Stock market investing can greatly enhance the performance of the average self directed IRA / 401K, and embarrassingly outperform the traditional 401K industry. But what does it take to make investing in stocks for beginners as safe as possible?
Let’s not be naïve here, the traditional 401K retirement industry has failed miserably, not only your retirement savings stop growing when the stock market stays flat (Which is the case for up to 80% of the time) but you also stand to lose a part of your hard earned savings if it goes down!
In fact, your final retirement payout depends on the performance of the stock market the very year you choose to retire!
Now how stupid is that… recent under-performance in the US stock markets has caused 1000’s of Americans to lose as much as 40% of their retirement savings, and now they have to work more years to make up for the shortfall and postpone retirement or take the reduced retirement and work part time elsewhere to make ends meet.
If you are entering the job market now you should seriously consider investing in stocks for beginners, and how that can be used to run a self directed 401K or IRA that will slowly grow in size 90% of the time, not shrink 80% of the time!
Learning investing in stocks for beginners will show you how to grow your 401K while the long stocks you hold in it stay flat for years:
Considering the above case, the traditional 401K complacent fat cat managers would have lost your savings throughout this market period, the stock in point is a stock that has excellent long term value of around $28, but as you can see if you get in at the wrong time, it will cost you dearly.
So what does investing in stocks for beginners tell you to do instead? It tells you to run a self directed 401K / IRA, where you make the decisions as to what to invest in, and how to invest in it. In this case investing in stocks for beginners, as well as any savvy employee who wants to retire early, would tell you to buy the above stock as part of a long term retirement strategy, but also at the same time write out Covered Calls on it, thereby generating a profit month in and month out.
The Covered Call Has You Covered!
The Covered Call will result in a huge profit if the stock goes down during that month, and if the stock shoots sharply higher the profit on the long stock exceeds the maximum loss made on the short Call Options. As much as 80% of the time, that is 8 months out of 10 months in the stock market, stocks trade flat or down and the traditional 401K accounts completely miss the opportunity to grow in size.
This is what investing in stocks for beginners is all about, going down a different route that will ensure their hard earned money is managed and supervised by themselves and no so called experts, these ‘experts’ in business suits have failed the 401K industry miserably over the last 30 or so years, their stupidity is being reflected in the 401K account shrinkage and their ignorance is confirmed in their talking manner, they put it like this; “It’s okay to lose 40% of your retirement savings, there are people who lost 100% in the stock market…’’
I think that is ridiculous, how can someone else’s bigger losses make you feel comfortable about your smaller losses? This is like saying “I invested in a stock, I lost 95% of my money, but hey.. I still outperformed those who invested in Enron stock and lost 100%’’.
Stock Market Investing Tips and Market Speculation by..
Scott Smith – Investing In The Stock Market © 2008 – 2010
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I have a web site where I research stocks under five dollars. I would like to comment about investing in stocks for beginners. I would recommend that investors that are new to this spend some tme learning about stocks. and other financial instruments before getting involved with them. the more knowledge you have about a subject the better.
Investing in a good stock market education is key to a beginner’s success in the markets. Covered call writing is generally considered a conservative income generation strategy because the potential loss is limited. The option premium received from the call reduces the cost of owning stocks thus decreasing the risk of stock ownership.