3 Investing Questions You May Be Too Embarrassed to Ask

Facebook Stock"How do I buy a stock?"

That was the subject line of an email sent to one of our analysts recently. It turns out the questioner wanted to put her life savings into the Facebook (FB) IPO.

Fortunately, our analyst was able to dissuade her from purchasing the stock. Otherwise, here's how that could have turned out.

Facebook stock

There Are No Stupid -- or Simple -- Money Questions

While "How do I buy a stock?" may have seemed like a simple question, just beneath the surface were a bunch of very important questions, ones that all too often people are too afraid to ask. Questions like:

  • If I like a company, should I buy its stock?
  • How much money is proper to devote to a single investment?
  • I've earmarked money for one thing but have an opportunity to use it for something else. How do I decide which is the better investment?

It's important to ask questions -- any question -- no matter how basic/stupid/embarrassing you think it might be. That's the only way to learn. The alternative is learning the hard -- and very costly -- way.

Give Us an Hour on Wednesday to Make You a Better Investor

Educating yourself on investing is one of the most profitable investments you can ever make. The best time to start is now.

Below are three investing questions we are frequently asked. (Maybe one of them is yours!) Check them out, and then start making a list of your own burning questions and we'll tell you how you can get answers from our experts on DailyFinance this Wednesday, June 6, from 2 p.m. to 4 p.m. EDT.

Q. I only have $500. Should I be investing?

A. Yes. An emphatic yes, in fact! With any amount of money, saving regularly and putting that money to work for you in the stock market is the key to creating wealth. Building the habit of saving and investing is the first step on the road to financial independence, but so many people put it off assuming that they have to have thousands of dollars to get started. You're in luck: Even with just $500, there are many low-cost brokers at your fingertips. With the special offers online brokers give to new customers, setting up an account will cost you little to nothing.

Q. What if I make a mistake?

A. Making mistakes is the only way to learn. If you are diversified -- meaning you've spread your money out among stocks that do not move in lockstep with each other -- mistakes won't cost you much and the education you gain will last you a lifetime.

Q. Should I sell my stock if it goes down?

A. Stocks go up and down daily as people buy and sell them. With information flying at you by the nanosecond, it's sometimes hard to sit back and do nothing. But often that's the best thing to do.

Still, sitting idle doesn't mean you should turn a blind eye to the business in which you've invested. If the dip is out-of-the-ordinary, then before you sell, you need to answer two questions:

  1. Has something fundamental changed with the business? If the company you are invested in decides to change its business from selling video games to selling knitting kits, for example, you should reconsider if this is the type of business you want to be in. Has there been a big shuffle in upper management? Has one of the company's biggest customers gone away? Fundamental changes in a business require investors to reevaluate that company. Which leads us to question No. 2.
  2. Has something changed with the valuation? If the stock price goes down and nothing else has changed, then that could mean that the valuation has improved. Investing is one of the few areas in life where something goes on sale and everyone runs away. Treat investing like you would grocery shopping -- look for deals on quality products, and when you see them, load up your shopping cart.

Get answers to your questions on Wednesday, right here!

Have an investing question you've always been too embarrassed to ask? We'll be hosting a live chat on DailyFinance.com this Wednesday, June 6, from 2-4 p.m. EDT with Motley Fool analysts live and on call to field your investing questions.

Drop any and all questions about getting started investing in the comment box below and our experts will get back to you in the chat.

The Motley Fool owns shares of Facebook.

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hi good post, i like 2nd question" How much money is proper to devote to a single investment?" its really tricky question .investment such way may be risky . I am confused in this question "sell stock if it goes down?" how it benefical to us . i read post on pennystockdetectives.com according to experts investment in metal stocks is good at the time.

December 12 2012 at 4:15 AM Report abuse rate up rate down Reply
Louis Delos Angeles

Very true. Lots of people think that the stock market is only for the super rich and the super math geeks but now a days with the help of internet you can easily open an online brokerage account and can start investing little by little. You might not feel it if you are just chipping in 20 or 100 dollars a month or every two months but as time passes and as your earnings grow you might be a millionaire in no time.

October 20 2012 at 8:09 AM Report abuse rate up rate down Reply

x dividend date

August 12 2012 at 6:17 PM Report abuse rate up rate down Reply

Six years ago we invested $50,000 in Mutual Funds. As of today, if we cashed out we would have less than $45,000. Our adviser keeps telling us staying invested over a long period is the key, but we are loosing money. What would you suggest we do? Should we stay put or go a different route? We are both retired living on a fixed income. We were needing for this investment to grow to keep up with cost of living. Our adviser says the economy is keeping us from growing our money. He says stay in for the long haul. I fear we are going to loose our money and have nothing.

July 11 2012 at 2:59 PM Report abuse rate up rate down Reply

you NEVER loose in the stock market its so easy theres only 3 ways u can loose 1. bankrupt 2. multiple reverse splits 3. u sell at a loss otherwise u will never loose i love it

June 07 2012 at 11:36 AM Report abuse rate up rate down Reply

Good article. I would to know what formule one can use to determine when a stock is undervalued. Thank you.

June 07 2012 at 10:53 AM Report abuse rate up rate down Reply

Find a good online broker that offers classes and good customer service. TD Ameritrade is excellent. For those with a small amount of capital to invest, exchange traded funds (ETFs) are excellent, as they provide diversification. Read the prospectus first. Wait for a market correction, then buy. Vanguard has the lowest fund fees, so take a look at them. BND and VTI would be good for a beginner.

June 06 2012 at 2:47 PM Report abuse rate up rate down Reply

It doesn't matter if you are a beginner or have been investing for many years, it's never too early or too late to start asking questions. One shouldn't feel intimidated. Remember, it's your money at stake. Seek professional advice before starting a business or simply seek for advice from elders or experts before starting with a big plan to achieve success. There's nothing more valuable than an advice from business advisors and entrepreneurs who have been in the trenches and have the battle scars to prove it. We have been setting up a network of professional advisors for a few years now with the intention of providing support and guidance to entrepreneurs and small business worldwide. You can approach a highly-experienced buisness advisor if you need help. We specialize in making connections between those who need help and those who can help. -Business Advisor Network

June 06 2012 at 5:10 AM Report abuse rate up rate down Reply

All of these suggestions are nice, but if you can explain how to purchase a stock to a person that doesn't know how. The fundamentals of stock market investing will be lost, because of course, they don't know how to purchase a stock.

June 05 2012 at 2:48 PM Report abuse +1 rate up rate down Reply