking simply because they are the best deal I currently know of + I have experience using them. At $4.95 per trade you can buy or sell any number of shares of individual stocks for a particular company.
I have mentioned in the blog that I also have an account open with TDAmeritrade but it charges me $9.99 per trade and to be quite honest, there is no much difference between the accounts (at least not in terms of the features that I use). I simply want my money to be safe and to be able to buy and sell stocks whenever I want without incurring unreasonable trading fees. Tradeking does that seamlessly. There are several other brokerages out there, even cheaper than $4.95! but do your research and make sure is a legit company and that they are protected by an entity such as the Securities Investor Protection Corporation (SIPC).

Note: I do not get any kind of commission/payment/compensation from any brokerage firm (zero, zilch, nada). I am simply sharing my personal experiences and like to recommend companies I have used myself.

2. Confirm your identity with the brokerage account. In the case of Tradeking, they may ask you to fax them a void check with a picture ID. I am sure most of the brokerage accounts have a similar process . You know- to make sure you are not laundering money or pursuing any illegal actions of the sort.  

3. Link your checking account with your brokerage account and transfer money. Soon after you complete your application you will get a notification/email on how to complete this process. They offer several options from sending in a personal check to simply linking your bank accounts. However you decide to do it-  I recommend transferring $100 to start off. That’s more than enough to get started. Again, the point of this is to get.you.started.

4. Wait the three or so days clearing period that it takes for your money to be available for investing.

5. Once you have the green light from the brokerage account is time to start investing!

Great companies under $100 you can invest in:

The prices posted below are as of end of today 10/15/14 (remember that stocks go up and down on a daily basis. I have embedded the link to the Yahoo! Finance page for each company below. You can click on the company name for the most recent prices.):

1. Starbucks $72.12 // Yearly dividends: $1.04 per share

2. Coca Cola $43.20 // Yearly dividends: $1.22 per share

3. Master Card $70.36 // Yearly dividends: $0.44 per share

4. Colgate $63.33 // Yearly dividends: $1.44 per share

5. Procter & Gamble $82.49 // yearly dividends: $2.57 per share

*BONUS POINTS: After you've bought your share of said company; you can contact the brokerage company directly and ask them to involve you in "DRIPS". Drips stands for dividend reinvestment program. Each of the above noted companies pays dividends on a quarterly basis. Hence, what will happen is that each time the company pays you a dividend; the brokerage account will automatically reinvest that money back in to the company, buying you a percentage of an additional share. I like to think of this as a "little money machine". The more shares you have, the more dividends you'll get every quarter. I would highly recommend doing this in the meantime until you get more confident in investing and are willing to buy additional full shares. With the drips program you don't need to add any additional monies. This is no "get rich quick scheme". Again, I just want you to get.started. Cant emphasize that enough.

I've shared this great article about DRIPS in the past but plan to write a quick and practical read providing general information on the subject. Stay tuned for that.

Note: If you want further clarification or details on the above noted steps or would like for me to sit with you, meet with you, talk to you over the phone, etc. in order to walk you through the process; do not hesitate to contact me. You can email me at teachmetoinvest@gmail.com.
Thanks for reading and as always, cheers to profits!
Mabel

Edited to add: I currently own shares in all of the above: SBUX, KO, MA, CL, PG

Edited to add: Coca Cola just recently announced earnings on 10/21. {after I wrote this post}. You can read my earnings commentary here where I mentioned that, although I still feel coca cola is still an amazing starter stock, I will be sharing a new post with an "alternative" for individuals whom may be looking for a company with stronger growth prospects.

*please do not invest or cease to invest based on the information noted above. The named companies are simply suggestions based on my own experience and research. Please conduct your own personal research and assessment of the noted companies prior to investing.