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Hey guys, I don't have nearly the kind of money that many of you guys are throwing around, but I'm only 20 and I want to get into investing early, but I'm not quite sure where to start. A long time ago my father opened some type of IRA account (seems to be retirement) in my name and I've been looking at the account and it appears to have been losing money since the time it was opened. He basically forgot about the accounts and doesn't seem to care that they haven't made a dime, so I'm coming to you guys. I have attached a summary of the account. From what I understand the money cannot be removed from the account, but can be transfered to any stocks, funds, etc... I also have almost $4000 sitting in a savings account which is making a paltry 0.9% interest rate. I'm hoping to move those funds into a well performing mutual fund or something. Please help me out.
I'm also a college student, 19 years old, and am actually dealing with about the same amount of cash. I've been following stocks for 2 years and opened up an brokerage account as soon as I turned 18. I would look for something with over a 3-9% dividend, especially if its in an IRA. BP, VZ, T, CSCO, KO, PEP, K all have a healthy dividend and they are companies you will be familiar with. Another option is master limited partnerships. I'd do a little research on them but don't let the research scare you off, taxes are a tad bit more complicated but I own mostly MLPs such as KMP, EPB, LINN all pay a 6-8% dividend. If you do stick with stocks as opposed to a mutual fund, buy 4-5 companies, it'll be easier to keep track of where you are and won't be so confusing.
Well if it is an IRA, you're right, you can't withdraw it without significant penalties, and for 4k, it's better to just let it sit around.
First thing is sell that stuff in that account (AMD is basically almost bankrupt, for example).
Next thing is to buy a S&P500 index fund and just let it ride the market until you have time to do more research.
I'm assuming of course that you simply don't have the time to be bothered with the stock market right now. You're in college. It's a distraction (unless you are in finance, accounting, math, etc). Focus on getting good grades, falling in love, chasing after everything with two legs and is human, listening to music while expanding your horizons. Have fun. College happens once in life, and you're lucky enough to go to college.
Also, don't deposit any money into that account until you start earning income. Your #1 priority is paying down debt. You will likely accumulate debt until you graduate, so save what you can and use it to put a dent in your debt.
That's what I would do if I were you. I had a taxable account with roughly $20k in it after my folks opened it up and I put money in it while in high school, then just let it sit while I went to college. Buying an index fund that tracks the market will give you peace of mind while you focus on more important things in life.
First of all, I have no debt, college is paid for. Secondly, it's summer vacation...I have as much time as I need to research stocks etc... I also have a steady income, it's nothing crazy huge, but I could invest as much as $1000 a month without dipping into my spending money.
I don't think owning individual stocks (as you currently do) is a good idea for most people unless you really understand how to and have the desire, time, and temperament to analyze the financial statements of individual companies. Even if you are really smart, you may not have the temperament/discipline to invest and do well. In fact, very few of us have the temperament to invest in individual stocks and actually do well. You shouldn't assume you're the exception.
For that reason, I think a good balanced mutual fund that invests in a mix of stocks and bonds is the best way to go. The best balanced funds usually match or exceed the performance of large company stock funds with less volatility. I'm thinking of funds such as:
--Vanguard Wellington (very low expenses, great long term returns, been around since 1929)
--T. Rowe Price Capital Appreciation (among the absolute best performers in the "balanced" category since its inception in 1986)
--Mairs and Power Balanced (low key, Minnesota based firm; consistently good long term returns over a 50 year period)
--Dodge and Cox Balanced (known for a team managed approach, so if one manager leaves, it's not the end of the world. Been around since 1931)
Pick one of the above listed funds and stick with it for decades, if possible. All of the above funds have beaten the S&P 500 Stock index over the latest 20 year period with less volatility.
S&P 500 Index funds aren't a bad way to go, but I generally think investing 100% in stocks is a bad idea for most people because most people can't handle the volatility and they will buy and sell at the worst possible times. But if you want to go the 100% stock route, I'd recommend Vanguard's Total Stock Market Index Fund. This fund owns some of the small companies as well as the big ones, and its performance is a bit better as a result, with only a tiny bit more volatility.
Had I been given and followed the advice I'm giving you when I started investing 16.25 years ago, I'd probably have at least 50K to 100K more than I do now.
...........but I'm only 20 and I want to get into investing early, but I'm not quite sure where to start............
Why not read a book or two, then take the money that is available to you and just start?
You're in a perfect position to begin. There is some money available to you and the market seems to be pretty stable. Depending upon who is able to convince you of what, you will start by learning fundamentals and sticking to a game plan or you will become a chart trader. Either way, you will learn how to invest.
Most people do not really learn much about investing and there is an entire industry out there dedicated to keeping you fascinated and keep your portfolio churning. But they're just interested in making sure you trade a lot. Maybe you can learn to be a little different. And much more successful.
Hey guys, I don't have nearly the kind of money that many of you guys are throwing around, but I'm only 20 and I want to get into investing early, but I'm not quite sure where to start. A long time ago my father opened some type of IRA account (seems to be retirement) in my name and I've been looking at the account and it appears to have been losing money since the time it was opened. He basically forgot about the accounts and doesn't seem to care that they haven't made a dime, so I'm coming to you guys. I have attached a summary of the account. From what I understand the money cannot be removed from the account, but can be transfered to any stocks, funds, etc... I also have almost $4000 sitting in a savings account which is making a paltry 0.9% interest rate. I'm hoping to move those funds into a well performing mutual fund or something. Please help me out.
First Kudos to you. When I was 20 years, I was busy chasing girls. :-) No one told me how to invest or anything. My dad had no idea either. Any way, this is what I would do or tell my kids.
First go to library pick a book or take little money from your saving; take a class over the summer on investing. It's worth it.
Remember one thing, day trading is fun but at the end day you always lose. Invest for long term. Buy good company stock such as Intel, GM and Ford or Costco. If you are interested in mutual fund, check
If it's money you're willing to risk a little but may need in the near future to cover certain expenses, look into PERM or PRPFX..
Far more important than what you invest is, is to seek knowledge of investing. Join any investment clubs in school you can find. Take electives in Finance (particularly those that focus on investing) and talk with the profs of those classes.. even if you don't wish to make Finance your career, it's best to gain an understanding of the subject early so you get a head start on your investing and let compound interest do it's trick over time.
Split the money and invest in 7 different LOW cost mutual funds(or ETF's). Make sure that you have some international money and something in precious metals in those 7 funds.
Keep 20% of your money in cash.
ADD TO YOUR CASH regularly !!!! (i.e. every month, every quarter, etc.)
Keep track of their prices every week.
When a fund or ETF goes up more than 15% from when you BOUGHT it, sell 15% of your portion.
When a fund or ETF goes down more than 15% from when you bought it, buy with your cash, around 10% of your cash.
Once per year, see what percentages each of your funds balance is to the total of your money, except cash. Sell those to get to around 15% in each account. Buy others to get to around 15% (This is called rebalancing.)
Repeat for 40 years.
Father in law is sitting at 16.8% average, after expenses for the last 40 years doing this.
First of all, I have no debt, college is paid for. Secondly, it's summer vacation...I have as much time as I need to research stocks etc... I also have a steady income, it's nothing crazy huge, but I could invest as much as $1000 a month without dipping into my spending money.
And that's great!
But the point here is no matter how much time you have in the summer to read up on these (or any given company) is short compared to the time you HAVE to pay attention to them, which is all year long. So while you're in school and being busy learning, you shouldn't have to be distracted by focusing on the financial statements of companies. If you have the time to do that, I'd wager you're either in not enough classes or you're not challenging yourself enough.
As for my other points, and what others have raised, they're all valid. I especially like the Retire by 40 website. I started too late to retire by 40, but I might have a chance at retiring by 50, which is still a pretty good run!
So you can take that $1000 / mo and invest it into the mutual funds or ETFs of your choice and just let it ride until you start earning a paycheck after college.
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