How I Started Buying My First Stock

by David@MoneyNing.com · 32 comments

invest online by yourself
One of the readers recently asked:

I see that you do quite a bit of trading via E*trade and I think it would be pretty cool to have a post about how you went about making your first stock purchase.

Naturally, I agreed to this because I would gladly share my experience with everyone. Let me know if you have any questions by posting a comment below.

As I think back, I’ve always been involved with the stock market unknowingly. As a kid, my parents bought me some mutual funds along with some CDs in an effort to help me understand money. At the time, I didn’t really know what money really was and meant but having the statements come every quarter was pretty exciting because the figure slowly became bigger.

Once I moved to the US a couple of years ago, I was living by myself which meant that I was on my own for many of the things that I took for granted while I was living with my parents. This included everything about money. I had the mutual funds and CDs, and I also have some cash saved up in an ING Direct online savings account.

By then, I’ve heard about online brokerages and stock trading but I was nervous about doing it by myself. However, I realized that most of the mutual funds are really about paying someone else to do what you can do yourself. It also didn’t help reading about the fact that most mutual funds perform worst than the S&P 500. I was thinking to myself “if they could do it, I could”.

With that in mind, I started frequenting financial websites like The Motley Fool and Yahoo Finance and within days, I signed up at ETrade through one of the advertising links there. I didn’t do any research on different brokerages because I told myself that I can always switch if I didn’t like it. Although I believe I was lucky and found that ETrade is one of the best brokerages, I do not recommend signing up for a brokerage account without doing any research. One thing I did though was that I transferred a small portion of my money into the account to limit the chances of me losing lots of money.

I am pretty familiar with how websites work, so signing up was a breeze and I familiarized myself with the account like a little kid with a new toy. I explored so many pages within the website and I was fascinated by all the performance metrics about the account. I didn’t know what most of the terms meant but that was fun because I was determined to learn.

Of course, I was impatient as always so without any research and based only on my personal experience with buying the company’s products, I bought my first stock. 70 shares of Intel (INTC) at $19.81 on March 27, 2006.

Fast forward to today. My brokerage account has become much bigger (as a matter of fact, my brokerage account has more money in it now than my net worth in 2006), my investment knowledge has grown tremendously and I’ve also found something to do that I really enjoy.

If you are thinking about trading stocks for the first time, I urge you to open an account in any of the well known brokerages. Start exploring the brokerage website and also the sites I listed earlier. Learn about how companies make and lose money. Get a feel about why prices go up and down based on supply and demand of that particular stock. DO NOT follow what I did and just blindly buy a stock thinking you would make money because you won’t. I was lucky because I started when the market was generally good but times are different right now.

Have the enthusiasm to start right away, but do enough research and make sure you understand why you are buying a particular stock before you put your money on the line. At the beginning, you will probably lose some money but understand why you lost money and try to adjust. Do that enough times and it could be a very profitable road for you in the future.

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Paying Credit Card Interest Is Like Throwing Cash Into the Fire

by Guest Contributor · 8 comments

This is a guest post from Tisha Kulak, a writer who writes about credit card offers, personal finances and credit card matters.

Credit card interest can be a financial killer if you are not handling your credit cards correctly. If you are only paying the minimum amount of money on your cards each month, you are setting yourself up for a large financial downfall. Imagine you carry a balance of $5,000 in credit card debt with an average interest rate of 16%, it would take you at least 12 years to pay off the balance. The balance would increase about $2,500 with interest fees, leaving you with a total bill of $7,500.

$2,500 could afford you many other things in life. That amount of money would pay for home repairs, a nice vacation, or an excellent deposit into a savings or retirement account. Paying that amount of money as an interest payment on credit cards is like using your cash for firewood.

There are steps you can take to help getting your credit card debt under control. Here are a few tips to keep you paying down your balances and not wasting your hard-earned money.

Stop Making New Purchases
You can never expect to pay down a balance if you keep adding new things to it. Use credit cards only for emergency purposes.

Get a Handle on What You Owe
Debt can be overwhelming and embarrassing; however, you will never be able to recover from debt without knowing how much you owe. Sit down with all of your bills and tally up your debt. Get a real picture of where you stand financially, no matter how bad the situation is.

Pay Card with the Highest Interest First
The cards you have with the highest interest rates will cost you the most over time. Start making your budget to include more than the minimum payment each month of the cards with the highest interest.

Keep Away from Penalties and Fees
Getting momentum to pay down your balances on high interest cards can be ruined if you are late. Being late or going over the limit on your card can cause your interest rate to skyrocket and therefore will thwart your plans for paying off your balance.

Consider a Transfer
If you have a low or 0% balance transfer credit card that can handle a balance transfer, it may save you a lot of money by transferring the high-interest balance to a card with a low or no interest.

Once you begin to realize the effect your effort makes on your debt, it will become easier to see the light at the end of the financial tunnel. Planning your family budget will be more realistic and you can anticipate a time period when your balance will be paid off. Once you have paid a balance in full, continue to use the amount you’ve been paying and pay towards the new balances of the other cards. If you do not have any other cards to pay off, take the payment amount you’ve been used to paying and stash the cash away in a savings account or other investment that is right for you.

Running Out of Ideas to Splurge

by David@MoneyNing.com · 12 comments

Lately, I have a hard time figuring out what to spend money on. It’s a strange feeling because my urge to buy something hasn’t gone away yet I can’t think of something to buy when I want to. I know I end up being able to keep my money in my bank account which is great but the urge to buy something is stronger each time that I’m afraid I will end up buying a huge ticket item one day.

I should correct myself. It’s not that I can’t think of something to buy. It’s just that the things I want to buy (LCD TV, car, house) cost so much that it’s outside my splurge comfort zone. I’m really afraid that one day the urge to spend money will be so great that I will just go out and get a new car.

Part of the reason that I’m feeling this way is because I have some money to splurge. Perhaps the stock market isn’t doing the greatest for many, but it’s been decent for me so far this year. The large influx of money every month through all my income streams have also contributed to my want (need) to splurge. To quote a famous movie, “with power comes responsibility”.

I’m beginning to appreciate the advantages of forced savings when someone buys a house. Even if it doesn’t make sense mathematically, the fact that home owners end up needing to be more frugal because they have a higher fixed expense (the mortgage payment) will force them to save more money.

In light of this new discovery, I should create a fixed expense for myself. Something I need to contribute to every month that I can put money in and forget about. 401k and Roth IRAs quickly come to mind but I’m already maxed out on those types of investments. A house is a good one as mentioned earlier but it might not be a good idea since I still feel that the housing market has ways to go before it will bottom, especially in Southern California where I live. Maybe I should look into commercial real estate, or perhaps investing in startups. I don’t know much about these two things, so I’m not sure if I can invest a small amount every month to a startup or something but that’s a place to start.

When I don’t feel rich, I should feel less of an urge to spend money.

Conserving as Much Energy as Possible to Save Money

by David@MoneyNing.com · 6 comments

conserve more energy

Today was really hot, which reminds me that summer is almost here. Over here in Southern California where we don’t really have heating bills, summer always means a much higher electric bill because of air conditioning. Although I always try to tough it out by not turning the A/C unit on, I think I will do it more often this year because I don’t want my wife to suffer with me.

So while I figure out how to save more energy and thus more money, here are some tips to get started.

Open The Window
This is a no brainer but I’m always amazed at how few people do this. In cooler mornings, open the windows and maybe even the door. Make sure that there’s a way for wind to come in the house one way and out the other for a good breeze. Once the house cools down in the morning, it will spend much less energy cooling it down in the afternoon even if we have to turn on the air conditioner.

Keep Yourself Cool
We don’t need any outside help if we feel cool already. To do so, we first should stay hydrated so store a bunch of cold water in the fridge. Popsicles are also an inexpensive way to stay cool and hydrated. For meals, eat more fruits and vegetables.

Turn Off Unused Electronics
Those appliances like TVs, DVD players, and Nintendo Wii consoles that stay plugged in are drawing power even if they aren’t turned on. One easy way to turn everything on and off is to plug all these devices into a power strip and just turn off the power strip when it isn’t used while we go to work. The only thing that will be gone is the clock that’s on our cable box but we won’t need it since we will be at work anyway.

Keep the Heat Out of the House
Cooking and using the microwave can really increase heat in our house. As a matter of fact, I always feel hot after I cook or use the laundry. During the summer, try to only do laundry or use the dishwasher during night time or early morning when it is cool. A night outside with the barbecue is also a great idea because it keeps the heat outside. Also try not to open the fridge door often. The more it is opened, the easier it is for heat to raise the temperature, causing the fridge to use energy to cool it back down.

Go Out and Have Fun
Lastly, summer is about going outdoors. There are plenty to do outside and I encourage everyone to go out and enjoy the sun. One of the nice activities in the summer is swimming. Not only are you getting a great exercise, you are also having fun and staying cool.

With these tips, hopefully we can all conserve some energy and save some money this summer. Do you have more ways to conserve energy for the rest of us? Share with us.

Making Money from Different Sales Tax

by David@MoneyNing.com · 5 comments

Speaking about different sales tax, I also remember an interesting experience I had one time when I bought something from Macys’ (department store) from another state and returned the product in Orange County that I want to share.

I don’t quite remember what it was that I bought, but when I returned the product to Macys’, the cashier actually gave me more money than I’ve bought it for. I remember asking why there was a discrepancy and the manager came over to explain that they had to return the product in their own state’s tax laws. Since I bought the merchandise at a lower sales tax state, I was making money off this purchase as I paid a lower sales tax originally and got more money back on the return.

So if every store does this, I can theoretically make money because I can always buy something from a lower sales tax state and return it when I’m back in Southern California. I could call this side business and the only problem I would need to figure out was how I was going to report the income to the IRS. J

Now, I have a bit of a moral issue with doing this of course, because I feel like it’s a little bit like cheating. This is obviously a loophole in the system that I would be exploiting, and I’m sure that it was never addressed because there aren’t that many people that will do something like this. On the other hand however, how is this different than buying a product at a lower price and selling it on Ebay?

At the end of the day, I don’t think I’m going to be doing this (I would already be doing this for the past few years if I thought it was morally right and probably be rich by now) but what does everyone think? Now that you’ve heard about this borderline scam type of business idea, would you pursue it? What if someone you know is doing this? What do you think of that person?

Taking Advantage of Different State’s Sales Tax

by David@MoneyNing.com · 9 comments

While I was traveling in Raleigh, North Carolina, I bought a wireless mouse at the Apple Store to work with my Macbook Pro. It wasn’t until I heard the cashier tell me the total did I realized the sales tax was different than where I live (Southern California). I checked the receipt, and there in big letters were Tax@6.75%: $4.66.

I used to live in the border of Orange County and Los Angeles County, where the sales tax was 7.75% and 8.25% respectively. I remember thinking about our geographic location before we purchased anything because it was possible that we can pay less if we went to another location close by.

Now you might be thinking that 7.75% and 6.75% is only a difference of 1%, but if I bought my Macbook Pro in North Carolina, I could’ve saved myself $20. Sure it still wasn’t much but I would be saving much money if I consistently buy in a low sales tax state.

I’m not sure why different states are allowed to dictate different sales tax, but I remember the simple times when I was in Hong Kong and there wasn’t any sales tax added on top of the merchandise price. In Hong Kong, the sales tax is included in other taxes for the merchants which make much more sense to me. When we go shopping and it was advertised for $100, we paid $100 and not $106.75 at checkout.

Of course, I shouldn’t complain too much because when I was in Toronto (Canada), the sales tax was 15% (it has gone down to 14% now I heard). Why the government needs 14-15% to keep themselves from losing money managing everything is beyond me but I certainly never had the choice of not paying.

No matter where we are, there will probably be a place that will charge less sales tax than the most convenient location. Would you go out of your way just to save that extra 1%? If you were me, would you wait to buy all the larger purchases until I was on a business trip? What do you think?

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