Greg Faulkner, Financial Advisor

If you are a beginning stock investor, there are certain steps that you will want to take in order to choose those stocks that you want to invest in. Just remember is that purchasing, selling, and/or trading stocks does not have to be as difficult as what many people might tell you. Just start out slowly and take some time analyzing the companies and their stocks before making your move. Here are 15 steps to consider before making your decision:

Educate yourself – read up on accounting, finance, publicly traded companies, and the stock market

Read the business section of the newspaper – better yet, subscribe to Investor’s Business Daily or the Wall Street Journal

Consider only those industries that you are familiar with – less education time means getting into the fray quicker

Think about stocks in companies or products that you like – take overall popularity factors into consideration

Research the companies you are eyeballing – get to know the company, its industry trends, and how its stock has performed in the past few years

If possible, check out the company financial statements – you will need to learn how to analyze these in order to minimize your risk when deciding on a stock to purchase

Familiarize yourself with several online investing informational websites – this will provide you with knowledge regarding a company’s:

- balance sheet
- dividend records
- growth or loss of earnings
- free cash flow
- number of stable shares
- revenue growth consistencies or inconsistencies

Decide on the amount of money that you want to risk – the first rule of thumb here is never invest more than you can afford to lose

Follow the stocks for a couple of weeks on a daily basis – this will help you decide if you want to order a specific quantity of shares or pass them up

Educate yourself on stock identification – certain criteria or information may indicate a potential price appreciation in the future

Calculate when to purchase, sell, or trade stocks – determine a method or technique for doing this so that you will know better timing on purchasing, selling, or trading stocks as well as when you should just walk away and not risk any more or your money

Consider learning how to use technical analysis – stock charts are invaluable where this is concerned, so are other tools such as candlestick charting, EMA, or MACD in order to learn and better time your entries and exits

Pay attention to the more reputable and respected stock analysts and experts – again, this is all part of your stock market investing education

Read up on all of their strategies – if a person is a published successful investor, you would be wise to read what their stock investment strategies

Think logically before you settle on the stocks you are thinking about purchasing… where are you hoping to go with your investments? Do you have a short term investing goal or a long term goal?  If you are just starting out, you’re at the bottom and the only way is up. Make sure that you always keep an eye on market trends as well.

IRA contribution limits 2010 should be observed by every investor that contributes to an individual retirement account (IRA). Failure to do so can result in financial hardship or potentially tax consequences. Whether it be a traditional or a Roth IRA, investors should be cognizant of exactly how much they contribute in any given tax year.

IRA contribution limits for 2010 are $5000 for participants who are under 50 years of age. Those who are over 50 may enjoy a catch up rule that allows for the contribution of an additional $1000. This makes the total IRA contribution amount $6000 for participants over 50. Participants in any IRA should check their eligibility for full contributions. The adjusted gross incomes (AGI) and participation in employer sponsored plans may effect the ability to fully contribute to an IRA.

Perhaps the biggest problem with IRAs, aside from under contributing that can result in not meeting up with personal retirement needs, is over contributing. Exceeding the maximum IRA contribution amount can result in the assessment of an excise tax. However, most over contributions are purely accidental. Therefore, it is imperative that IRA participants keep track of the exact dollar amount of their contributions in any given tax year.

Since over contributing to an IRA is not an uncommon event, many investment firms that offer them, will return excess contributions to the participant without penalty. Even though investment companies offering IRAs may return excess contributions to participants, there is a myriad of paperwork that is usually required and must ultimately be submitted to the Internal Revenue Service (IRS). However, returning excess contributions is dependent upon the amount of over contribution, the tax deadline date, the age of the participant and the underlying investment itself.

The excise tax imposed for over contribution is intended as a penalty administered by the federal government for exceeding the limits of that tax year. For any unreturned excess IRA contributions, the imposed tax penalty is 6% for every year that those funds remain in the IRA. Included in the 6% excise tax is all earnings, including capital gains and dividends acquired from the excess amount.

IRA participants have until April 15th of the following tax year to reach their contribution limits. For example, anyone investing in an IRA in the 2009 tax year has until April 15 of 2010 to fully contribute to their IRAs. Those with multiple IRAs must understand that they cannot exceed the contribution limits for the current tax year. Regardless of participating in more than one IRA, the contribution limits remain the same. The IRA contribution limits 2010 remain at $5000 for those participants who are under 50 years of age. Those who are over 50 may still contribute a total of $6000. Therefore, if a participant owned two IRAs, the sum of all contributions within both of them cannot exceed $5000 for those under 50, and $6000 for those participants over 50.

The most important aspect of participating in an IRA is observing the current tax year’s contribution limits. By knowing how much an IRA participant can contribute, will avoid the potential for a penalty and a bunch of unwanted paperwork.

Annuities are a security policy for retirement. Learning how to find the best annuities is the best way for you to ensure you make the best choice for yourself and to make sure that you have plenty of retirement income.

You need to understand how annuities work thoroughly before investing in them. Annuities Explained does a nice job of explaining the basics of annuities, I would start there. All of the choices you make will affect the money you receive and the return you get for your investment. Each choice you need to make during this process will help you tailor the annuity to fit your own needs, which is why they are so important.

You need to make the choice if you want a fixed or variable annuity. The fixed will give you stability in any type of economic atmosphere, and the variable will give you higher returns when the market is performing well, but no profit when it isn’t.

You should compare the companies themselves, as well. The way the company has done in the past for other investors, the fees they charge and even the length of time they have been in business are important things to consider before you give them any of your own money.

There are some key comparison points you do need to look at. These are things such as how much you can pull from the account every year without losing the principal you have invested, how much you can take from the account over the course of your life and the minimum income you will earn annually. This is often the deciding factors when choosing the company you will invest with.

Knowing the way on how to find the best annuities can help you make the right choice for your retirement. If you ever have any questions or feel you cannot make these decisions on your own, you can check a site like AARP that provides general retirement advice for free, or speak to a financial planner who can help you. Before you invest any money though, be sure you clear it with your advisor.

Computing the total amount of life insurance you should carry depends on a number of factors. The rule of thumb for the life insurance industry is often stated as ten times a person’s annual salary. But that’s really a very rough estimate. Let’s take a more detailed look at your family’s needs, should you die tomorrow.

First, you should look at immediate expenses, such as burial and funeral costs, unpaid medical bills, and outstanding debt. Funerals can easily run between $5,000 and $10,000, without being at all lavish. Let’s assume a conservative total of $20,000 in this example.

Next, consider ongoing indebtedness, such as mortgages, college costs, and any outstanding loan payments. Here, we’ll plug in a figure of $40,000 per year.

You also need to consider the family’s ongoing living expenses, such as utilities, groceries, clothing, automobile costs, etc. Without your group medical coverage, your spouse may need to get new, more costly medical insurance for the family. $15,000 per year seems like a very conservative estimate here.

Finally, you need to consider how long your insurance needs to provide for your family. If your spouse is a stay-at-home mom with young children, or essentially without any marketable skills, you may need to assume a longer time frame than if she is already employed and drawing a healthy salary. For demonstration purposes, let’s assume you want to provide for a period of ten years.

Summarizing, your minimum needs would be:

$20,000 immediately

$550,000 ($55,000 per year X ten years)

$570,000 total insurance

From this, you can deduct such things as present savings balance, other insurance, social security or other pension plan payouts, retirement savings… even additional properties that your spouse can cash in on.

You also need to consider inflation over ten years…figure on 3% annual. Over ten years, that’s an aggregate increase of slightly over 34%.

Assuming that your spouse will invest the insurance payout, you can probably safely assume a 6% return on the investment, which should cancel out the inflationary effect, and then some.

Completing this exercise should give you a good idea of the total amount of life insurance you need to provide, in order to protect your family in the event of your death. Keep in mind that the assumptions stated here are extremely conservative, and your needs may be much greater, depending upon lifestyle, timeframe, number of family members, outstanding debt, mortgage balance, and other factors. There are a number of calculators that can help you with this… MSN has a nice life insurance calculator, as does lifehappens.org. Don’t rely on these exclusively but they will help you get a good headstart.

Most of us realize that the economy in the US as well as globally encountered a great deal of instability. This was especially true in numerous financial markets such as those involving foreign currencies, stocks and bonds, and other types of investments. Suffice it to say, many investors were reluctant to play any of these markets as the element of risk proved to be a huge deterrent. But what about 2010? What does the picture look like for the balance of the year where investing in the stock market is concerned?

Towards the end of the 4th quarter in 2009, UBS Wealth Management has basically said that the best advice would be to stick with investing in what are called “procyclical” investments during 2010. These are investments which gain as the economy is improving and this indicates that UBS feels that the economy will recover sufficiently so that smart investors will benefit through the balance of the year ahead.

Stock sectors to pay attention to

Although there are numerous best stock sectors for 2010, there are 3 that remain high on the list and are worthy of a stock market investor’s attention:

- Energy
- Materials
- Technology

Granted, these three stock sectors have been receiving considerable attention in recent years. However, these are considered to be the three primary stock sectors to pay serious attention to.

The reason for such confidence and strong feelings towards these three stages is the fact that it has been estimated that at least 50% of the Economic Stimulus Package will be spent in 2010. Nearly $400 million will be going back into the economy. When you combine that fact with interest rates that have remained relatively low, this bodes quite well for those three sectors above.

Current economic trends that can impact stock sectors

What is not going to happen?
- The US dollar will not collapse
- Inflation will not be a significant problem
- A municipal credit crisis is not going to occur

What might happen?
- Another high-dollar stimulus package may be passed into law
- Crisis levels may arise in the commercial real estate sector
- The “Fed” may continue to remain on hold

What will happen?
- Economic recovery is going to continue
- More geopolitical threats are going to emerge
- Taxes will inevitably rise

Other stock sectors to keep a close eye on

Where the best stock sectors for 2010 are concerned, there are several others that should be watched closely in addition to the 3 that were mentioned above. These are broken down by sector and include the following:

- Basic industries
- Capital goods
- Consumer durable goods
- Consumer goods
- Non-durables
- Consumer services
- Finance
- Health care
- Public utilities
- Transportation

If you are still trying to position yourself in a financial and investment position, you should consider the above information prior to making your final decision on which sector or sectors that you want to invest in.