New to the stock market and need some advice

[Daisy]

Hello,

I am 44 years old and have 22 years of federal service. Aside from contributing to my TSP and a Roth account with Vanguard, I recently bought shares in Citigroup and Hero on ameritrade. I am new to stock investing and was wondering if you had any recomendations about what to do with the dividends. Do you reinvest in buying more stock by setting up a drip or do you just have the dividends deposited into your account for future stock purchases? also, do either of these choices affect your taxes?

Please forgive me if my question is very basic but I am a beginner and just learning. Thank you for any advice you may have.

 

[nnuut]

Welcome to the Message board Daisy!
I don''t have any stock only TSP, but there are many on the MB that do and I'm sure you will get a knowledgeable answer or two before you know it!
Best of luck
Norman

 

[James48843]

Hello,

I am 44 years old and have 22 years of federal service. Aside from contributing to my TSP and a Roth account with Vanguard, I recently bought shares in Citigroup and Hero on ameritrade. I am new to stock investing and was wondering if you had any recomendations about what to do with the dividends. Do you reinvest in buying more stock by setting up a drip or do you just have the dividends deposited into your account for future stock purchases? also, do either of these choices affect your taxes?

Please forgive me if my question is very basic but I am a beginner and just learning. Thank you for any advice you may have.

Looks like you won't have to deal with that issue anytime in the near future. Neither Hercules Oil (HERO) nor Citigroup (C) pay dividends, and have not in some time. The last time Citigroup paid was in Feb 2009, before it got all that U.S. bailout money. HERO is losing money right now.

So, in both cases, no dividends are forecast at all.

What I do with dividends, usually, is have them accumulate in my account, and then be prepared when I spot a stock I really would like to get. My dividends have always been small, so they really haven't added a lot to my portfolio, but hey, a few bucks here and there can't hurt. Tax implications are small, unless you buy something with a very large dividend payout.

 

[Daisy]

Thank You James. Do you think these were good stock buys? Now I am wondering if I did the right thing purchasing them. So far I haven't lost any money and have gained a few bucks.

 

[Bullitt]

What was your goal when first purchasing these stocks? Have your goals changed? Has your outlook on these companies changed?

 

[Daisy]

My goal was to make money, learn about investing since it is all new to me and quite honestly I got the stocks as a tip from someone who follows trends etc. and knows the stock market. My goals haven't changed because I just started 2 weeks ago so to date, I still have the same goals. I didn't bet the farm so i am considering this a learning experience, "training wheels" so to speak.

 

[Birchtree]

Just be prepared to buy more C when it gets to $5 and then more at $6 - track it all the way to $16. Don't worry about HERO - it'll take care of you. Finance and Energy are the sectors to buy over the next several years. C will eventually start paying a dividend probably sometime this year. I had 12 companies pay dividends into my oceanic account today that were reinvested. You are on the right path.

 

[Daisy]

Birchtree,

Thank you for the confirmation that I am on the right track and the excellent advice on future purchases of C. I am a little wobbly becuase I am new to all this and learning as I go. I appreciate your advice and this forum. It is helpful to have a place to come and ask questions and get feedback from experieinced people like yourself. Wondering if you have a recomendation about the stock quantity to purchase at the 5 or 6 mark? I presently have 300 shares of C at 4.77.

 

[Birchtree]

Preferably 100 shares at $5. Take 100 shares as a dollar cost average all the way to 16 if you can. It will cost you more but then again you are locking nice profit behind you. I'll be buying more C for myself.

 

[Daisy]

"Preferably 100 shares at $5. Take 100 shares as a dollar cost average all the way to 16 if you can. It will cost you more but then again you are locking nice profit behind you. I'll be buying more C for myself.

Birchtree, So you are saying to buy 100 shares at each 1.00 higher thru to $16 dollars? Question, Wouldn't it be more profitable to just buy several hundred shares at the 5 dollar value? You lost me here a bit.

I posted this question 2x sorry about that.

 

[Daisy]

Birchtree, So you are saying to purchase 100 shares at each successsive dollar up to 16.00. If I understand you correctly. My Question is: Wouldn't it be more profitable to purchase several hundred stock at the lower 5.00 price? you lost me here.

 

[Birchtree]

The risk is that the anticipated higher prices may not materialize. Dollar cost averaging as the price increases guarantees you a profit. I buy in 500 share blocks but that's just me. I bought C at $1.56 on 3/2/09 and again at $4.05 on 8/7/09. If it gets to $5 I'm ready to buy another 500 shares and I'll do that discipline all the way to $16 and maybe beyond.

 

[alevin]

did you start out buying 500 share blocks, Birch? so far I've only been willing/able to buy 20 or 50 shares at a time.

 

[Birchtree]

I did a lot of buying in C back in 11/08 and 12/08 with 500 share blocks looking for a bottom. On 11/26/08 I got 500 shares at $7.37, another 500 shares at $7.12 on 12/03/08 and another 500 shares at $8.32. Then I lost my courage and went shopping in other places until 3/02/09. Someday I expect to have a profit and will stick with the company until it shines again.

 

[Daisy]

I understand what you are saying now. I can afford another hundred shares at 5.00 so I will purchase some more. Looks like I won't have to wait long, last I checked C was up at 4.95.

 

[Birchtree]

You might also look at KEY or REF as small banks yet to outperform.

 

[Daisy]

Will do. Thank you again for such helpful comments. Now the trick is to know when to eventually sell. I have no idea how to time that but I am researching and reading.

 

[Daisy]

Birchtree, Is the stock symbol REF correct? I couldn't find it.

 

[Birchtree]

My mistake - the symbol is RF for Regions Financial Corp.

 

[Daisy]

Thank You, KEY looks like a definite investment on my list. I will check out RF as well. On another note, I read an article today in the Wall Street Journal dated 1/3/2011, entitled "New Scrutiny Slams Near-Shore Exploration". Essentially it discusses the future of HERO and shallow water drilling in a not too favorable light. I was wondering if you saw this and your thoughts on it?