How to start investing with only $100 per month

[alchemize]

A pretty good basics article
Discounts the whole "only rich people can play in the market" sentiment (not that anyone who has that sentiment would listen). But maybe it will help someone with an open mind and a few bucks left over each month.

How badly do most of us perform? A study by Dalbar Inc., a Boston-based investment research firm, found that from 1984 to 2002, when the S&P 500 index ($INX) grew at an annual rate of 12.2%, individual investors in equity mutual funds saw average returns of 2.6% a year, before taxes.

That's downright pitiful.

Ignore your broker, ignore "hot tips", and follow these principles to get 10+% on your money over the long haul. Index funds and diversification, baby.

 

[Orsorum]

VFINX, baby!

 

[alchemize]

Vanguard r0x0rs My crappy company has its 401K in Fidelity, but all my IRA's, my kids ESA's, and my old 401K money is in vanguard index funds.

 

[Orsorum]

Originally posted by: alchemize
Vanguard r0x0rs My crappy company has its 401K in Fidelity, but all my IRA's, my kids ESA's, and my old 401K money is in vanguard index funds.

I need to actually get a job so I can start socking away some money, both in my Roth and in my regular acct. Thinking about concentrating any shares of VFINX in my Roth and finding a good muni fund for my taxable acct.

 

[heartsurgeon]

welcome to the Rich Boys Club (RBC)!

eventually we'll let you upstairs where the scotch is at least 25 years old, the women are all smart and beautiful.

 

[Romans828]

Be careful investments are evil. Run away or the rich republican neocons with destory your mind.........

flee flee............ invest in the poor and forgotten not corporate america comrades

 

[myusername]

I wish 2.6 percent ... my muti interest doesn't even cover my administrative fees this year.


Thanks for the link!

 

[Zephyr106]

Originally posted by: Romans828
Be careful investments are evil. Run away or the rich republican neocons with destory your mind.........

flee flee............ invest in the poor and forgotten not corporate america comrades

Troll.

Zephyr

 

[Romans828]

Originally posted by: Zephyr106

Originally posted by: Romans828
Be careful investments are evil. Run away or the rich republican neocons with destory your mind.........

flee flee............ invest in the poor and forgotten not corporate america comrades

Troll.

Zephyr

Thank you for that insight...........

whats wrong with my point?

 

[Officerdown]

Ticker ' HAL '... oh yeah! 'nuf said?

 

[Zephyr106]

Originally posted by: Romans828

Originally posted by: Zephyr106

Originally posted by: Romans828
Be careful investments are evil. Run away or the rich republican neocons with destory your mind.........

flee flee............ invest in the poor and forgotten not corporate america comrades

Troll.

Zephyr

Thank you for that insight...........

whats wrong with my point?

I guess its fitting for a Communist as yourself.

Zephyr

 

[Romans828]

You got it comrade

 

[Zephyr106]

Originally posted by: Romans828
You got it comrade

Don't call me comrade, because I'm not Communist. I take great offense to your comments, troll.

Zephyr

 

[Romans828]

Originally posted by: Zephyr106

Originally posted by: Romans828
You got it comrade

Don't call me comrade, because I'm not Communist. I take great offense to your comments, troll.

Zephyr

Boo hoo get a life

 

[alchemize]

Take it to PM gents.

 

[Romans828]

I will simply say ONE LAST thing..........

read through the thread (its not long yet)........

He calls me a communist then pretends to get upset when I RESPOND with comrade.........WTF is that?

nuff said

Thank you and good night

 

[prontospyder]

Thanks for the link!

 

[SuperTool]

If you have $100 to invest, first make sure you don't have any credit card debt to pay off.
Then see if your employer matches 401k contributions, and contribute as much as you can up to matching limit. Keep in mind in addition to free money from the boss, you are getting a tax break. So instead of getting that $100 after taxes, you could put $120 or so pretax into the 401k.
Otherwise open an IRA and put that $100 there.
I like NBGNX fund in my 401k. It makes VTSMX (total stock market from vanguard) look like a joke over the last 5 years. Of course we don't know what the next 5 years will look like.
http://finance.yahoo.com/q/bc?s=NBGNX&t=5y&l=on&z=m&q=l&c=vtsmx

 

[chess9]

Uh, there are some better saving tips. Don't buy a new car and finance it for 5 years at the ridiculous rates these lenders charge most people. Buy a decent used car and pay cash for it. I.e., put as little money as possible into DEPRECIATING assets. That is the single biggest failure of most Americans. Oh, you can invest $100 per month in an indexed fund, but how much sense does it make if you waste the rest of your money? Do not carry ANY credit card debt. If you must use credit cards pay them off monthly. If you find you are abusing the cards, give them to your mother to keep for a few months or cut them up. Eating out is another big money waster. Many of my friends eat out 3 or more nights per week. Too stupid. You can eat better at home for about 25% of the cost of eating out. Buy a home. Preferably the smallest home in the neighborhood. Use furniture and clothing as long as possible. I have clothes from 1959. I am not kidding!

If you are doing that (and so much more, but I'm lazy as usual), then invest. I prefer real estate, but I do own a fairly substantial stock portfolio with way too many tech stocks.



-Robert

 

[alchemize]

Chess9: All good points Yes, if you live beyond your means, then investing $100 while paying $200 in credit card debt is not wise

Here is a piece of advice I always have given myself, and taken If you are not invested in 401(k), and want to ease into it, each year take at least 1/2 your raise (preferrably all of it) and increase your contributions. I've gone from zero 401(k), zero IRA, to contributing 14% to 401(k), 1 fully funded IRA. Next year's goal is to contribute to my wifes IRA. Also, always use direct deposit to fund your accounts. If it is gone, you'll never spend it!

 

[Minchenden]

Basic rules of trading.

1) Securities suck. Do not get emotional about securities. If you have a "favourite" stock you shouldn't be in the market.
2) Manage your risk by "Planing your trade and trading your plan". Put a stop on the downside and, if it moves in the direction you hope, sell/buy enough to recoup your investment. Readjust your stops. Sell/buy at a predetermined price. Don't hang on until the last possible moment. Once a security starts to move, you may not be able to trade at the optimum point.
3) Be prepared to lose. But follow rule #2 to minimize losses.
4) Make sure you know what you are doing. Learn about options, futures, the different types of stops, etc., and the different plays.
5) Unless you are prepared to follow the market closely (Level 2 screens), you may as well not play.

You do not need a vast amount of cash to make a decent living trading securities, nor a great deal of time to make your portfolio grow, but it takes dedication and patience. Stuffing cash into mutuals is a suckers game. If you knew how they worked, you wouldn't go near them. If you want your assets to grow, MANAGE THEM.

Remember, with proper risk management an investor/trader need only be successful 40% of the time.

 

[LordMagnusKain]

Originally posted by: Romans828
Be careful investments are evil. Run away or the rich republican neocons with destory your mind.........

flee flee............ invest in the poor and forgotten not corporate america comrades

LOL

but then you have to rely on social security for retirement... which is just silly.


two words:
cooperate bonds.

 

[alchemize]

Minchenden, thank you for your contribution, however...

I would suggest that any beginner follow the concepts outlined in this article with the majority of their investment money. If you have extra "play" money, go crazy. But many a day-trader has gone bankrupt trying to "play the game". I suggest anyone looking to invest your income wisely stay away from trading stock.

I understand exactly how mutual funds work. They are far from a suckers game. Especially index funds.

 

[LordMagnusKain]

Originally posted by: alchemize
Minchenden, thank you for your contribution, however...

I would suggest that any beginner follow the concepts outlined in this article with the majority of their investment money. If you have extra "play" money, go crazy. But many a day-trader has gone bankrupt trying to "play the game". I suggest anyone looking to invest your income wisely stay away from trading stock.

I understand exactly how mutual funds work. They are far from a suckers game. Especially index funds.

when you compare the tax advantages to what you get from a drip-fund most mutuals are generally a suckers game.. but then only 1 in 100 dollars in the stock market should be real anyway.

 

[mugs]

Thanks for the link/info. I'm looking to open an IRA sometime soon. Does anyone have any suggestions for what company I should open it with?