[JoshKurtz]

I really want to start investing but I don't know where to begin. I've never had anything greater than a bank account before. No cd's, no 401K. I don't have much money to play with but I'm willing to make sacrifices now in order to have more in the future.
Where should I start? What should I learn about?

[Mastrap]

Talk to a number of financial advisors. Pick the one you feel most comfortable with and who provides the best references.
Check these references. Carefully.

Alternatively consider this: Buy land about 1 to 1 1/2 hours drive from major cities. Wait for 15 years. Sell.

[JoshKurtz]

Alternatively consider this: Buy land about 1 to 1 1/2 hours drive from major cities. Wait for 15 years. Sell.

Great idea but I don't have that much money.

As far as financial advisors go, should I wait until I have a certain (large) amount of money to begin or can I walk in there with one or two thousand dollars?

[RAILhead]

Save up $3000 and open up a Vanguard Roth IRA with a basic Index fund. Roths are tax free, so 30 years from now when you pull the money out, you'll get ALL of it. I suggest an Index fund because that's your best LONG TERM bet to get "guaranteed" returns.

As you make more money and save more money, you can open up different kinds of funds and begin diversification. But for starting out, get your retirement set so that you don't have to eat Alpo when you're 65.

Don't use a financial advisor yet, just keep it simple and put $ into a Roth and contribute the max each year, if you can.

For example, if you were to contribute the max into a Roth fund that only earned 10%, in 33 years, you'd have around 1.2 million dollars, tax free, waiting for you to spend. If you get married during that time and your spouse does the same, you can double that.

[drmbb2]

Start a 401(k) (or 403(b) if you work for a Uni, or Gov) - then arrange for a monthly direct deposit. The withdrawal is pretax, so it reduces your taxable income, as well as starting a retirement savings plan. Even $50/month will add up over your working career. Or look into a Roth IRA, again with a monthly automatic deposit from your paycheque. You bank should have someone who can advise you, just ask for an appointment with your main branch's investment advisor.

--

[RAILhead]

NEVER invest at a bank! Crap rates, poor management, etc.

[wdlove]

Doing a lot of research is key. Then talking to a professional, on the works for a fee.

[NYCFarmboy]

Whatever you do, every dollar you save and invest will be something that grows exponentially over time thanks to the magic of compound interest... so starting small today can lead to big rewards down the road upon retirement.


401k with the funds in the S&P500 over time is a sure bet. avoid glamourous "high growth funds" and sales talk. go with the S&P500 as it has lower overhead charges as well versus other funds.

[ambush]

Consider the next oil crisis.

[Psychonaut]

Three steps to true wealth:

1.) Realise that Federal Reserve Notes are backed by nothing except faith. It is a fiat currency and you're at the mercy of Bernanke and his Keynsian inflationary policies.

2.) Buy gold, silver, platinum, palladium, rhodium -- anything that has inherent value.

3.) Watch the country go down the tubes as the Dollar falls to the Euro (which is at least backed by a percentage of silver), our national debt skyrockets ($8,251,036,589,331.23 as of today, your share of which is $27,633.70,) and as hyperinflation sets in.

Weimar Germany or Alfonsín Argentina, anyone?

[turtle777]

Get a Roth IRA that allows pre-set monthly investments, directly debited from your checking account. Usually the minimum contribution starts at $ 50. If you do that, you don't have to deposit a big lumpsum up-front.

Oh, and get this book:



http://www.amazon.com/gp/product/157...lance&n=283155

[gumby5647]

Originally Posted by Psychonaut

Three steps to true wealth:

1.) Realise that Federal Reserve Notes are backed by nothing except faith. It is a fiat currency and you're at the mercy of Bernanke and his Keynsian inflationary policies.

2.) Buy gold, silver, platinum, palladium, rhodium -- anything that has inherent value.

3.) Watch the country go down the tubes as the Dollar falls to the Euro (which is at least backed by a percentage of silver), our national debt skyrockets ($8,251,036,589,331.23 as of today, your share of which is $27,633.70,) and as hyperinflation sets in.

Weimar Germany or Alfonsín Argentina, anyone?

[IMG]http://www.lanuf.org/images/gold2.jpg[IMG]

[IMG]http://www.lanuf.org/images/silver.jpg[IMG]

there is a LOT of truth in this.....I would have at LEAST 15-25% of your investment in gold or silver that you physically own....i HIGHLY recommend the US Mint's American Eagle Coin program for this. Keep in a safe place.... IE: safe deposit box, home safe etc....

[Chuckit]

Originally Posted by Psychonaut

2.) Buy gold, silver, platinum, palladium, rhodium -- anything that has inherent value.

A woman I know did this 20 years ago under the same premises you're suggesting. It has only just gotten back around the value it had when she bought it.

[drmbb2]

Originally Posted by RAILhead

NEVER invest at a bank! Crap rates, poor management, etc.

BS, blanket statement. Some banks offer excellent investment advise and management, especially for conservative retirement accounts. Many private investiment firms are also good, but many suffer from the same poor customer service you seem to be applying to any and all banks. Bottom line is, check out all your options, and make intelligent, informed choices. One nice thing about many banks, is if you are a customer in sufficient good standing, you can have a retirement investment consultation for no charge.

[JoshKurtz]

Thanks for all the suggestions.

I guess I'll start with a Roth IRA since that seems to be a good beginning.

[greenamp]

Originally Posted by wdlove

Doing a lot of research is key. Then talking to a professional, on the works for a fee.

Poetic!

[JoshKurtz]

Originally Posted by what_the_heck

Get a Roth IRA that allows pre-set monthly investments, directly debited from your checking account. Usually the minimum contribution starts at $ 50. If you do that, you don't have to deposit a big lumpsum up-front.

Oh, and get this book:



http://www.amazon.com/gp/product/157...lance&n=283155

I just ordered that book.

Thanks

[JoshKurtz]

Originally Posted by greenamp

Poetic!

Indeed it is.

[RAILhead]

Originally Posted by drmbb2

BS, blanket statement. Some banks offer excellent investment advise and management, especially for conservative retirement accounts. Many private investiment firms are also good, but many suffer from the same poor customer service you seem to be applying to any and all banks. Bottom line is, check out all your options, and make intelligent, informed choices. One nice thing about many banks, is if you are a customer in sufficient good standing, you can have a retirement investment consultation for no charge.

So tell me, what interest rates does your local bank have for Roth and Traditional IRAs? Savings? Money Market?

I'd LOVE to hear how their rates compare to Vanguard, Oppenheimer, TD Waterhouse, ING, and others...

[bboisvert]

Originally Posted by JoshKurtz

I really want to start investing but I don't know where to begin. I've never had anything greater than a bank account before. No cd's, no 401K. I don't have much money to play with but I'm willing to make sacrifices now in order to have more in the future.
Where should I start? What should I learn about?

My opinion start looking at your current spending habits now before looking at investing. For example, if you are like me terrible with money, the little bit that you do invest will be good not think about if you could cut down 20% of your spending and have 20% more to invest, that would be better. Decide on your goals as well. Are you in it for the long term, are you looking for short term gains. In Canada for example putting money into RRSP can be used as your own personal loan system for school and buying a house which is part of the reason I invest into it. There are also tax reasons, depending on what you make, investing could let you keep more of your money out of the hands of the tax man. But my point is, your better off if you can save 20 bucks of spending each month, vs saving 2 bucks a month in a investment plan. BTW RAILHead is prob the best expert here on investments

[greenamp]

Originally Posted by Psychonaut

Three steps to true wealth:

1.) Realise that Federal Reserve Notes are backed by nothing except faith. It is a fiat currency and you're at the mercy of Bernanke and his Keynsian inflationary policies.

2.) Buy gold, silver, platinum, palladium, rhodium -- anything that has inherent value.

3.) Watch the country go down the tubes as the Dollar falls to the Euro (which is at least backed by a percentage of silver), our national debt skyrockets ($8,251,036,589,331.23 as of today, your share of which is $27,633.70,) and as hyperinflation sets in.

Weimar Germany or Alfonsín Argentina, anyone?

If the country goes down the tube I'm thinking guns and ammo will be worth more than precious metals

[JoshKurtz]

Originally Posted by bboisvert

My opinion start looking at your current spending habits now before looking at investing.

That's why I feel ready to start investing... because my wife and I have really shaved our spending habits down. We've gotten out of most of our long-term debt but we aren't putting enough back. We're very good about not spending frivolously though. We discuss spending money even if it's $5 for a burger.

And my goals are definitely long term.

[turtle777]

Originally Posted by JoshKurtz

I just ordered that book.
Thanks

Sure, you're welcome. It's a really good start into the whole finance arena. Not only investing, but also for money management...

[RAILhead]

Don't forget Dave Ramsey's Total Money Makeover.

[JoshKurtz]

Originally Posted by RAILhead

Don't forget Dave Ramsey's Total Money Makeover.

Thanks. I'll scoop that up too.

[Psychonaut]

Originally Posted by Chuckit

A woman I know did this 20 years ago under the same premises you're suggesting. It has only just gotten back around the value it had when she bought it.

I'm not organising my future around an inevitable collapse, and I haven't built a bomb shelter in my backyard. For me at least, it's the principle of it. I campaign for the return to a gold/silver standard, and I hope to accomplish that at least locally in New Hampshire.

Originally Posted by greenamp

If the country goes down the tube I'm thinking guns and ammo will be worth more than precious metals

Don't worry, I've got that covered.

[Chuckit]

Originally Posted by Psychonaut

I'm not organising my future around an inevitable collapse, and I haven't built a bomb shelter in my backyard. For me at least, it's the principle of it. I campaign for the return to a gold/silver standard, and I hope to accomplish that at least locally in New Hampshire.

I'll I'm saying is, if she'd just kept her fiat currency, she would've been better off than she was putting her money into gold. You may like gold better, but it's not inherently more secure.

[simonjames]

The first thing you need to do is plan - think about where you want to be in 1 year; in 5 years; in 10 years; in 20 years. And then think how and where you want your money at those 'life events'. If your desire is to own your own home asap then you need to save up a big cash deposit and have a good history of saving. If you want to travel (like me) then short term savings is a good idea as locking large sums into property or shares means you'll probably loose out as these investments are considered long term.

I would not trust a financial planner as far as you could kick one. They ALL get kick backs from one source or another.

I suggest you find a savings fund that is not linked to insurance of any kind and has little or no agents fees (it is common that some savings funds will pay the first 2 years of 'premiums' to the agent who signed you) and has no exit fees.

If you're employed see if your payroll department can send a fixed amount to your savings fund each pay period before you see the money.

PLAN and SAVE (or marry rich)

[SirCastor]

Originally Posted by simonjames

PLAN and SAVE (or marry rich)

"Maybe you have a trust fund. Maybe you'll have a wealthy spouse. But you never know when either one might run out..."

I recommend a Roth IRA. They seem to be the most logical. Even though you're paying post-tax dollars, near as I can tell they almost universally have a higher return. The whole situation is really in your favor.

[macintologist]

I'm a freshman in college and 19 years old. I have a Roth IRA and put in about 9 dollars every month. That seems like nothing now, but as I make more money, I'll be putting more in, and that 9 dollars a month really starts to add up. After 4 years of college working part time on campus that's 432 dollars. Not too bad, you can choose to put in more.

[thesunisgone]

These guys are all wrong.

You can't "save" and become wealthy. You have to take risks. A lot of risks. You will either win big, or lose it all. And when you lose it all, and you're eating out of a rancid garbage can in the freezing cold remembering the two hundred dollar dinners and the sports car you used to have, you'll at least know you had the guts bet it all and roll the dice.

[thesunisgone]

Originally Posted by JoshKurtz

Great idea but I don't have that much money.

As far as financial advisors go, should I wait until I have a certain (large) amount of money to begin or can I walk in there with one or two thousand dollars?

hahahahaaa!!! they'll laugh you right out of their office if you walk in and tell them you have a thousand bucks. By the way, if you want to experience what a "financial advisor" aka stockbroker will do once they have your money, just give someone half your money and ask them to kick you in the nuts.

[Chuckit]

Originally Posted by thesunisgone

These guys are all wrong.

You can't "save" and become wealthy. You have to take risks. A lot of risks. You will either win big, or lose it all. And when you lose it all, and you're eating out of a rancid garbage can in the freezing cold remembering the two hundred dollar dinners and the sports car you used to have, you'll at least know you had the guts bet it all and roll the dice.

What's your net worth?

[subego]

Google "Dollar Cost Averaging"

This concept alone can take you much of the way.

The (national) radio show "Money Talk", at least when it's hosted by Bob Brinker and not one of his subs, repeatedly covers the basics.

It's free too.

[milhous]

some of this is redundant so...

first off, does your employer offer any sort of retirement program? if so, please take advantage of it and contribute up to the maximum match they offer. after all, that's free money.

secondly, think of savings and investments as three buckets.

Bucket 1 - Retirement savings (401K, IRA, etc). This should be maximized as much as possible including maximum employer-sponsored matches. You set the amount and it's taken out of your paycheck automatically. Set it and forget it.

Bucket 2 - Cash Savings. Create a separate savings accounts such as one with ING Direct. How about 4.75% APR. Like retirement savings, you can set it up to automatically withdraw money from your checking account for a fixed amount at regular intervals. How much and how often you want to contribute to this is up to you. But again, you can set it and forget it. No need for mailing deposits or filling out deposit slips. Set it and forget it. www.ingdirect.com if you're interested.

Bucket 3- Rainy Day Fund. Speaks for itself, have several months worth of assets on hand to cover monthly expenses like a mortgage, utility bills etc. You don't necessarily have to have a separate account for Bucket 2 + 3, so it might be best to create a ledger of sorts to track how all the money in the savings account is allocated. And rather then just withdrawing money from savings, it will also make you think on how the withdrawl will impact the money allocated to all the sub-accounts.

with my credit union, i can also establish sub-accounts for vacation and christmas savings so that when it's time to take a vacation or start buying Christmas gifts, I can have separate funds on hand while minimizing any impact on cash flow. I automatically contribute to these accounts monthly. again, set it and forget it.

there are many ways to save, and how you allocate your money is up to your or your financial advisor, but what i just described is basically how i started the new year.

also, if you have severe credit card debt, make it top priority to pay them off as quickly as possible. then if you have too much access to credit, cancel some of your cards and cut them up. severe credit card debt is BAD debt.

good luck.

[RAILhead]

Originally Posted by thesunisgone

These guys are all wrong.

You can't "save" and become wealthy. You have to take risks. A lot of risks. You will either win big, or lose it all. And when you lose it all, and you're eating out of a rancid garbage can in the freezing cold remembering the two hundred dollar dinners and the sports car you used to have, you'll at least know you had the guts bet it all and roll the dice.

Yeah. Right. Quit trolling and get to bed -- you have school tomorrow.

[JoshKurtz]

Right now my wife makes the money and I stay home with our baby. I manage a restaurant part time a few nights a week for some extra cash but that's about to stop when I go back to school in the fall.

An IRA sounds like something I'm going to go with. So does the 3 bucket idea. My wife and I do our banking online but I just now started looking at the accounts. I recently sold some things on eBay and it was kind of fun moving the money around from paypal to checking.

My wife is great at managing our money but I want to do something with the little bit that I bring in other than filling our gas tanks. I also want to know how our finances work in case anything ever happens to her. I started thinking about that the other day and realized how lost I would be so I'm trying to take steps to be better informed so I can have some credible input when the subject of money comes up.

[RAILhead]

The buckets are great, but here's the order I'd do them in and why (as well as some basic money-smart steps)...

1) Get *at least* $1000 in a savings account for emergencies, if you don't have that much already.

2) Eliminate all your debt (except for your house) as quickly as possible by managing spending, etc.

3) Save up 3-6 months of expenses to cover any *necessary* bills in case you have an unexpected income cut.

4) Put 15% of your total household income into retirement. If you get a 401k match, go there first to the max the company will match. Take the remainder of your 15% to a Roth IRA tot he max ($4000 per year for now). If you still have a % left over, put it back into the 401k.

Invest this Roth in an Index fund with a company like Vanguard.


Note, too, that if you're over 18 and have an income, you can contribute to a Roth — so BOTH of you can.

Our lives were se in place with the Dave Ramsey principals several years ago, and we killed $40,000 of debt in 250 days. From there we started our investing, etc., and we're 100% free of any kind of financial burden.

[only120xs]

Originally Posted by SirCastor

I recommend a Roth IRA. They seem to be the most logical. Even though you're paying post-tax dollars, near as I can tell they almost universally have a higher return. The whole situation is really in your favor.

What are you talking about? How can they have a higher return? Investing inside of a Roth is no different than investing outside of a Roth... it's just a holding account... has no bearing on what you're investing in.

[RAILhead]

Yeah, a Roth is just a wrapper.

[turtle777]

Originally Posted by only120xs

What are you talking about? How can they have a higher return? Investing inside of a Roth is no different than investing outside of a Roth... it's just a holding account... has no bearing on what you're investing in.

Methinks, Sir Castor has not clearly understood the difference.

Given that your tax bracket will NOT change, you will get the same amount out of your Roth IRA as your trad. IRA (of course, only if they invest in the same stocks or funds).

The difference is the anticipation of a CHANGE in your tax bracket once you reach retirement age. Depending on what your tax bracket is now and what you expect it to be later, there are different investment strategies, resulting in either the Roth or the trad. IRA being more favorable. There is no one easy answer.

[SirCastor]

Perhaps I haven't understood. But every time I've crunched the numbers, the Roth comes out on top for me.

[only120xs]

Perhaps we need to clarify: To what are you comparing the Roth? Are you comparing your investments inside your roth vs. those same investments inside a traditional IRA or something? Or are you comparing your overall Roth return to some other investments?

My point was that a Roth (or a traditional IRA) isn't actually an investment. It's just a 'holding account' or 'wrapper' or whatever you want to call it. You still have to invest in something.

[RAILhead]

It's all about the fund choice. I can have a Roth in a 17% 10-year return fund and you can have the same fund as a basic investment or traditional IRA. If we invest the same amount and contribute the same amount, we'll have the exact same return and totals.

30 years down the road, however, when I want to pull out my $4.6 million out of the Roth, I'll get ALL OF IT TAX FREE whereas you'll pay taxes on your $4.6 mil if you had it in a traditional fund.

I have no idea what you're doing for the "Roth to come out on top" unless you're really comparing different funds.

[Person Man]

Originally Posted by RAILhead

1) Get *at least* $1000 in a savings account for emergencies, if you don't have that much already.

Got that under control.

2) Eliminate all your debt (except for your house) as quickly as possible by managing spending, etc.

Working on that. I never keep a balance on credit cards (except when taking advantage of 6-12 month interest free offers on major purchases which are always paid off before interest gets charged). Working on paying off the car quickly, by making higher than minimum payments. Then all I'll have left is student loans (~160K at 2.875% interest) and the house.

3) Save up 3-6 months of expenses to cover any *necessary* bills in case you have an unexpected income cut.

Got that under control, too, along with #1, above.

4) Put 15% of your total household income into retirement. If you get a 401k match, go there first to the max the company will match. Take the remainder of your 15% to a Roth IRA tot he max ($4000 per year for now). If you still have a % left over, put it back into the 401k.

I'm contributing the annual maximum of $15,000 to my 401K, and starting next year my employer will contribute an additional 6% of my salary to that. I will be rebalancing my 401K portfolio (managed through ING) on a yearly basis. I plan to continue contributing the maximum every year.

I make more than the income limits for a Roth IRA. What do you suggest I use for after-tax retirement savings?

[RAILhead]

Originally Posted by Person Man

I make more than the income limits for a Roth IRA. What do you suggest I use for after-tax retirement savings?

Good on the management thus far. It's a nice place to be, telling your money what to do rather that it telling you, no?

I don't know how far above the $160k Roth limit you are, but I get around this by making massive charitable donations so that my MAGI falls below the limit. Just be sure to keep records of donations for audit reasons.

[Person Man]

Originally Posted by RAILhead

Good on the management thus far. It's a nice place to be, telling your money what to do rather that it telling you, no?

Yes. I quite like it.

I don't know how far above the $160k Roth limit you are, but I get around this by making massive charitable donations so that my MAGI falls below the limit. Just be sure to keep records of donations for audit reasons.

Excuse my ignorance, but I thought the maximum was $150K-160K for married couples, and 95K-110K for single people. I'm not married, and my salary is above $110K and below $160K, so I suppose I could make massive charitable donations as well, or open a traditional IRA.

[RAILhead]

Yeah, I thought you said something about your wife. But yeah, you can do the same with donations or go with the Traditional IRA. Be sure you have a plan for the tax hit you'll take, though, like using a portion of your investment gains to serve as nothing but tax payback.

Also, be sure to do long-term investing in accounts with low turnover or you'll get a higher tax hit as well. That's another good thing about the Roth: you can take a fund with 38% annual turnover and shelter it under the Roth.

Remember, too, that the Roth limit is based on your ADJUSTED income, so when you look at the Roth max numbers, you know how much of your AGI to shave-off to donations, 401k, etc.

[itai195]

Originally Posted by Chuckit

I'll I'm saying is, if she'd just kept her fiat currency, she would've been better off than she was putting her money into gold. You may like gold better, but it's not inherently more secure.

It's more secure, because it will always have an inherent value, but it has a shitty return in the long haul. It's a popular investment these days because its value rises with inflation (according to everyone but Alan Greenspan). Still, someone just starting out probably should stay away unless they're the ultra-pessimistic type, in which case they're probably also investing in guns