How to Start Investing in Stocks

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When beginning to invest in stocks, remember to stick with familiar companies or products, and think about the tax consequences of what is being done. Learn not to be afraid to cut and run when investing in stocks with help from a portfolio manager in this free video on money management and personal finances.

Part of the Video Series: Investing & Money Management
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Video Transcript

Are you a newbie investor about to begin buying stocks or bonds? Hi this is Roger Groh at Groh Asset Management. There's a lot to think about here, but a few golden rules. One, stick with what you know. Buy companies that make products that you use or products that you understand and that way you can relate to the management team and really understand what they're telling you that what they're plans are in the years going forward. Number two, think about the income tax consequences of what you're doing meaning if you trade all the time, you may run up large gains but end up paying significants amount of tax at the end of the year. Third, cut and run, don't hesitate if things are going wrong or bad or if the company fails to do what they said that they were going to do, cut and run. Those are three golden rules. There's one bigger one though that I would go to first. Read. Go back and read the annual reports from a company called Berkshire Hathaway. Just read the first few pages where the chairman Warren Buffet talks about how their company is going about their business and I mean read about them every quarter for the last 10 years. He is the master and that's a short, easy way at how a master who has done it over a lot of years. Want more data? How about going back to Graham and Dodd, the textbooks from Colombia. You can get them at your local library, they'll give you an idea of how pros will size up a company in relation to one another and determine whether or not there's value there. Hope all that helps, Roger Groh here, thank you very much for spending time with me.


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