Stock investment for greenhorns
May 25, 2014 10:06 AM Subscribe
My mom wants to invest $5K (which she could afford to lose) in possibly high-return, but also possibly high-risk, sectors of the stock market. She's asked me to do the research and manage the investment. I'm interested, but I don't know much about investing in stocks, so I want to proceed cautiously. How do I educate myself about this field? What are some specific sectors to research? What red flags should I be looking for? What about the practicalities, e.g. choosing an online broker? Or is this just a bad idea?
posted by zeri to Work & Money (25 answers total) 13 users marked this as a favorite
My mom has pretty comfortable retirement savings; losing this $5K wouldn't hurt her significantly, and she's aware this might happen. (If it did, our relationship wouldn't suffer.) She's more of a risk taker than I am; if it was me, I'd probably just put it into a Vanguard index or something of the kind, but she wants to place educated bets on emerging sectors that have a good chance of high growth in the next few years. Her initial ideas were "internet of things"-related technology and medical cannabis; the former seems more promising to me than the latter, but I don't actually know how to judge. Assuming that this is a good idea at all: what are some possible fields of this kind to check out? What sources can I use for research, both on general sectors and specific stocks? How do I learn to evaluate specific stocks, especially in newer markets where companies may be smaller and younger than elsewhere? What are good and bad signs to look for? What are some common beginner mistakes? About how many different stocks does it make sense to invest in given a total of $5K? How do I choose an online broker?
I'm definitely interested in doing this, partly as a learning experience for myself, but feel free to tell me it's a terrible idea. (Even if it is, knowing my mom she's probably going to go ahead and do it anyway, so if you think this is the case, please suggest some ways of damage control!)