How to start investing with only $100 per month

[alchemize]

Originally posted by: 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?

I suggest Vanguard, broad based Index fund

 

[alchemize]

Originally posted by: 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.

LMK, I'm not following you here. Unless you are talking about the tax advantages of the reduced dividend tax rate? My discussions were primarily directed towards someone who currently invests Zero, and wants an EASY way to invest. Their priority should be:

1) 401(k)
2) IRA's
3) Then start thinking about DRP's or other ways of investing. I still think index funds are the easiest and offer the best return, as DRP's require you to be a bit more savvy and research oriented.

And what is the 1/100 statement about??

 

[1cito]

Thanks for the link alchemize :beer:

 

[DealMonkey]

BTW, nice sig alchie. What prompted your new leaf?

I'm also looking at some SEP IRA decisions very soon. Last year I made a sizeable dep to my SEP and just let it sit there uninvested. Bad, bad, bad, BAD! So, I'm going to dump last year's dep into a Vanguard Index Fund. This year's dep will probably sit for a while until I can research what ETFs to get involved with. Assuming I can even do that via my Schwab acct.

Anyhow, thanks for the article buddy. Really helps give me some direction. I'm such a noob when it comes to investing.

 

[DealMonkey]

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.

What Vanguard index funds do you recommend specifically? Can you please provide symbols? I'm doing some research over the weekend.

Thanks!

 

[alchemize]

Originally posted by: DealMonkey
BTW, nice sig alchie. What prompted your new leaf?

Eh, I kind of thought I was being a dick It is easy to get sucked into the us/them posting on here, isn't it?

I'm also looking at some SEP IRA decisions very soon. Last year I made a sizeable dep to my SEP and just let it sit there uninvested. Bad, bad, bad, BAD! So, I'm going to dump last year's dep into a Vanguard Index Fund. This year's dep will probably sit for a while until I can research what ETFs to get involved with. Assuming I can even do that via my Schwab acct.

You should be able to. If not, get outta Schwaab and transfer into Vanguard.

Anyhow, thanks for the article buddy. Really helps give me some direction. I'm such a noob when it comes to investing.

Everybody starts a noob :beer: I was lucky enough to major in Finance. I think Investments 101 should be a required class...Who cares about global economics, what really matters is when you are trying to send your kids to school, or retire.

Fool.com has good reading

You could also just pick up a used college textbook on investing, I still reference mine when I forget things. But generally I prefer the simple approach of index funds, dollar cost averaging, and diversification. It is tried, trued, tested, and perfect for the lazy like myself (and it almost always beats out the "pros".)

 

[conjur]

www.sharebuilder.com

 

[alchemize]

Originally posted by: DealMonkey

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.

What Vanguard index funds do you recommend specifically? Can you please provide symbols? I'm doing some research over the weekend.

Thanks!

Well, the easiest way to invest is the good old S&P 500 index fund (VFINX). That way you can watch the S&P 500 every day and go "yay I made $27" or "ack, I lost $18". I would suggest you put roughly 50-80% of your money in there. Depending on your tolerance for risk, you can also get into some mid or small-cap funds. I'm also in Vanguard Small-Cap Growth Index Fund (VISGX). In my IRA's, I'm 75% VFINX/25% VISGX. I like to keep my IRA's pretty simple. (My 401(k) is more diversified, since it represents a lot more money right now)

Those are the very very basic funds. If you want to start with those, then try to get more advanced, that's what I'd reccomend.

Now, if you are less tolerant to risk, but still want to get a decent return, then I suggest you look towards funds like Vanguard Balanced Index Fund Investor Shares (VBINX). Extremely low cost (.22% Expense ratio), but still provides a nice return. If you aren't an old fogey, or we can start taling about exclusively bonds

But I'm assuming you are relatively young and won't be touching your money for 20+years, like myself.

 

[LordMagnusKain]

Originally posted by: alchemize

Originally posted by: 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 was thinking taxes on DRiP, 'cause the republicans won't stay in power forever.

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.

LMK, I'm not following you here. Unless you are talking about the tax advantages of the reduced dividend tax rate? My discussions were primarily directed towards someone who currently invests Zero, and wants an EASY way to invest. Their priority should be:

1) 401(k)
2) IRA's
3) Then start thinking about DRP's or other ways of investing. I still think index funds are the easiest and offer the best return, as DRP's require you to be a bit more savvy and research oriented.

And what is the 1/100 statement about??

An index fund is probability the safest bet, but i believe that the market is way overvalued.

well if 1 in 10 dollars out of banks is physical, and you've got a 10:1 PE as a fair investment in a stock, then we've got about 1 in 100 dollars in the market being physical. of course things aren't that simple, but it gives a picture of how much more 'sure' 1million in cash is over 2 million in stocks.

My discussions were primarily directed towards someone who currently invests Zero, and wants an EASY way to invest.

your right; an index fund that you put $100 a month into is a lot better than the ignorant "i pay SS don't i" view that it looks like most people have.

a quick calc:
w/ returns of just 8.2%* 100 dollars a month for 40 years of work will have you a nest-egg of about $339,900: allowing you to have an extra $2500 a month for another 28 years!

*half historical w/ 2% for dividend re-investment, done to adjust for capital gains and inflation.

we should all know that the retirement age IS going to be pushed back.

 

[Jadow]

individual investors are morons then. I know its tough to beat the S&P, so I put about 70% of my Roth IRA and 50% of my 401K into it.

 

[Zebo]

Securities are for morons who don't know how to make money unless your an officer or Martha in the know. I dispise my employer 10% match and almost forced contribution schema with the tax break. First trust deeds have neted me over 15% every single year since 1995. yup even with the market collapse. Why not give the match and let me buy a McDonalds or Taco Bell with it, with the same tax breaks? Once the note is paid it's all gravy from there.

But go ahead listen to the standard fair, it's better than pissing away every dime you earn even if you are paying out for golden parachutes of the real business people..What's good for the goose is good for the gander

Some other very good advice in this thread was the savings ideas from chessmaster.

 

[alchemize]

Zebo, instead of applying your typical politcal rhetoric, why don't you explain what a Trust Deed is, and it's pros and cons?

 

[Zebo]

Originally posted by: alchemize
Zebo, instead of applying your typical politcal rhetoric, why don't you explain what a Trust Deed is, and it's pros and cons?

You call that political rhetoric? Naw just stating people are better off with a more entrepreneurial spirit like searching google for first trust deeds would be a good start.

 

[alchemize]

Originally posted by: Zebo

Originally posted by: alchemize
Zebo, instead of applying your typical politcal rhetoric, why don't you explain what a Trust Deed is, and it's pros and cons?

You call that political rhetoric? Naw just stating people are better off with a more entrepreneurial spirit like searching google for first trust deeds would be a good start.

it's better than pissing away every dime you earn even if you are paying out for golden parachutes of the real business people.

Yah, I call that political rhetoric. What do you call it?

 

[rufruf44]

VFINX is definitely one of best to fund if you're planning to stay the course of indexing. For large cap fund, its hard to beat it consistently (although Legg Masson O'Reilly is really in a class of his own). If you choose to do indexing, I suggest adding some exposure to international index fund as well as small cap to complement the VFINX. I personally prefer VISVX to VISGX due to the former better track record.

Another thing that some of you might want to consider is to invest on the Oracle of Omaha himself. Buffet's Berkshire Hathaway has returned an average of 22% over the last 20+ years, handily beating the S&P 500. Shares are pricey ($90K for class A, $3.5K for class B), but for those that has the funds, its worth looking into.