Rated Sahara
medium to long term investing?
what i want to do is sink some money into an investment that will grow significantly in a large period of time. i have read all of these articles talking about if you invest 2,000 dollars in an account by the time your 60 you can collect 1,000,000 dollars. the problem is these articles were written before the economy went on a vacation. now i cant find ANY accounts that will deliver an interest rate of same or similar proportions. if possible i would like a safe secure way to invest some money so when i get to be around 30-40 i could get a good sized withdrawal and then around 70-80 get a large enough sum to retire on comfortably. i realize that what I'm asking for in this economy is like asking for water in the Sahara but any tips as to what i could do shortly down the road would help to.oh by the way I'm 18 for reference.
I do not like long term investing the way most suggest. I make a great profit with short term trading because I have educated myself and I follow a strict set of rules. If you plan to invest in the long term, then at least follow the strategies of those who have been very successful doing it, like Warren Buffet.
First, you must educate yourself on investing. http://www.stockprep.com is a great place for beginners to learn the basics. After you have a good foundation, http://www.investopedia.com is a great place to learn more advanced information. Before you invest any real money, be sure to practice what you've learned paper trading in a free stock market game. After you have properly educated yourself and have months of experience paper trading, then you will be ready to invest the money that you can afford to lose.
The best long term investing strategy is not just buy and hold like you might have heard. It is to buy, and protect your investment with Collars. This strategy requires you to have a big enough starting investment to buy at least 100 shares of stock. Choose a company that you are confident has the potential to grow, or at the very least still exist in the future. Their stock must be optionable.
How a Collar works:
Buy the stock in increments of 100 shares. Buy the at the money put option(s) to "insure" the amount of stock you own(100 shares per option contract). Now sell call option(s) that covers the amount of shares you own. Choose the call option strike at a price you are willing to sell the stock at, and at a price that the premium you receive will greatly reduce the cost of the put option(s) you had to buy.
If the stock moves up, beyond your call strike, then you will have made a profit on the stock but would have sold the shares at the strike price when the call option(s) expired. So you reinvest your money and profit again with a collar if you still like that stock.
If the stock drops, then you exercise your put options to sell the stock at the same price you bought it, and reinvest your money into the stock if you still like it. This time you'll be able to buy more shares of it because it costs less, but you will not have lost much if any of your original investment due to the drop.
This can be complicated to a new investor. So, as I mentioned earlier, educate yourself first and gain experience before risking real money.
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