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Yesterday BP saw it’s stock close at $29.20 per share. BP’s stock has been lower as the oil spill/leak/disaster in the Gulf of Mexico continues.
Clean up for the Gulf spill is around $1.43 billion and will continue until BP stops the leak.
Oil analyst Matt Simmons made a comment in an interview with Fortune magazine that has caught the attention of many.
He stated that he believed that BP could be bankrupt in a month due to upcoming lawsuits and the increasing costs of the cleanup.
Should You Invest in BP Now?
Others, though, see a buying opportunity, saying BP has the resources to pull out of this and eventually move on from this disaster much like Exxon did from the 1989 Valdez oil spill.
For those investors who bought Exxon shares, they saw a 950% increase as the company rebuilt its reputation.
As an investor, what should you do? Would it be smart to go ahead and buy BP stock right now when it’s at its lowest in 13 years? Could this help boost your retirement portfolio?
Focus on Fundamentals, Not Noise from ‘News’
My advice? Unless you have some extra retirement money to mess around with, make sure you have your fundamentals down first.
Most people are bad at picking stocks.
David Swensen, Yale’s investment portfolio manager who has beat the market consistently, has commented that regular investors simply don’t have the resources to keep up with the market by stock picking.
Investing in index funds is the most practical way for most investors to obtain their best performance. He offers the following recommendations:
- Domestic Equity (30 percent)
- Emerging Market Equity (5 percent)
- Foreign Developed Equity (15 percent):
- Real Estate Investment Trusts (20 percent)
- U.S. Treasury Notes and Bonds (15 percent)
- U.S. Treasury Inflation-Protection Securities, or TIPS (15 percent)
John Bogle offers similar advice for those looking for a long term strategy that won’t tie up all your free time.
You can get some information from online and television news, but that shouldn’t be the sole source of your decision.
You have to do your own research if you want to make a truly informed investment.
Get Started on Investing
If you have your retirement contributions automated, go ahead and continue it.
If not, you should go ahead and start investing in your 401(k) if available or your Roth IRA.
It’s easy to set up and automate as you continue to go through your day to day activities.
How much should you put in? Some personal finance experts suggest put 5- 10% of your paycheck into a retirement account.
If your budget is tight, then starting with a smaller amount works. You can always increase your contribution amount as you receive raises and promotions.
Where to Invest Your Money
Some brokerages you may want to look at for your IRA include:
You should be able to find a brokerage that works for you.
I think tomorrow’s review of the Coffeehouse Investor will help you ignore unnecessary noise and focus on building your investments.
Your Thoughts on Investing
Are you buying BP stock? Why or why not? Do you think BP will be able to recover from this? What’s your investment strategy?