An Attempt to Recover Information...

Note: Starting this blog with research is akin to finding a needle in a haystack: where to begin? Using the NVCC libraries for academic papers is generally a good place to start, but it all depends on the context of the writing. In my case, I’m writing about investments here, so while the library does have good information, using a search engine like Google to hunt down active, legitimate investment sites is not a bad action either.

Beginning with Basic Research
One of the websites I've found is Investopedia, and I like it for its diversity: its name is a play off “encyclopedia,” as other sites like Wikipedia have done on the Internet. But don’t confuse it with anonymous tidbits of cultural trivia. It’s much more dynamic than an encyclopedia: Investopedia has tutorials and training links, “ask the expert” functions, financial articles from taxes and investing to retirement, stock quotes, calculators, and quite a bit more that I haven’t even qualified yet. I'm still reeling over how much there is for me to learn. I think it's good that I start with some definitions and then place myself as a “newbie” within those terms depending on my future actions.

So here are a few useful definitions: Stocks are actually part of “debt investments” (Orman, 2002), in which people like me give their money to corporations (buying a share) As defined by Suze Orman in The Courage to Be Rich, using the stock market is a must to build wealth: "invest in the market for growth and to use as your approach ... dollar cost averaging" (2002, p. 317, emphasis mine). So what is “dollar cost averaging” (DCA)? It is investing small amounts of money, say $25-50 per month, in the markets without starting off with a lump sum. Tim Middleton, in his article "The Costly Myth of Dollar-Cost Averaging" disagrees with this position, describing DCA as similar to what we do with our monthy contributions to a 401(k) but it is slightly different when working the markets. He provides samples of DCA and lump-sum investing in the same fund, with lump-sum approaches netting an 11.7% return and the DCA only 9.8%. That doesn't seem like too much of a difference, but with the right amount of money over the long term, this could be significant.

My goal is not a small one: I want to get confident enough to invest in the stock market. Hopefully this will happen within the next month and a half. Londo Carver, another blogger in our group, suggested that a $2,000 start is a good one for stock investment purposes. I'm going to see how this pans out. According to Chad Langager, an Investopedia advisor, investing with a sum as small as $1,000 is certainly possible, but it's pretty hard to build that base into something much bigger quickly. He falls between Orman and Middleton. Langager states that the intitial money investment isn’t even the only thing to worry about, because

One of the biggest considerations for investors with a minimal amount of funds is not only what to invest in but also how to go about investing. Not long into your investment journey you may find yourself bombarded with minimum deposit restrictions, commissions and the need for diversification, among a myriad of other
considerations. [Langager, 2007]

So, on top of managing my basic needs, like bills and creating a 3-6 month “emergency” cash stash, and now debate between having an initial fund for additional bonds investments. Orman might get us in the game earlier, but Carver, Langager, and Middleton suggest starting with a bit more to lose. The research continues...

References Cited
Langager, C. (2007). Start investing with only $1,000. Investopedia. Retrieved April 2, 2007, from http://www.investopedia.com/articles/basics/06/invest1000.asp

Middleton, T. (2007). The costly myth of dollar-cost averaging. MSN Money. Retrieved April 3, 2007, from http://moneycentral.msn.com/content/P104966.asp

Orman, S. (2002). The courage to be rich. New York: Riverhead Books.