Investing Advice - Selected Resources For Investing Advice

by Charles M O'Melia

You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way. Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where the article was published. (Word Count 804).

Investing in the Stock Market – 9 Power Packed Tips!

1. Do not spread your money too thin.
My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual funds is 27 too many collecting load fees, management fees, commission fees, operating and advertising fees. Diversity is important, but just as important is over-diversification. Also, in my opinion, $200,000 should not be put into more than 12 stocks, let alone 27 different Mutual funds.

2. Do not pay commission fees to purchase a stock.
If you are going to invest your hard earned dollars into a company, the least the company could do is provide you a way to invest in their company commission free – and they do!

3. Only purchase those companies that pay a dividend.
The same company that you invest in commission free should also offer you another incentive for you to invest – a dividend for the use of your money.

4. Only purchase those companies that have a history of raising their dividend every year.

The same company should continue rewarding you for your faith in their company by increasing the amount of their dividend every year. Rising dividends are also the proof that the company is doing something right.

5. Dollar-cost average into each stock position.

By dollar-cost averaging (buying the same stock at different prices through the years) you’ll never pay too much for the company’s stock, even if the initial purchase is at a 52 week high. Have all the dividends from each company rolled back into more shares of each company, until retirement. The companies you invest in should do this for you, automatically, commission free.

6. Forget making a profit; instead focus on the income provided from your stock portfolio.

That’s right! Forget making a profit. The burden is now lifted - no more pressure on tryingto make a buck in the stock market. (Instead of trying to bend the spoon, that is impossible, instead just think of the spoonas – omigosh! - I’m in the Matrix!) When you focus on the amount of money your holdings are providing in dividends – and when those companies selected have a history of raising their dividendseach year – a lower stock price allows the dividends that are being rolled back into the stock to accelerate your income. The total value of your portfolio may go lower, but your income from that lower priced portfolio would increase dramatically. Profit by income!

7. Make every stock purchase with the intent that the purchase will be a long-term investment.

Do not trade in and out of your holdings. There have been many up and downs in the stock market. The down markets only accelerate your income. GE has raised their dividend for 28 years in a row. Why sell it? 100 shares of GE ten years ago has turned into 1200 shares today due to stock splits, and that is not counting how many shares you would have now if the dividends were being rolled back into more shares of the stock through those years.

8. Understand that a lower stock price, after your initial purchase may be a blessing in disguise.

The income from your stock holdings should grow every quarter, no matter what the total amount of your stock portfolio is worth. (If your Mutual fund declines in price from one year to the next and if your income is not increasing (accelerating) from that fund, why are you in that fund?) A company pays their dividend not on how much their stock is worth in the market place. For example, a company pays a quarterly dividend of 50 cents a share. A company has little control on how much its stock price is worth in the market place on any given day. You will receive 50 cents a share per quarter whether the stock price is at 50 dollars a share, or drops to $40 a share or goes up to $70. While the stock is down at $40 a share your dividend reinvestment is loading up on more shares.

9. Develop a savings plan to add to your holdings each quarter to help your dividend reinvestments to accumulate more shares on a dollar-cost averaging basis.

The savings could be as little as $5.00 a week. Why put that savings in a savings account at 1.2 percent, when there are so many companies out there that are paying a 4 to 5% dividend yield and increasing their dividend every year? And since none of the companies you are investing in charge a commission, all of that $60.00 a quarter you saved and invested would help your dividend reinvestments to dollar- cost average into your holdings. Every cent you save and invest would work toward your ROI (Return on Investment).

To read the PREFACE from the book ‘The Stockopoly Plan’ please visit http://www.thestockopolyplan.com

Charles M. O’Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book The Stockopoly Plan – Investing for Retirement; published by American-Book Publishing. To invest in a copy of the book:
http://www.pdbookstore.com/comfiles/pages/CharlesMOMelia.shtml

Copyright Charles M O'Melia - http://www.thestockopolyplan.com

Yahoo! Finance: Most Popular
The most popular stories on Yahoo! Finance

Nokia, Qualcomm settle long-running dispute (AP)
Nokia Corp. and Qualcomm Inc. said Wednesday they agreed to settle a high-stakes licensing dispute and end a bitter legal battle that has lasted nearly three years and spanned three continents.
Qualcomm, Nokia deal ends long legal battle (Reuters)
Qualcomm Inc and Nokia settled a three-year, three-continent legal battle on Wednesday when Nokia agreed to make an upfront payment and ongoing royalties to the U.S. technology company.
Microsoft exec who led Yahoo bid leaving company (Reuters)
Microsoft Corp said on Wednesday that Kevin Johnson, who as president of Microsoft's largest business division spearheaded the company's pursuit of Yahoo Inc , is leaving the software maker.
Qualcomm Announces Third Quarter Fiscal 2008 Results (PR Newswire)
Qualcomm Incorporated today announced results for the third fiscal quarter of 2008 ended June 29, 2008.
Petro-Canada Increases Quarterly Dividend By 54% (Marketwire)
Petro-Canada today declared a quarterly dividend of $0.20 per share on the Company's outstanding common shares - a 54% increase compared with the $0.13 per share dividend declared in April 2008.
Microsoft exec who led Yahoo buyout team to leave (AP)
Microsoft Corp. on Wednesday said Kevin Johnson, the executive in charge of its Windows and Web operations and an instrumental player in the company's failed $47.5 billion bid to buy Yahoo Inc., is leaving the company.
Amazon profit, sales above view and shares rise (Reuters)
Amazon.com Inc said on Wednesday quarterly profit doubled and sales grew 41 percent, indicating to Wall Street that many cost-conscious shoppers are heading online to save money in a tough economy.
Fording Canadian Coal Trust 2008 Second Quarter Earnings Results (Marketwire)
Fording Canadian Coal Trust today announced its second quarter 2008 results. Cash available for distribution generated in the quarter was $420 million compared with $135 million in the same period of 2007.
XTO Energy shares fall as oil slides (AP)
Shares of XTO Energy Inc., which acquires and develops oil and natural gas properties in the U.S., fell in Wednesday midday trading, a day after the company reported a 30 percent profit increase, but also said it will boost capital spending and issue 26 million shares to finance acquisitions and repay debt.
WaMu shares fall on 2Q loss, S&P downgrade (AP)
Shares of Washington Mutual Inc. stumbled Wednesday after the bank reported a staggering $3 billion loss in the second quarter as it increased its loss reserves to more than $8 billion to cover souring mortgage loans.
San Diego sues Bank of America to halt foreclosures (Reuters)
San Diego's city attorney said on Wednesday he filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a "foreclosure sanctuary."
Defense firms split $6.9B parts deal (AP)
The Air Force has awarded a $6.9 billion contract for spare parts to a variety of contractors for all of the service's managed weapons systems.
Toyota outsells GM worldwide in first half (AP)
General Motors Corp., pummeled by falling U.S. sales and high gas prices, lost the global sales lead to Toyota Motor Corp. in the first half of this year, but the churning market makes it difficult to predict which automaker will end the year on top.
Costco, AT&T, McDonald's, WaMu, Fannie big movers (AP)
Stocks that moved substantially or traded heavily Wednesday on the New York Stock Exchange and Nasdaq Stock Market: NYSE
Danoff Sees Sell-Off As Opportunity (Investor's Business Daily)
Will Danoff needs no reminder that this is a tough market.