Playing the stock market

I have always thought the phrase “playing the stock market” was an interesting one. It makes it sound like someone is investing in the stock market just for fun. Admittedly, that’s what many people do. They make an educated guess at what stocks will go up, and they buy shares. Sometimes the guess isn’t even an educated one. But it’s treated as a game, and if they lose, they lose.

Unfortunately, I think that there are many people out there who are playing the stock market in the same way, only for them, it’s less of a game. They are putting money into stocks that they really don’t know about and expecting to turn a profit. They are investing money that they absolutely need. I have a couple of coworkers who are very active in day trading, and unfortunately, some of them have so much money invested that if things go south, they could lose their homes. Now, I realize that I like to play it safe, but I don’t think it’s ever a good idea to gamble with your home.

Of course, there is always risk with investing. In some ways, it’s always a gamble. You might end up with a huge profit, but you might end up losing everything. There are, of course, ways to mitigate that risk.

I have to admit that I play the stock market, but I do so for fun. I have investments in mutual funds and index funds, and that’s all money that I will need later. But I do own a few shares of individual stocks. Not many, and not really much money, but it’s kind of fun to make an educated guess at what’s going to happen and then hope it pays off.

A few weeks back, I opened a Sharebuilder account as part of a promotional deal where if you made a $25 investment, they would credit your account with $25. So I put $25 into the account, made a purchase (at a cost of $4, so I ended up investing only $21), and this week, the $25 promotion was credited to my account. I transferred that back into my savings account. How is that investment doing? At last check, it was worth $19.06. Admittedly, I bought the particular stock because I like the company. I didn’t bother to do any research beforehand. I can’t say that I mind – someone gave me $25 to play with, so that’s what I’m doing.

I’m also playing with the other stock I own. I hold a few shares of Yahoo stock that I got for free years ago. Way back when, I participated in some Geocities community forums, and was gifted 10 shares of their stock when they went public. Yahoo bought them out not long after, and I ended up with Yahoo stock plus a small cash payout. I don’t remember how much that was, but I think it was between $100 and $200. Of course, that was the late 90’s, and Yahoo stock was worth much more than it is now. Once I got that cash payout, I decided that I would just let my Yahoo stock play. If it crashed, it crashed. I had already received money, which in my mind was something for nothing, since I was unexpectedly gifted the stocks to begin with.

Of course, in the past few months, Yahoo stocks have been making some headlines. I’m eager to see what happens. Can’t say that I have an opinion, but it’s fun to watch. I’m well aware that I’m gambling with my money, but it’s a risk I’m willing to take, and one I can afford to take. Others aren’t so lucky.

Megan Smith

Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:

In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance.  It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information.  It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck.  While that was working for me, clearly I needed a better plan.

While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.

Except that’s not what an emergency fund is for.

So I did a lot of research, read a lot of blogs, and decided that I needed a plan.  I needed to budget.  I needed to know what I was spending my money on.  I needed to prepare for the future.

I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way.  I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.