Investing thrust upon me, help!

[sungarshe]

There may be a lot of information in the following, but I am asking 2 questions in the end, any other tips are always appreciated, but I got 2 questions from all of this in order to move forward in my life.
So here is the snapshot of my financial being:

Age: 23
Salary: $35,000 (pre-tax)
401k Contribution: 8%/ month

---Liablities---
-Credit Card #1: $2000 @ 11%
-Credit Card #2 : $600 @ 14%

---Assets---
-Checking: $1000
-Savings@2.20%: $5300 (I add about $200-$300 a month after expenses)
-Company 401k: $3100 (By default in a MMA, because I don't know where to invest yet)
-Investment account: 1,112 shares of Heritage Comerce Corp (HTBK)@ $15.38(10/1 03:45PM EST): $17,102.56
+I recently inherited, who bought them for $15/share in the year 2000.

I have no loans or other debts.

I am now trying to crash course in investing to figure out what I should do with so much new money, in the form of the HTBK shares.

Question: So from just reading lots of things, let's take the money in the shares as all my investable income, I think I should sell 80% of the shares at least for the time being so I don't have my newfound wealth isn't all tied up in one volatile regional bank stock. Research shows the company is fairly sound, but still highly volatile.

1) Should I sell a large portion of the stock for cash until I figure out what to do?

2) With the cash, should I pay off all my Credit Card debt before even thinking about reinvesting?

Thanks in advance for any responses!!

[aiki14]

There may be a lot of information in the following, but I am asking 2 questions in the end, any other tips are always appreciated, but I got 2 questions from all of this in order to move forward in my life.
So here is the snapshot of my financial being:

Age: 23
Salary: $35,000 (pre-tax)
401k Contribution: 8%/ month

---Liablities---
-Credit Card #1: $2000 @ 11%
-Credit Card #2 : $600 @ 14%

---Assets---
-Checking: $1000
-Savings@2.20%: $5300 (I add about $200-$300 a month after expenses)
-Company 401k: $3100 (By default in a MMA, because I don't know where to invest yet)
-Investment account: 1,112 shares of Heritage Comerce Corp (HTBK)@ $15.38(10/1 03:45PM EST): $17,102.56
+I recently inherited, who bought them for $15/share in the year 2000.

I have no loans or other debts.

I am now trying to crash course in investing to figure out what I should do with so much new money, in the form of the HTBK shares.

Question: So from just reading lots of things, let's take the money in the shares as all my investable income, I think I should sell 80% of the shares at least for the time being so I don't have my newfound wealth isn't all tied up in one volatile regional bank stock. Research shows the company is fairly sound, but still highly volatile.

1) Should I sell a large portion of the stock for cash until I figure out what to do?

2) With the cash, should I pay off all my Credit Card debt before even thinking about reinvesting?

Thanks in advance for any responses!!

My opinions only,

1) Yes, You have an opportunity to establish a portfolio at a young age. If you're gonna trade, educate yourself first. If you're gonna invest, consider mutual funds or a 5-7 position stock portfolio. But don't leave it in one stock, it's too risky.

2) Yes, Pay off all the debts, then don't carry a monthly balance in the future. The only debt you should have is mortgage debt.

Good luck

[netwrangler]

There may be a lot of information in the following, but I am asking 2 questions in the end, any other tips are always appreciated, but I got 2 questions from all of this in order to move forward in my life.
So here is the snapshot of my financial being:

Age: 23
Salary: $35,000 (pre-tax)
401k Contribution: 8%/ month

---Liablities---
-Credit Card #1: $2000 @ 11%
-Credit Card #2 : $600 @ 14%

---Assets---
-Checking: $1000
-Savings@2.20%: $5300 (I add about $200-$300 a month after expenses)
-Company 401k: $3100 (By default in a MMA, because I don't know where to invest yet)
-Investment account: 1,112 shares of Heritage Comerce Corp (HTBK)@ $15.38(10/1 03:45PM EST): $17,102.56
+I recently inherited, who bought them for $15/share in the year 2000.

I have no loans or other debts.

I am now trying to crash course in investing to figure out what I should do with so much new money, in the form of the HTBK shares.

Question: So from just reading lots of things, let's take the money in the shares as all my investable income, I think I should sell 80% of the shares at least for the time being so I don't have my newfound wealth isn't all tied up in one volatile regional bank stock. Research shows the company is fairly sound, but still highly volatile.

1) Should I sell a large portion of the stock for cash until I figure out what to do?

2) With the cash, should I pay off all my Credit Card debt before even thinking about reinvesting?

Thanks in advance for any responses!!

I agree with Aiki that selling off most (or all) of your holdings in HTBK is a good idea. I don't see that you need to be in a huge hurry to do that. HTBK is a relatively well positioned back in the great San Jose area. It does not seem to have anything to scary in its loan portfolio.
Here is a link to a Reuters report on HTBK
(http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=HTBK.O)
From a strategic point of view, it doesn't make sense to have most of your assets in one stock. Diversification is the key to survival in the investment world.

So, here are some strategies:
First, get a brokerage account and put your HTBK shares in that account. If you have done that already, then good.
But even if you have, take at look at past posting on the OTF (do a search or two) to see what others say about their brokers. Personally, I use Schwab and am happy with them. But there are several others that offer a combination of low transaction costs, good research resources, and good execution and documentation of your trades. Go with one of them.

Second, for selling HTBK, you might want to sell into a rally that is likely to occur when Congress passes the Paulson rescue plan. This should be a time when all bank stocks are on the rise.

Third, for selling HTBK, you might want to sell 100 shares a week for the next 11 weeks. This reduces the risk that you would be selling all of your stock at just the wrong time. (Note: You need to look at your transaction costs here. With many brokers, selling 100 shares costs you $9 or less. You could sell 200 share for the same brokerage fee. Your choice of strategy there.
But for some brokers selling 100 shares can costs you $35 or more. If that is the case, change brokers. -- oh, and the broker where you want to go can help you with that change.)

Fourth, for selling HTBK, start with the third strategy, but sell the entire position if the price per share goes below $'X' dollars. You could set the value of 'X' in a number of ways. Essentially, you would be setting a stop-loss. Do a search on that, both within the OTF and on Google, to get a round-up of thoughts on stop-loss techniques.

All of these strategies address your question #1.
You have a lot of portentially winning strategies available to you.
I expect that other posters on this forum will comment on my suggested strategies and add some of their own.
=====
As to question #2, there is no doubt.
Pay off your credit cards!
Don't cancel the cards. Just get in the habit of paying them off in full every month.
The logic here?

There are few investment opportunities you will find that will give you a guaranteed 11% return (card #1), let alone 14% (card #2).
Creating a good pay record will improve your credit score. You might need that later on.
If you don't stay on top of your credit cards, 11% can go to 23% in a hurry as penalties are assessed. This is absolutely an area where you need to be in control.

The fact that you are asked the question you did is a very good sign.
You will be able to sit on your cash for a while and 'go to school' on investing.
That's an enviable position. There is no need for you to be in a hurry.
And you still have folks on the OTF like Aiki who can field your questions and come back with good advice.

[Horsefish]

From the two responses above, you probably realize that you have come to the right place to ask a question. To expand on what NET said about not being in a hurry. Google "Dollar cost averaging". That was really good advice, especially in a market and economy that is in recession.

I would add only that it is important to approach investing with a degree of cynicism. The investing business is full of professionals and very experienced people in a complicated environment. They make their money by profiting from mistakes made by less experienced investors. What you see on TV must always be taken with a grain of salt.

Still, there is no better way to plan for your future.

[fast]

1) Should I sell a large portion of the stock for cash until I figure out what to do?

Yes.

You should immediately sell all the shares of the stock you have, and the reason is because holding them is too risky. One reason it’s risky is because you are not sufficiently diversified.

2) With the cash, should I pay off all my Credit Card debt before even thinking about reinvesting?

Yes.

You should be debt free (with a primary residence as the only exception) and have a sufficient emergency fund of three to six months of living expenses tucked away in a separate money market account before investing. One reason you should be debt free is because debt enslaves you to the lender by placing limits on the freedom of your financial maneuverability. One reason you should have a separate emergency fund is so that life’s little set backs do not become full blown crises. The peace of mind far exceeds the financial rewards of potentially risky investments.

I am now trying to crash course in investing to figure out what I should do with so much new money […]

You need to calm your need to be in a rush. Sell your shares and pay off your credit cards. Afterwards, take your time to find a high-yield money market account for your emergency fund.

As far as your 401k is concerned, I’d suggest raising your contribution to 15% of your household income. You could begin by spreading your contribution among four mutual funds types: 1) Growth, 2) Growth & Income, 3) Aggressive Growth, and 4) International. The reason for this is because it affords you ample diversification that safeguards you in such a way that is far superior than holding shares of a single inherited stock would.

With kindest regards, I am and remain,

fast

[sungarshe]

Wow thank you everyone so far with the smart, concise advice!!

It is really reassuring to hear this advice, because it hopefully means that my mind is geared in the right direction from my own research! That dollar-cost average method of selling off HTBK was great. I knew the method in investing, but didn't even think about applying it to the reverse.

I am reading, funny enough, "Stock Investing for Dummies" which I feel is giving me a pretty good groundwork to understand risk, taxes, how to read the financial sheets, and some more basic stuff. But I decided to participate in forums such as this and I think it will really help me out.

I am not in a hurry to reinvest the money, but I felt like I was in a hurry to sell the shares. Mainly because I read a sentence: "No more than 20% of your investable income should be in any one stock".

So I guess in moving forward, I am going to wait until tomorrow to see what happens with the bailout package in the House, and hopefully look to sell off into a rally, whenever that package passes. I hope to just not suffer from paralysis by analysis as I decide what to do with the cash when I have no specific short, intermediate, or long (besides retirement) term needs for the money.

[sungarshe]

I already have this paralysis with my Schwab 401k, which is completely open and does not restrict investment vehicles like other 401ks I've heard of.

[CSSVT]

I know this post won't help anything but I looked into HTBK's charts and it appears that in the time it's been owned it was +12.00 or so per share above the purchase price. good for about an 80% gain. Not quite sure why the holder at the time didn't sell it (or most of it) then to reinvest into more HTBK on a decline or another company or diversify.....oh well, maybe that's just me.

[sungarshe]

My father held it, as just part of multiple investments he made for me and my siblings so we would have assets of our own. He does not invest in the market himself, so he does not really have knowledge. I became aware of them this current year, and he just never watched them.

[Horsefish]

HTBK is holding up pretty well in this horrible market. It's as good a place to hide as any right now. You never know, it may become a buyout target for one of the big few major banks that survive and thrive after this debacle is over.

Like was suggested above, no hurry. You may be better off than you realize. Maybe your Dad knew more than you thought. Again, best of luck.