| Hi Taylor:
I have some money I want to put into the stock market, and I'm wondering
if I stand to make more through educated day trading or just standard
investing. I've been reading books on both and feel like I have a
decent grasp of the market, but I wanted to ask someone with a little
more experience. I'm hoping to put my money to work and actually generate
some income. - Claire
Hi Claire: There are a few ways to answer this question. The
first is, "it depends," but I know that's not a very helpful response.
Here are some thoughts with a little more substance.
trading. This is the riskiest option. While no investment
is a sure bet, long-term stock market returns almost always win
out over what you'll get from day trading. In addition to the
immediate and substantial risk, you end up losing a lot more of
your investing money by way of transaction fees. You might see
eight bucks as a drop in the bucket, but as those charges add
up-and if you aren't getting consistent returns on your trades-the
difference between what you'll make via day trading and what you'd
make with long-term investments will be very stark.
2. Standard market investing. As far as generating income,
you won't be able to do that right away with standard investing.
You can buy dividend-yielding stocks, which is a good way to bring
in extra capital, but that probably won't be enough to cover your
bills. Nevertheless, long-term investing will help you grow your
money substantially and free you up to spend your regular earnings
on alternative investments that can pay out more quickly. If you
have to choose between day trading and investing, I'd definitely
urge you to go with option number two.
3. Investing for immediate returns. If this is about getting
money now, there are other options to think about. You could try
investing in a rental property that could generate monthly income;
real estate has the potential to meet both your long- and short-term
earnings goals. It all depends on what you have to invest and
what your objectives are. Alternative investments require a little
more work to get started, but nothing more than what you'd have
to put in to actually have success with day trading.
| As far as getting
the most out of your dollars, I'd stick with the investments over
the risky trading. To generate income, I'd think about what alternatives
might be available to you. If you feel really compelled to day trade,
make sure all your other investments are in order before you start.
There's so much risk with high-volume trading, and I'd hate for you
to trade with money you can't afford to lose. Good luck!
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.