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Mid caps are more domestic centered and less likely to be hurt by the high dollar valuation which is hurting big cap multi nationals. My extended market funds are doing well.
Lets say high risk is ok, no kids no wife and the chances of your disposable income increasing year on end is almost a positive.
You need to look into speculative stocks, companies that are expanding fast. ETF's such as VOO are going to perform similar to the S&P 500. If you want to take high risk for high gains, you'll need to look into FB, DDD, USO etc. However, like I mentioned before you need to learn technical analysis to know when to buy and when to sell otherwise you're playing with fire.
mike,
You are getting some fantastic advice inc. forget MLynch, check out Vanguard, Fidelity, T Rowe, you can afford "high risk" now because you have 30 years to go. You will be a millionaire easily if you follow through because of the compounding of time which is on your side now Dollar cost averaging in, that means you don't have to be an investing genius.
Just remember you will take a major loss, or 2 or 3 or 4 along the way, like 40-60% loss, but don't pull your money out then despite your sphincter palpitations looking at your paper losses because after a major route the big gains happen very quickly, in a day or 2, & if you are out of the market you will miss some of the biggest gains of your lifetime. I will suggest index etfs or funds unless there is a major market downturn & you can pick up some blue chip dividend paying stocks at a 40-60% discount.
As you hit your mid 40s & beyond widen your asset allocation to include some more conservative investments like bonds & adjust the percentage annually.
Oh and as far as brokerages go, sign up with "TradeKing" I really like them and if you open an account with $5,000+ with promo code "free1000" you get $1,000 in free commission!
Lets say you're in your early 30's, single. Extremely small mortgage due to putting 20% down and you have around 2k to "play with" each month. How do you invest, high risk or low. High interest savings or stocks?
Your approach is way too binary. I recommend the middle path and investing in something with moderate risk. A balanced mutual fund that invests 60% to 70% in stocks and 30% to 40% in bonds/cash is a good approach.
Also, are you maxing out your 401K? That is the first place to put some of that 2K per month. And I'd put it in a balanced fund if you plan has one (and most do).
Now, of course, you do need to have cash on hand in case of an emergency or job loss. You probably need 6 months of living expenses in such a fund if you don't have it already.
Beyond all of the above, I'd say invest in a fund like:
Vanguard Wellington. It's a balanced fund that's cheap, has been around forever, and it's returns have been nearly as good as the stock market's with a much smoother ride.
A somewhat more aggressive balanced fund would be Dodge & Cox Balanced. It outperformed the stock market when it crashed in 2008, but didn't do as well as other balanced funds. That said, it has done pretty well since then. It has an excellent long term track record, and it's probably the second cheapest actively managed balanced fund after Vanguard Wellington. Long term returns are similar or better than Wellington's, depending on the time period studied.
Honestly, if you can afford to sock away $2000 per month, you really don't need to go high risk.
$2000 per month invested in Vanguard Wellington beginning in March of 2000 would now be worth $719,328.
If you really want to be aggressive, you could go with a health care mutual fund. The tricky part is that just because health care has outperformed in the past doesn't mean it will continue to do so. But health care stocks typically hold up better when the stock market crashes and they have gotten great long term returns.
$2K per month in Vanguard Health Care starting in March 2000 would now be worth $1,113,431
However, like I mentioned before you need to learn technical analysis to know when to buy and when to sell otherwise you're playing with fire.
OK I ignored this once but it is hard to ignore when you repeat it, especially as "investment advice" to novice investors.
Mike (OP) - ignore technical analysis. Period. It has a very niche application, if any, in trading tactics. As an investment strategy, it is worthless. I realize that BMW has performed miracles with it and what not, but it is unlikely that you can do the same.
If you want to retire at a normal age, max out your 401K first. You also have a real chance of retiring early, if you can invest in taxable. In either case, an aggressive balanced fund or a plain broad stock market ETF will all work OK. Boring but work well. If too boring then carve out $500/month for your own speculation and put the other $1500 into the boring alternatives.
OK I ignored this once but it is hard to ignore when you repeat it, especially as "investment advice" to novice investors.
Mike (OP) - ignore technical analysis. Period. It has a very niche application, if any, in trading tactics. As an investment strategy, it is worthless. I realize that BMW has performed miracles with it and what not, but it is unlikely that you can do the same.
If you want to retire at a normal age, max out your 401K first. You also have a real chance of retiring early, if you can invest in taxable. In either case, an aggressive balanced fund or a plain broad stock market ETF will all work OK. Boring but work well. If too boring then carve out $500/month for your own speculation and put the other $1500 into the boring alternatives.
The OP is looking for a high risk / reward method. You shouldn't try to be someone's mother. I assume he isn't an idiot if he is able to have $2k available to trade every month, so we shouldn't treat him like one. A balanced mutual fund is not high risk / reward, plain and simple. There is no one answer fits all, when someone asks for retirement advice, I'll recommend a balanced fund and/or market ETF, but whens someone says they want a high risk / reward, I would be lying if I recommended a balanced mutual fund or market ETF.
If you go manual mode and invest yourself, get educated first. If you go in blind you will lose.
Right, thats kind of what the point of the thread is but mainly to hear others experience and mistakes they've made. I have literature but I'm interested in real life scenarios as well. Lots of good advice being given and trust me I'm taking it all in.
Right, thats kind of what the point of the thread is but mainly to hear others experience and mistakes they've made. I have literature but I'm interested in real life scenarios as well. Lots of good advice being given and trust me I'm taking it all in.
For me it was finding out what type of strategy best fits me, then it was following that strategy to a T, and if I did deviate how I could correct my position. When I first started trading I had no idea what type of trader I was, I made small gains early, 50 bucks here, 40 bucks there, 80 bucks over there, etc. I started to get a handle on my strategy and what type of trader I am. I also learned that not every stock follows the same time variation, for example, if you go into something that you think will be long-term, it might be best to cut it to short-term, and vice versa. The next thing was risk management. I never lost, but my short-terms turned into long-terms because I was a stubborn guy without a risk management plan, albeit I was able to come out positive, it took much longer than I would have liked. On those trades, when I went back and looked at my entry points I just sat there and shook my head in disbelief. It's part of learning, but learn when to hold (on pullbacks) and learn when to fold (on reversals).
- he asked about investing not trading, 2 different things. Investing is having a steady plan that is taking the long term upward market trend over decades & using that, plus asset allocation, to your advantage. The goal is to secure a future with relative wealth in a conservative fashion, ie., not losing a lot of money on individual securities but riding the trend on sectors or indicies. Trading is a vocation that requires a lot of analysis of individual companies finances + market trends + emotions & also engenders taxation for cap gains, etc... It takes a lot of education & hit & miss speculation to get going in this. I would suggest that he allot 10% or less of his investible portfolio for trading/speculation in individual stocks.
One can make a killing trading individual securities, but most people without inside info aren't going to. On the same token without inside info one can take a big loss.
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