Hey guys I'm 22 and just got my first real job. What is the best way to invest to make the most of my money. I have a 401K now but I like the idea of having access to my investments if the situation arises that I really need it. Thanks
How to invest?
- Thread starter krwell
- Start date
If you haven't already I would suggest you put some money into other retirement investments. The Roth IRA is an excellent place to start but there are other good ones. You'd be amazed how much money a few thousand invested now can grow into later. There really aren't too many investments that offer ready access to the money if you need it; not without a penalty anyway. If you think you can get by a few years without it look into short-term CD's or mutual funds.
Edit: Of course, the best way to handle investing is to find somebody who does this for a living that you trust (but always be aware of where stuff is and what it's doing).
Edit: Of course, the best way to handle investing is to find somebody who does this for a living that you trust (but always be aware of where stuff is and what it's doing).
im only 16 but i really do know a lot about the markets
STAY AWAY FROM MUTUAL FUNDS. it's basically a system where they slowly transfer your account into their account through high management fees even if it doesn't make any money
you buy things based on what goes on in the news, after 9/11 all the airplane companies took a hit. after that happened my dad bought a crap load of bombardier shares (some company in quebec that makes personaly airplanes). he said it went down in sympathy with all major plane manufacturers even though they don't make those big commercial liners
BROKERS WILL SCREW YOU. Suze Ormand said it best when she said 'they are called brokers because they make you broker' go with discount brokers (like 10 or 20 bucks a trade)
DO NOT listen to analysts on CNBC because they represent brokerage firms, they make money from commission of transactions so they will ALWAYS tell you to buy even if it's a bad idea. if those guys ever said to sell they would get their asses fired on the spot
index funds are your friend, you are not basing the outcome on your money of 1 stock but every stock in the index. your money rides up with the general average of the index itself
if you have heard a 'hot stock tip' then it is old news and you are too late, don't fall for it
penny stocks can make you or break you. for heavy gamblers only
a basic blue chip stock with a generaly good history should do well most of the time
it is a GOOD thing if stock prices go down. it means you can buy a ton of shares at that time and average down so you make more money when it goes back up
don't panic when your stock goes down unless it is something which could crash such as Enron or those internet companies of a few years ago
happy gambling to you
STAY AWAY FROM MUTUAL FUNDS. it's basically a system where they slowly transfer your account into their account through high management fees even if it doesn't make any money
you buy things based on what goes on in the news, after 9/11 all the airplane companies took a hit. after that happened my dad bought a crap load of bombardier shares (some company in quebec that makes personaly airplanes). he said it went down in sympathy with all major plane manufacturers even though they don't make those big commercial liners
BROKERS WILL SCREW YOU. Suze Ormand said it best when she said 'they are called brokers because they make you broker' go with discount brokers (like 10 or 20 bucks a trade)
DO NOT listen to analysts on CNBC because they represent brokerage firms, they make money from commission of transactions so they will ALWAYS tell you to buy even if it's a bad idea. if those guys ever said to sell they would get their asses fired on the spot
index funds are your friend, you are not basing the outcome on your money of 1 stock but every stock in the index. your money rides up with the general average of the index itself
if you have heard a 'hot stock tip' then it is old news and you are too late, don't fall for it
penny stocks can make you or break you. for heavy gamblers only
a basic blue chip stock with a generaly good history should do well most of the time
it is a GOOD thing if stock prices go down. it means you can buy a ton of shares at that time and average down so you make more money when it goes back up
don't panic when your stock goes down unless it is something which could crash such as Enron or those internet companies of a few years ago
happy gambling to you
im only 16 but i really do know a lot about the markets
STAY AWAY FROM MUTUAL FUNDS. it's basically a system where they slowly transfer your account into their account through high management fees even if it doesn't make any money
Heh. If I realized as much as you do when I was 16, I'd REALLY be ahead. However, I disagree somewhat about mutuals.
I'm 40 and have been investing in mutuals, DRIPs, brokerage accounts for 20 years. 18 of those years was with an Army paycheck, BTW. It depends upon the mutual fund. Look at the expense ratio. If you are on a budget, there are "low-minimum" funds to get you started. Dividend ReInvestment Plans are a good bet because many have low minimum purchases. A basket of 5 DRIP stocks can be purchased for as little as $50 per period. Some allow investments of as little as $10. Investing in DRIPs is real grass roots investing. The NAIC has many good resources on this.
you buy things based on what goes on in the news, after 9/11 all the airplane companies took a hit. after that happened my dad bought a crap load of bombardier shares (some company in quebec that makes personaly airplanes). he said it went down in sympathy with all major plane manufacturers even though they don't make those big commercial liners
There are various "schools of thought" regarding when is the best time to invest. "Value investing" means purchasing shares of a particular company at or near their respective yearly low. "Dollar Cost Averaging" entails purchasing shares with the same amount of funds at evenly spaced intervals over a given time period.
BROKERS WILL SCREW YOU. Suze Ormand said it best when she said 'they are called brokers because they make you broker' go with discount brokers (like 10 or 20 bucks a trade)
Full service brokers will if one is a small player. However, for large accounts, the fees can actually be less than a mutual fund, in some cases. Discount brokerages are best.
DO NOT listen to analysts on CNBC because they represent brokerage firms, they make money from commission of transactions so they will ALWAYS tell you to buy even if it's a bad idea. if those guys ever said to sell they would get their asses fired on the spot
Heh. I've sold on many occasions when analysts screamed BUY! That's called the contrarian approach. In my opinion, analysts are paid to hawk stocks and nothing more.
index funds are your friend, you are not basing the outcome on your money of 1 stock but every stock in the index. your money rides up with the general average of the index itself
Index funds are great, no doubt. Use Dollar Cost Averaging over a period of time and one can see exactly how much of a conservative, secure and fruitful investment they really are.
if you have heard a 'hot stock tip' then it is old news and you are too late, don't fall for it
There is one exception to the rule. If you are familiar with someone in upper management (CFO, CEO, Chairman) of the particular company, then it could be a good bet.
penny stocks can make you or break you. for heavy gamblers only
Yep. However, believe it or not, the odds are quite good with some bank stocks under $5. Go to the FDIC website and reseach the H - E - double toothpicks out of them. Look at the market they are in and whether or not they might be a good takeover target. Have been successful with two out of three using this approach.
a basic blue chip stock with a generaly good history should do well most of the time
People often make fun of the "stuffy old blue chips" such as General Electric, Proctor and Gamble and General Motors. GE and PG have been around for over 100 years and are super huge mult-nationals with good balance sheets. I've had great success with blue chips over a long period of time.
it is a GOOD thing if stock prices go down. it means you can buy a ton of shares at that time and average down so you make more money when it goes back up
Been doing that for years. I'm not as active with the value investing as I once was.
don't panic when your stock goes down unless it is something which could crash such as Enron or those internet companies of a few years ago
Good advice. Discipline and patience are key. This is a marathon. I did not invest one cent in the dot bombs when everyone else was so arrogant about them. Although I did indeed plunder their generous offers. Stayed with banks, blue chips, couple of resturants, lot's of Dow stocks and mutual funds during the craze.
happy gambling to you
LOL. I look at it more like a long term calculated risk. Must say that I've had my share of losers..... PanAm, Woolworth, Security First Bank come to mind.
Hey guys I'm 22 and just got my first real job. What is the best way to invest to make the most of my money. I have a 401K now but I like the idea of having access to my investments if the situation arises that I really need it. Thanks
krwell: My advice to you would be to discipline yourself to put aside a set amount each pay period into an Index fund. Vanguard has many of them with low expense ratios.
Above all, do some research. Many resources on the net.
STAY AWAY FROM MUTUAL FUNDS. it's basically a system where they slowly transfer your account into their account through high management fees even if it doesn't make any money
Heh. If I realized as much as you do when I was 16, I'd REALLY be ahead. However, I disagree somewhat about mutuals.
I'm 40 and have been investing in mutuals, DRIPs, brokerage accounts for 20 years. 18 of those years was with an Army paycheck, BTW. It depends upon the mutual fund. Look at the expense ratio. If you are on a budget, there are "low-minimum" funds to get you started. Dividend ReInvestment Plans are a good bet because many have low minimum purchases. A basket of 5 DRIP stocks can be purchased for as little as $50 per period. Some allow investments of as little as $10. Investing in DRIPs is real grass roots investing. The NAIC has many good resources on this.
you buy things based on what goes on in the news, after 9/11 all the airplane companies took a hit. after that happened my dad bought a crap load of bombardier shares (some company in quebec that makes personaly airplanes). he said it went down in sympathy with all major plane manufacturers even though they don't make those big commercial liners
There are various "schools of thought" regarding when is the best time to invest. "Value investing" means purchasing shares of a particular company at or near their respective yearly low. "Dollar Cost Averaging" entails purchasing shares with the same amount of funds at evenly spaced intervals over a given time period.
BROKERS WILL SCREW YOU. Suze Ormand said it best when she said 'they are called brokers because they make you broker' go with discount brokers (like 10 or 20 bucks a trade)
Full service brokers will if one is a small player. However, for large accounts, the fees can actually be less than a mutual fund, in some cases. Discount brokerages are best.
DO NOT listen to analysts on CNBC because they represent brokerage firms, they make money from commission of transactions so they will ALWAYS tell you to buy even if it's a bad idea. if those guys ever said to sell they would get their asses fired on the spot
Heh. I've sold on many occasions when analysts screamed BUY! That's called the contrarian approach. In my opinion, analysts are paid to hawk stocks and nothing more.
index funds are your friend, you are not basing the outcome on your money of 1 stock but every stock in the index. your money rides up with the general average of the index itself
Index funds are great, no doubt. Use Dollar Cost Averaging over a period of time and one can see exactly how much of a conservative, secure and fruitful investment they really are.
if you have heard a 'hot stock tip' then it is old news and you are too late, don't fall for it
There is one exception to the rule. If you are familiar with someone in upper management (CFO, CEO, Chairman) of the particular company, then it could be a good bet.
penny stocks can make you or break you. for heavy gamblers only
Yep. However, believe it or not, the odds are quite good with some bank stocks under $5. Go to the FDIC website and reseach the H - E - double toothpicks out of them. Look at the market they are in and whether or not they might be a good takeover target. Have been successful with two out of three using this approach.
a basic blue chip stock with a generaly good history should do well most of the time
People often make fun of the "stuffy old blue chips" such as General Electric, Proctor and Gamble and General Motors. GE and PG have been around for over 100 years and are super huge mult-nationals with good balance sheets. I've had great success with blue chips over a long period of time.
it is a GOOD thing if stock prices go down. it means you can buy a ton of shares at that time and average down so you make more money when it goes back up
Been doing that for years. I'm not as active with the value investing as I once was.
don't panic when your stock goes down unless it is something which could crash such as Enron or those internet companies of a few years ago
Good advice. Discipline and patience are key. This is a marathon. I did not invest one cent in the dot bombs when everyone else was so arrogant about them. Although I did indeed plunder their generous offers. Stayed with banks, blue chips, couple of resturants, lot's of Dow stocks and mutual funds during the craze.
happy gambling to you
LOL. I look at it more like a long term calculated risk. Must say that I've had my share of losers..... PanAm, Woolworth, Security First Bank come to mind.
Hey guys I'm 22 and just got my first real job. What is the best way to invest to make the most of my money. I have a 401K now but I like the idea of having access to my investments if the situation arises that I really need it. Thanks
krwell: My advice to you would be to discipline yourself to put aside a set amount each pay period into an Index fund. Vanguard has many of them with low expense ratios.
Above all, do some research. Many resources on the net.
bigdog1218
Golden Member
- Mar 7, 2001
- 1,674
- 2
- 0
<< it is a GOOD thing if stock prices go down. it means you can buy a ton of shares at that time and average down so you make more money when it goes back up >>
I would stay away from doing this
personally i sell a stock when i make 30-50% on it, depending on how the charts look and if there's more room to go up but never get greedy, and sell if it goes down 15%, of course depending on if it looks like it would go down more or if the current downtrend stopped.
example: you buy a stock at 10, it goes down to 8.5, but charts show there's still more room for it to fall, sell at 8.5, stock goes down to 7, down trend looks over, buy at 7, now instead of owning the stock at 10, 8.5 and 7, all your money is in at 7
sounds easy buts its very tough, and i've been trading for 5 years now and its still tough to decide when to jump into a stock and when to get out, you always want the lowest price, but you don't want to miss the bottom, and you always want your stock to sky rocket, its tough but its fun, good luck
If you have a 401k, chances are that all your contributions will be invested in a mutual fund, to which you will go to pick out of the ones offered. A 401k is a retirement account and if you need access to the money, you will pay income tax and a 10% IRS early withdrawl fee on any withdrawls. If you are concerned that a fund you choose isn't performing well, you can move it to any of the other funds offered in your 401k without penalty.
Watching something about the Enron failure the other night, I picked up a bit of advice. Don't allow more than 10 - 15% of one stock to make up your portfolio. Diversify. Pharmacueticals, utilities, tech companies, etc etc.
bigdog. your example is not a very good one
i think what you are refering to is when you know it's just a fad. back a few years ago when oil was just a BRUTAL price was really high and was starting to drop. THAT is when people should have sold because they knew it would never be that high again for at least another 10 years
good point though.
i think what you are refering to is when you know it's just a fad. back a few years ago when oil was just a BRUTAL price was really high and was starting to drop. THAT is when people should have sold because they knew it would never be that high again for at least another 10 years
good point though.
lol that's a beauty
don't ever feel sad for not putting more in though because if you had invest more. the stock would have crashed or something (that's the way everything goes).
like George Costanza said on Seinfeld "this whole universe is against me!"
don't ever feel sad for not putting more in though because if you had invest more. the stock would have crashed or something (that's the way everything goes).
like George Costanza said on Seinfeld "this whole universe is against me!"
I'm also 22, and just started a new job. i have a 401K (through the government) but have also done several other things
1) CAP account. works as a checking account and also gives you more interest than a normal "savings" account
2) Roth IRA's. i've already got 2 of them opened up...basically, they sit there for 30 or 40 years and when you retire you get them + interest AND you're not taxed on taking the money out of them (versus regular IRA's in which you are taxed)
3) mutual funds. basically, i met with a financial advisor and split up some cash i had from my signing bonus into both moderate and slightly riskier mutual funds.
I highly suggest you talk to someone at your bank or what not, they can be quite helpful
Once my salary starts increasing some more, i plan to do some day trading and what not...but with a 401K + IRA's plus some mutual funds, you're gonna be set
and starting younger is KEY...there's no reason not to
1) CAP account. works as a checking account and also gives you more interest than a normal "savings" account
2) Roth IRA's. i've already got 2 of them opened up...basically, they sit there for 30 or 40 years and when you retire you get them + interest AND you're not taxed on taking the money out of them (versus regular IRA's in which you are taxed)
3) mutual funds. basically, i met with a financial advisor and split up some cash i had from my signing bonus into both moderate and slightly riskier mutual funds.
I highly suggest you talk to someone at your bank or what not, they can be quite helpful
Once my salary starts increasing some more, i plan to do some day trading and what not...but with a 401K + IRA's plus some mutual funds, you're gonna be set
and starting younger is KEY...there's no reason not to
thers a few index funds in Canada, TSE 500 is the big one. i don't have enough to invest in that one though so im the TSE 300 (like 5k minimum for 500)
btw what is a 401k? is that when you put some of your income towards investing as a retirement plan and it's tax free until you pull it out?
btw what is a 401k? is that when you put some of your income towards investing as a retirement plan and it's tax free until you pull it out?
First off be sure to take advantage of your 401K matching. Invest to the maximum that your company matches (3%, 6%, whatever), at a minimum, more if you can afford to. While it's not recommended, you -can- make loan withdrawals from your 401K in the event of an emergency. Just make sure it's a loan, not a withdrawal, in order to avoid the penalties. The interest that you pay on the loan goes back to you, so you're really only losing the growth that the money would have had if you'd left it alone in your 401K. One big issue, though, is that if you lose your job the loan is generally payable in full at that time and if you're unable to pay it back then it's considered a withdrawal with the inherent penalties.
The best advice I ever received is to invest your pay increases (i.e., if you get a $100/month raise, invest an additional $100/month). Since you haven't gotten used to having the money, you'll never miss it, and your investments will really take off over time.
Once you've maxed out what you want to do with your 401K then you can start investing in the IRAs & mutual funds, etc. Don't plan on doing anything with stock trades until you're already happy with what you've invested already out of your paycheck. Basically, don't gamble with money you have to have (retirement, college funds, rent money, whatever) - Only trade using 'extra' cash that you're not emotionally attached to, so it won't break you when your first 'hot' IPO goes bust.
Despite Halogen's advice to the contrary, I think that mutual funds are a good place to have your money as you're taking advantage of the 'average' performance of a particular market, not the whims of a single board of directors. Just like any other investment, though, research it in advance before you put your money into it, that way you won't be surprised by management fees or a mutual fund that has a majority of it's investments in a single company (lots of folks have been hurt by Cisco, Lucent, and some of the other 'major' companies that brokers felt were a sure thing).
Good luck.
The best advice I ever received is to invest your pay increases (i.e., if you get a $100/month raise, invest an additional $100/month). Since you haven't gotten used to having the money, you'll never miss it, and your investments will really take off over time.
Once you've maxed out what you want to do with your 401K then you can start investing in the IRAs & mutual funds, etc. Don't plan on doing anything with stock trades until you're already happy with what you've invested already out of your paycheck. Basically, don't gamble with money you have to have (retirement, college funds, rent money, whatever) - Only trade using 'extra' cash that you're not emotionally attached to, so it won't break you when your first 'hot' IPO goes bust.
Despite Halogen's advice to the contrary, I think that mutual funds are a good place to have your money as you're taking advantage of the 'average' performance of a particular market, not the whims of a single board of directors. Just like any other investment, though, research it in advance before you put your money into it, that way you won't be surprised by management fees or a mutual fund that has a majority of it's investments in a single company (lots of folks have been hurt by Cisco, Lucent, and some of the other 'major' companies that brokers felt were a sure thing).
Good luck.
db
Lifer
- Dec 6, 1999
- 10,575
- 292
- 126
re brokers/whoever who give advice on what particular stock/whatever to buy:
if they were good at picking winners, they would be spending every minute making themselves richer with their winners, not wasting their time talking to you or me.
Fact is, brokers are making money off you b/c of the commissions, payback, etc.
Lookup "churning".
if they were good at picking winners, they would be spending every minute making themselves richer with their winners, not wasting their time talking to you or me.
Fact is, brokers are making money off you b/c of the commissions, payback, etc.
Lookup "churning".
ultimatebob
Lifer
- Jul 1, 2001
- 25,134
- 2,450
- 126
I've said before, and I'll say it again. You're asking the WRONG forum for advice! Questions like these would be better answered in the new investors forum at the Motley Fool, which is located at www.fool.com.
Also, since you're a new investor, stick with safe "blue chip" stocks for your first investments. Sure, companies like GE and IBM didn't go up as much as Nvidia did last year, but they have a much better chance of not losing value THIS year.
Also, since you're a new investor, stick with safe "blue chip" stocks for your first investments. Sure, companies like GE and IBM didn't go up as much as Nvidia did last year, but they have a much better chance of not losing value THIS year.
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