Investment Virgin

[ememdee19]

I'm interested in investing but I have absolutely no clue where to start. The extent of my investing experience is my 401K account at work. Obviously, my goal is to be rich before I hit the grave. And when the time comes, I also want to ensure that my daughter will be able to attend college.

So my question is, where should I start? Any insight would be very helpful. Mutual funds, stocks/bonds, IRAs...it's all confusing to an investement virgin. Please help!

 

[Lugnut]

I'm interested in investing but I have absolutely no clue where to start. The extent of my investing experience is my 401K account at work. Obviously, my goal is to be rich before I hit the grave. And when the time comes, I also want to ensure that my daughter will be able to attend college.

So my question is, where should I start? Any insight would be very helpful. Mutual funds, stocks/bonds, IRAs...it's all confusing to an investement virgin. Please help!

Start by checking out the online resources like
http://www.fool.com/index.htm
http://finance.yahoo.com/
http://finance.google.com/finance
http://moneycentral.msn.com/home.asp

Check out all the tutorials, follow links, search for definitions, read the articles etc... Then buy a couple books on the type of investing you're interested in, talk to friends, and work your way from there.

 

[buddy999]

I'm interested in investing but I have absolutely no clue where to start. The extent of my investing experience is my 401K account at work. Obviously, my goal is to be rich before I hit the grave. And when the time comes, I also want to ensure that my daughter will be able to attend college.

So my question is, where should I start? Any insight would be very helpful. Mutual funds, stocks/bonds, IRAs...it's all confusing to an investement virgin. Please help!

If you're interested in providing for your daughter's education, the government has a program that allows you to save tax free or tax deferred dollars in an account to be used specifically for education. The website that I found is from Wells Fargo but I'm sure they're not the only ones who offer these plans. https://www.wellsfargo.com/investing/education/

Hope this helps.

 

[ememdee19]

If you're interested in providing for your daughter's education, the government has a program that allows you to save tax free or tax deferred dollars in an account to be used specifically for education. The website that I found is from Wells Fargo but I'm sure they're not the only ones who offer these plans. https://www.wellsfargo.com/investing/education/

Hope this helps.

What about the rich part?

 

[Oz]

If you don't know what you are doing, you will have better luck buying CD's and such. Learning to invest is very expensive. Good, reliable advice is expensive. You get what you pay for. If you are trying to save for college there are better ways than costly investment mistakes.

 

[itsbob]

If you don't know what you are doing, you will have better luck buying CD's and such. Learning to invest is very expensive. Good, reliable advice is expensive. You get what you pay for. If you are trying to save for college there are better ways than costly investment mistakes.

CD's??? At 4% year?? oh you'll get rich, IF you live to 1,348 years old..

 

[itsbob]

Also, I think it's better to put your money into an IRA then it is to save for your childs education. Anything you put into an education savings counts against student Aide.. so if you have 50k (for example) in an IRA it doesn't count against aid, BUT you can withdraw without penalty to use if for your childs education, as well as her getting grants, scholarships.. loans etc.. if you have 50K in ed savings you get NO aid, no grants.. you pay it all out of the savings.

IRA's also come with a lot of protection, and depending on which IRA that you pick (ROTH or traditional)grow tax free, and deposits can be deducted form your taxable income.. If you're not maxed out in your IRA deposits, I'd start there. Starting in 2006 you can invest $5000 a year...

 

[Oz]

CD's??? At 4% year?? oh you'll get rich, IF you live to 1,348 years old..

Actually, short term CD rates are currently between 5% and 5-1/2%.

Thats far better than the S&P has done in the last 3 years, and random inexperienced investing can be even more costly.

 

[itsbob]

Making the Most of Your Money by Jane Bryant Quinn, Simon & Schuster, 1997 (hardcover)
$30 How-to •
• • •
•2 The Road to Wealth by Suze Orman, Riverhead Books, 2001 (hardcover)
30 Reference •




Top two investment books rated by Consumer Reports....


They didn't like Ormans "The 9 Steps to Financial Freedom"

 

[itsbob]

Actually, short term CD rates are currently between 5% and 5-1/2%.

Thats far better than the S&P has done in the last 3 years, and random inexperienced investing can be even more costly.

Which S&P... this year the S&P 500 gained over 10%

 

[itsbob]

3 year average return on the S&P 500 for the last three years was over 14%...

 

[Ponytail]

I started investing about 6years ago. I have an account with Ameritrade. I own stock in 3 or 4 companies, and am not as active with it as I once was.

Initially, I picked a large company that showed BIG promise in growth and profits and so far that bet has paid off quite well. I'm in for the long run so that one sits. It recently split two for one and I wish I was in a position to buy more shares at the lower price.

One of the other companies that I invested in was little more that a start up. It was basically a "penny stock". They went out of business shortly after I invested.

Em, no matter what kind of education you have, or get on investing, there are no guarantees. The Long Term invester has advantagesin that if for some reason a stock tanks, or all of them do, over time, you can bet that eventually there will be some sort of rebound and you will get your money back.

Getting rich seems to me to be for the rich, priveleged and lucky. Stock investing is fun, challenging, and educational, but in no way is it a guarantee of retirement wealth, or college fund building. There is no way to know what shape the market will be in when it's time to retire, or time to put the money into a college.

As obvious as it is, it must be stated and remembered... Buy Low, Sell High. That means that if your stock tanks for some reason, don't panic and sell for fear of it going lower. Let it rebound. If it's a good stock, buy more at the lower price, but don't sell existing stock.

Read Fortune magazine. Read the Wall Street Journal, and any other reputable business/investment ink that there is. There are some good FUNDS that you can invest in that are safer than stocks, generrally make more money, but you have to play by their rules (maturity, amounts...). These funds are rated, reveiwed, and disected alot by Fortune magazine.

My Aunt did really well for my brother and I by investing in the Magellan fund. By the time we went to college, the funds had matured and had done fairly well. It didn't cover all the bills, not even close actually, but it was a HUGE help.

The most important advice I can give you is that you shouldn't invest any more than you can afford to lose. You have to take a chance, but you have to consider covering your azz if the market tanks again. In general, the stock market is a good place for your money and Long Term Investments do pay off. It's just a matter of being smart, moving your money when the time is right, and a little luck never hurts.

Oh, don't jump on every "hot stock" that friends may recommend. I lost a significant amount of money over the last couple of years on a stock that I bought on the recommendation (hounding) of a couple of friends. Do your own homework, and make your own decisions.

Good Luck!

HTH

 

[ememdee19]

I started investing about 6years ago. I have an account with Ameritrade. I own stock in 3 or 4 companies, and am not as active with it as I once was.

Initially, I picked a large company that showed BIG promise in growth and profits and so far that bet has paid off quite well. I'm in for the long run so that one sits. It recently split two for one and I wish I was in a position to buy more shares at the lower price.

One of the other companies that I invested in was little more that a start up. It was basically a "penny stock". They went out of business shortly after I invested.

Em, no matter what kind of education you have, or get on investing, there are no guarantees. The Long Term invester has advantagesin that if for some reason a stock tanks, or all of them do, over time, you can bet that eventually there will be some sort of rebound and you will get your money back.

Getting rich seems to me to be for the rich, priveleged and lucky. Stock investing is fun, challenging, and educational, but in no way is it a guarantee of retirement wealth, or college fund building. There is no way to know what shape the market will be in when it's time to retire, or time to put the money into a college.

As obvious as it is, it must be stated and remembered... Buy Low, Sell High. That means that if your stock tanks for some reason, don't panic and sell for fear of it going lower. Let it rebound. If it's a good stock, buy more at the lower price, but don't sell existing stock.

Read Fortune magazine. Read the Wall Street Journal, and any other reputable business/investment ink that there is. There are some good FUNDS that you can invest in that are safer than stocks, generrally make more money, but you have to play by their rules (maturity, amounts...). These funds are rated, reveiwed, and disected alot by Fortune magazine.

My Aunt did really well for my brother and I by investing in the Magellan fund. By the time we went to college, the funds had matured and had done fairly well. It didn't cover all the bills, not even close actually, but it was a HUGE help.

The most important advice I can give you is that you shouldn't invest any more than you can afford to lose. You have to take a chance, but you have to consider covering your azz if the market tanks again. In general, the stock market is a good place for your money and Long Term Investments do pay off. It's just a matter of being smart, moving your money when the time is right, and a little luck never hurts.

Oh, don't jump on every "hot stock" that friends may recommend. I lost a significant amount of money over the last couple of years on a stock that I bought on the recommendation (hounding) of a couple of friends. Do your own homework, and make your own decisions.

Good Luck!

HTH

Thanks, PT! That was really helpful!

 

[itsbob]

I've never tried my hand at individual stocks, only mutual funds. Mutual funds have managers whose job it is to do the research and do the buying and selling of individual companies stocks. Most funds have 50 or more different companies stocks so if one or two companies tank, hopefully they will still have money maker stocks to make up for it.

I don't know enough to chance my money on buying and selling individual stock, though I think it would be fun to do like they do in school. "Here's your $10,000 make a portfolio, buy/sell, and let's see who has the most money in 6 months."

 

[marketsavvy]

Why are you investing? Are you really ready to invest? What are you currently doing now? What is your risk tolerance? Do you have an emergency fund? These are all questions that you should answer before investing. Investing is only part of the equation to becoming rich or building wealth. There is no book or manual that will tell you how to invest to get rich. Though there are books that will explain the principals, theories, and terminology behind investing. Each individual is in their own unique situation and has their own opinions, suggestions, beliefs, habits, etc. Each person also has their own capacity for learning and understanding investing. Therefore an investment strategy has to be determined by taking all those things into account. That is why there are so many different types of investments out there. I believe that your first investment should be in finding and working with someone who has a general knowledge and understanding of personal finance and investing such as a financial advisor or planner who can look at the big picture and work with you to find out where you currently are and where you want to be and take into consideration all those individualities to devise a plan to guide you towards meeting your goals. You should also include a tax advisor in the mix to assist with tax considerations.

I have been in and out of the financial industry for while and seen and worked with financial planners, brokers, dealers, analysts and portfolio managers. Over the years I have drawn my own conclusion that although investing plays a big part in becoming wealthy it is not most important part. A lot of people use the words investing, stocks, bonds, mutual funds synonymously with wealth. I believe that the word save is more synonymous with wealth. You first have to have the ability to save your money in order to be able to invest your money. The more you can save the more you can invest. I believe that I can become wealthier by investing in CD’s than another person can by investing in the stock market and making a 15% return. Why? Because I have a plan that enabled me to own my house, own my vehicles, and have no credit card debt. The other person didn’t have a plan so they bought a house they couldn’t afford; they bought those expensive cars, and ran up credit card debt. Building wealth means developing a plan imploring self discipline and sticking to it. It is more than just picking the investment with the highest return

The only book that I have read and really liked is: Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach

I hope this helps. Good luck.

 

[Oz]

3 year average return on the S&P 500 for the last three years was over 14%...

5 Year average on the S&P is only 6.97% - 3 year is 12.3% and 1 year is 10.79%.

So my time frame is a little off. But I know that the money I put into a Vanguard S&P 500 Index Fund 4 or 5 years ago has just now recovered to its original investment value. I would have been much farther ahead buying CD's at the time. And I am currently considering cashing out and moving it into CD's.

Meanwhile, another investment that I have which is managed by a professional is doing very well. The advice is expensive but he consistently earns me at least double his costs.

A small amount of money I invested just to play around and gamble with the stock market in known companies that I was familiar with and had studied is about 90% gone. Poof - That money was for that sole purpose and I could afford it. The college fund, or the mortgage that month was not at stake. Long-term learning expense.

Meanwhile, the last time I went to Vegas, the trip paid for itself. So you win some and you lose some and you don't get do-overs. Make sure you have the stomach for whatever investment vehicle you choose. And don't risk your child's college fund if you don't know what you are doing, or aren't willing to pay for good advice.

 

[Lugnut]

Oz, Bob, where are you two getting your numbers?

 

[itsbob]

Oz, Bob, where are you two getting your numbers?

I don't recall, but I THINK I got the S&P 500 last three year numbers from Morningstar.. I might be wrong though...

AND if you are a poor investor doing monthly installments, the market being down is a VERY good thing.. that means you are buying more shares every month while it is down, and when it recovers you have more shares at the original cost. You STILL made money, even when the market was down..

In the end, you need TIME.. if you are looking for a short term investment, then yes CD's are the safest way to go.. IF you plan on ivnesting for 6 months to a year, and taking the money out and spending it or doing something else with it.. BUT if you have more then 10 years, 15 or 20 years to invest, CD's are NOT the place to put your money.

Funds, S&P have upturns and downturns, but in the end if you choose wisely, can average up to and even more then 15% interest... 5% or 15% a year.. hmmmmm

At 5% a year starting with 10K in 30 years I'll have 40K

At 15% the same amount of years I'll have 640K.. 3 times the interest, SIXTEEN times the return..

or a more realistic number.. say 12% average... = 240K SIX times the amount saved under CD's..

 

[aps45819]

The extent of my investing experience is my 401K account at work.
So my question is, where should I start? Any insight would be very helpful. Mutual funds, stocks/bonds, IRAs...it's all confusing to an investement virgin. Please help!

Your 401K is probably all those things.

 

[Agee]

Your 401K is probably all those things.

...and probably divided into low, medium and high risk categories.