I'm out of highschool, and still living with my parents, and I just started a factory job, with lots of overtime. I'm basically just working, and sleeping, and relaxing on my time off, and I'm able to save away roughly $30,000 a year. I want to keep doing this for a few years, and I want to know what is the wisest way to invest my money, so I can amass as mouch as possible at the end of the next few years.
I know basically nothing about investing, or interest rates, and I would dearly appriciate it if somebody could explain all that to me. Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. If you are like most people you will invest part of your money aggressively in stocks, and part conservatively in money market funds and bond funds. The links below have on-line questionnaires which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of investment.
You want to buy a diversified portfolio of stocks as individual stocks are too risky. Highly knowledgeable people can buy a properly balanced portfolio, but most folks have a difficult time balancing things on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Back in 2000, Some people bought all internet stocks; they got burnt when they all crashed together. You have to diversify across industries. Unless you know what you are doing, it is best to buy mutual funds. Buy no-load, low cost funds. Mutual funds should have expense ratios of less than 0.5%.
If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.
I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.
If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.
Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however. Okay, here's what you need to do.
$30,000 a year is $2500 per month.
Invest $2500 a month, into mutual funds.
What Kind of Mutual Funds?
- Look into what is called an "asset allocation fund"
- This will give you diversification into a lot of different types of investments, which you need.
At the end of a few years, you WILL be sitting pretty.
Oh, and a note: GET A FINANCIAL ADVISOR to lead you in the right direction. They will help. Good Luck
Most Important Rule:
NO CDs. No Savings Accounts. No Money Market Accounts.
EDIT: Funny I get the thumbs down for this - I am assuming they don't like that I say no CDs, No Savings, No Money Market....
- These investments are only ways to KEEP the same amount of money. After you take out taxes and inflation, you're breaking even.
Get someone to help. Don't invest anything until you have done your homework. I could set here and tell you exactly what to invest in and if you did and lost money what then? You don't even know me.
Take advice from people who you can track their performance. Start reading. Try Smartmoney magazine and Kiplingers Personal Finance. Also try reading the business page of the newspaper or the Wall Street Journal.
The most important thing I can tell you is to learn, learn, learn. Read books. "Why we want you to be Rich" By Donald Trump and Robert Kiyosaki. Also read some of warren buffets books.
Learn to identify trends in the business cycle and get in front of them. In other word consider this. Their are 76 million baby boomers the between the ages of 41 and 59. Cater to the 59 year old and you will have 18 years of growth to look at.
So what will boomers need? Nursing homes, prescriptions, they want to look younger etc.
Remember take your investing seriously and buy assets. What is an asset? It is something that produces more money.
Use your income to produce more income or cash flow.
Oh yeah if you go for stocks make sure it's worth what you are paying for it. Find it's value just like if you were purchasing a car and don't overpay. Learn about price to earnings ratios and price to growth ratios and such. Just educate yourself first so you will be more comfortable with your decisions.
Good Luck
Shannon invest in stock mutual funds for the rest of your life. see my profile. Great job !! If you invest wisely, you could be in great shape in a matter of 5 years.
A few things I think might help you. Mutual funds are not the great investment they once were, in my opinion. About 75% of them under perform the market. All of them have management fees, and some have sales loads. There are better options.
ETF's are basically the same things as mutual funds, with lesser overall fees.
Your first option should be to fund fully a retirement account. This is always a good investment regardless of who you are.
If you have done this, or you wish to wait on the retirement fund, then one of the best things you can do is open a DRIP Plan.
They are seldom talked about because brokers make very little money when they suggest them. Yet, they have proven to be one of the best, if not the best, long-term strategy on Wall Street.
The best part is you get to choose from the best Blue Chip International Corporations in the world. You can have Toyota, General Electric, Royal Canadian Bank or McDonalds in your portfolio. Although there is always risk in stocks, these Blue Chip giants offer far less risk than most.
They are inexpensive to start and maintain, and your dividends are reinvested for free.
They are perfect for small investors, as well as big investors. They will allow you to sleep at night and not care about whether the market is going up or down.
Look at all of your suggestions closely. Ask your parents help you to make a good decision.
Best of Luck Look at all of the suggestions you get here very closely.
First off, you do not need a financial advisor if you do some very basic research. A financial advisor is going to put you in some mutual funds that he or she makes a large commission off, everytime you purchase more. They have ulterior motives. There are better investments than mutual funds.
Just look into an investment strategy that utilizes dollar cost averaging and dividend reinvestments. These 2 strategies are very powerful long-term investment methods.
I would personally suggest looking into ETF's or DRIP Plans.
And I would establish a savings account with enough money to cover atleast 6 months of bills. This is always a good idea.
Do your research. A Financial advisor is only feasible if you have a large sum of money that needs to be put in several different investment vehicles. It depends on your time frame and risk tolerance. For example, if you'll need the money for a down payment in 3 years, you should stick to t-bills or CDs. If it's for retirement in 25 years, you should buy ETFs that track the S&P 500 (like ticker symbol "IVV"). Short & simple....
Try http://www.goldenbullstocks.com
It works for me Hello,
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I had a good amount of money, and wanted it to grow.
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Hope this has helped you! In this market it is safer to put your money into CDs. You are young enough to earn plenty of retirement cash in a safe investment such as this. If you socked away 30 k per year and only earned 4.25% (conservative rate) per year you will be a millionaire in just under 20 years. CD's are also guaranteed for the rate you initially sign up for so you won't have to worry about market conditions lowering your earnings. Your money will also be available to you annually or every 6 months should you decide you want to invest in real estate or something else. You can search the top yielding CDs in this free directory:
http://cdratesearch.net/
Good luck. |
