Starting to invest

Q: So … I don’t know much about stocks, but I want to invest in them. And I don’t have a lot of money. What should I do?

A: You don’t need much money at all to start investing in stocks. You might start by reading up on investing so that you’re comfortable with what you’re doing. Also, the more you know, the fewer costly mistakes you’ll make.

Read books like “The Little Book of Common Sense Investing” by John Bogle (Wiley, $25).

Websites such as are also informative. To find a good brokerage account, compare brokerages at sites such as and

It does take time and work to become good at studying, and investing in individual stocks takes time and work. Remember that you can do very well over the long run simply by investing in low-fee broad-market index funds, such as funds that track the S&P 500.

Q: I just graduated from college. Would I do better to pay off my student loans as soon as I can, or just make the regular payments on them while investing elsewhere?


A: Either plan has merits, and much depends on the interest rates you’re paying and the investment growth rates you expect. If your debt is costing you a lot, or at least more than you expect to earn by investing, paying it off quickly is smart. But if you’re paying, say, 5% on your loans while hoping to earn 8%, on average, on your investments, you might prefer to stick to the regular repayment schedule.


Before the bubble burst

Dear Fool: In late 1999, I thought my smartest investment was having bought a few shares of a company called CMGI, after having read about it in a magazine.

After a little research, I saw that it was essentially a fund of internet stocks, spawning several IPOs per year. Respectable companies such as Microsoft and Intel had invested in it, so I added more shares over time and ended up with a total gain of more than 1,000% in less than two years! The joy didn’t last, though, as the stock soon lost most of its value after the internet bubble burst.

The Fool responds: CMGI took investors on quite a ride, with its stock price soaring above $1,000 per share before plunging below $50 within about a year.

In its heyday, CMGI was an intriguing “internet incubator,” buying up lots of dot-com businesses at a time when many investors were drooling over them. The problem, though, was that while many of these businesses had exciting plans and lots of potential, relatively few had actual track records of growing profits, not to mention sustainable advantages over competitors.

Over the years, CMGI ended up selling off various businesses and restructuring to cut costs. It eventually even changed its name to ModusLink Global Solutions — and then to Steel Connect. Now a penny stock, its market value was recently only around $110 million.



Take a bite of this

Apple (Nasdaq: AAPL) has reaped huge profits from its iPhones, Mac computers and a host of other electronic devices and services. With more than $225 billion in cash and marketable securities, the company recently delivered its seventh annual dividend increase and announced it would buy back $75 billion in stock. Its operating cash flow remains healthy, permitting such moves.

That said, Apple has its share of naysayers. Some believe the lack of recent major innovation could weigh on its long-term future, while others point to trade tensions with China as another potential roadblock.

Meanwhile, Apple is shifting its focus from hardware sales to its higher-profit-margin service businesses — and it’s just getting started. The company is building on current services such as Apple Pay, the App Store and Apple Music, and it has added (or is soon adding) new services such as Apple News+, Apple Arcade and Apple TV+.

Apple has a massive user base of over 1 billion devices and has already proved it can make money from services. As more services come online, there’s plenty of opportunity in the coming months and years. The stock offers a dividend, too, that recently yielded 1.8% — with room for further growth. (The Motley Fool owns shares of and has recommended Apple and has the following options on it: long January 2020 $150 calls and short January 2020 $155 calls.)