Got a question on a stock, a strategy, or your portfolio. Just email us your question, and Gene Walden, author of more than 20 books on stocks and personal finance.  

Just email Gene at


We received some great questions from readers recently:

Q> I am a new investor. Well, technically I am not anything yet. I am selling a home and I am trying to make the best decision as to where to put my money. I have gotten a thumbs-up on mutual funds from several sources, but what makes a GREAT mutual fund? (I am a single Mom. It has to be GREAT!) What are the criteria for selecting one with some risk (I am 29) and some serious gains? Throw some bones (or names) to this desperate dollar seeker. Please!

A> I’m not sure there is such a thing as a "GREAT" mutual fund. I’ve written three editions of The 100 Best Mutual Funds to Own in America, and I haven’t found one yet. They all have their ups and downs. But there are certainly some good ones.

What I look for is 5-year growth and year-to-year consistency. You don’t want the best fund for the last year—one year’s performance means nothing. But five-year growth gives you an idea of how the fund has performed over an extended period. You want a fund that has not only had a good five-year growth record, but has also had consistent year-to-year performance compared with the overall stock market. You also want to make sure the fund manager who established that track record is still with the fund.

Q> I've never traded stocks before and would like to start. What would be the best way to get started?

A> My generic comment to anyone starting in investing is: great, wonderful, congratulations! And have no fear. If you stick with it, you will succeed. Millions of working Americans will never make money in the stock market for one very simple reason—they never take the initiative to make that first purchase. It takes real courage to make that first buy. But once you do, the rest is easy.

You don’t need to be an expert in the market to start investing—just the opposite; only by investing will you EVER become an expert. Once you’re in the game, the experience of buying stocks, watching and studying the market, and tracking your own portfolio will ultimately make you an expert.

 Over time you should develop a portfolio of about six to 20 stocks. Some people have even more. If you can follow more than 20, and you enjoy accumulating stocks, that works, too.

Q> 1. Once I have selected the stock(s) that I am interested in, how do I go about purchasing the stock(s)?

2. If the company you purchased the stock in goes bankrupt will I have to pay any additional charges?

3. Do you have to have a broker?

4. Who sets up the portfolio?

5. If I decide to withdraw my money, how do you collect the money?

6. When and how do I add more money to the stock?

7. In your book you indicate you can purchase stock for under $20.00, does that mean you can purchase the desired stock for $15.00?

8. How many shares do I have to purchase, can I purchase 1 from each stock I choose?

A> To question #1 (Once I have selected the stock(s) that I am interested in, how do I go about purchasing the stock(s)?) You have to open a brokerage account either with a full service broker, a discount broker or an online brokerage company. You get the cheapest commissions online (about $7 to $15 per trade with companies like Ameritrade and E-trade), and the most expensive with full service brokers such as Merrill-Lynch ($70 to $150 per trade). Discount brokers (brokerage companies that handle your trades but offer no advice) are somewhere in between ($30 to $60 per trade). If you know what you want, and you are comfortable making your own decisions on your investments, you might prefer a discounter or an online brokerage company. If you want help with all your investment decisions, you need a full service broker. For discounters and full service brokers, check the yellow pages. To do online trading, visit Ameritrade.com, Etrade.com and Accutrade.com and see which you like best. Then sign up, and send in a check, and you can start trading. (Personally, I use Ameritrade) For more on dealing with brokers go to our story in Timeless Tips on How to Deal with Brokers.

To question #2 (If the company you purchased the stock in goes bankrupt will I have to pay any additional charges?) No. (And hopefully you’ll sell your stock long before it drops that far anyway.)

To question #3 (Do you have to have a broker?) You have to buy stocks through a brokerage company except in rare exceptions. Some companies such as McDonald’s allow investors to buy stocks directly through the company, but for the vast majority of stocks, you must use a brokerage company.

To question #4 (Who sets up the portfolio?) You do, unless you use a full service broker. In that case, you should work with your broker to set up a portfolio you’re comfortable with.

To question #5 (If I decide to withdraw my money, how do you collect the money?) You call the brokerage company and tell them to send you a check for the money you wish to withdraw. It’s a very simple process.

To question #6 (When and how do I add more money to the stock?) You send a check for more money to your broker when you can afford to buy more stocks (or more shares of the stocks you already own). Or you can also send in a lump sum, and keep some of it in stocks and some in the brokerage company’s money market account, where it can earn interest while you are awaiting the perfect time to buy more stock.

To question #7 (In your book you indicate you can purchase stock for under $20. Does that mean you can purchase the desired stock for $15?) You pay whatever the market dictates. Stock prices fluctuate daily, hourly and even minute-to-minute. Most of the stocks in my 100 Best Stocks Under $20 book are trading between $3 and $20 a share (and a few are now trading for over $20). You pay the going price, which is published in the stock tables of the newspaper every day, and on a variety of sites on the Internet, including www.best-100.com. My two favorite stocks are much higher than $20. Cisco Systems is about $70 per share, and Microsoft is about $95. What you hope for when you buy stock is that the price goes up, so that in a few years you can sell the stock for far more than you paid for it.

To question #8 (How many shares do I have to purchase? Can I purchase one from each stock I choose?) There is no minimum or maximum limit, but I think you should buy more than one share. Otherwise you spend as much on commissions as you do on the stock. I would say you should buy a minimum of about $500 worth of each stock, and ideally $1,000 to $2,000. It takes money to make money. If you want to make money in the market, you have to invest. Imagine this, for instance: You buy one share of a $10 stock. The stock is a huge success, growing 500 percent! A huge gain, right, but for you it makes you a lousy $50, minus brokerage commissions to buy and sell. Now imagine this: You invested $10,000 in that stock, it grows 500 percent, and you earn $50,000! The more you invest, the more you stand to gain.

Thanks for your questions. If you have a question about a stock or an investment strategy, please contact us at

-- Gene Walden