2k in disposable income, what\how do you invest it.

[bmw335xi]

Originally Posted by Hefe

Just a comment on that:

- 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.

Here

Originally Posted by bmw335xi

That depends on you... some people are willing to take high risk in return for high gains, while others are the complete opposite.

If you want to actively trade, you need to learn "technical analysis" if you don't want to put much time into it, then go with an ETF that tracks the market such as SPY or VTI. These are relatively safe as long as you don't have to sell. If you want to take it a step further, you can buy a balanced mutual fund that is maybe 60-70% stocks, 30-40% bonds.

Originally Posted by ayahuasca_mike

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.

[cfa-ish]

Originally Posted by bmw335xi

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.

It's not about risk/reward - just investing in individual stocks is a high risk/reward activity; especially if you leverage using options/futures. Even if you don't, we have seen plenty of stock market ups and downs in just the last 17 years. I am not lecturing him to keep his money stuffed in a mattress and never take risks.

My objection is that technical analysis is a crappy long-term investment strategy. It's a bad fit for each of these three words in fact - long-term, investment, or strategy. It is almost impossible for a novice "investor" to not lose their shirt. Maybe that's OK, school of hard knocks and all that; but my "maternal instincts" would not let me allow to leave that advice unchallenged.

I can damn well embrace my feminine side if I want to Investing is not about who has the biggest, let's say, piece of equipment. It pays to think like a girl picking a date with an eye for long-term.

[bmw335xi]

Originally Posted by cfa-ish

It's not about risk/reward - just investing in individual stocks is a high risk/reward activity; especially if you leverage using options/futures. Even if you don't, we have seen plenty of stock market ups and downs in just the last 17 years. I am not lecturing him to keep his money stuffed in a mattress and never take risks.

My objection is that technical analysis is a crappy long-term investment strategy. It's a bad fit for each of these three words in fact - long-term, investment, or strategy. It is almost impossible for a novice "investor" to not lose their shirt. Maybe that's OK, school of hard knocks and all that; but my "maternal instincts" would not let me allow to leave that advice unchallenged.

I can damn well embrace my feminine side if I want to Investing is not about who has the biggest, let's say, piece of equipment. It pays to think like a girl picking a date with an eye for long-term.

I correlated high risk to trading stocks and he replied with high risk, like I said, it's not our job to be his mother... if somebody wants to trade stocks, they need to learn technical analysis plain and simple. There are too many people that try to trade stocks, so all they do is guess, which is dangerous. They need to understand how to do it and the best way he can learn is through technical analysis. It's much better than just looking at XYZ, "oh it went down 70% from its previous high, it must be a good buy."

[Hefe]

I don't see anyone on this thread treating this fellow as an idiot or pretending to be his mother, we are all just giving our opinions & experiences to someone who asked a great question & wants to learn something.

I will clarify that in my posting above my consideration for somebody that isn't necessarily a professional in the financial field a "high-risk" investment would be investing exclusively stock funds, say a S&P 500 index, for several years until he starts to creep into middle age & begins to diversify. Most wealth is most easily built through the combination of time & asset allocation.... & don't take my word for this, please research it. Telling someone just starting out to learn technical analysis is not wise, a lot of full-time financial pros consider it voodoo.

As for individual securities you might, or might not get lucky holding some big winners. If you were my age & started out by investing your money in your 20-30s in great individual companies/stocks such as TWA, Pan Am, Lehman Bros, Sears.... you would be left at old age with paper. 10-15 years ago all the people in my office, mostly smart, all college educated, were thinking about how they could retire early with their soaring AOL stock holdings.
It's ancient wisdom for a reason: don't put your eggs all in one basket: mutual funds, etfs, index funds are for most of us.

Finally all individuals, as well as markets, will experience unexpected traumas going forth: illness, loss of job, children in trouble, just plain bad luck... It helps to consider this as well.
Here is an excerpt from a fellow in another thread, but I think it's germane to consider looking ahead in life:

The investments that I had prior to 2008 not only lost their value (a big chunk of it was in BP, which went from about $118/share to $29/share after the Gulf oil spill, and suspended paying all dividends for about two years as well) but I had to liquidate much of them -- in addition to all of my savings nest egg -- because I was diagnosed with cancer


Stuff happens.

[bmw335xi]

Originally Posted by Hefe

The investments that I had prior to 2008 not only lost their value (a big chunk of it was in BP, which went from about $118/share to $29/share after the Gulf oil spill, and suspended paying all dividends for about two years as well) but I had to liquidate much of them -- in addition to all of my savings nest egg -- because I was diagnosed with cancer

This is exactly why I recommend technical analysis because if you knew it, you most likely would have sold at $110/share. That's why it's more risky to blindly pick and choose random stocks to trade. A lot of people who don't know technical analysis think it requires advanced forms of calculus when in reality I could teach a 12 year old. Now, going into option strategies is another thing that can be very complicated. However, understanding moving averages, support/resistance, basic psychology of the market is very easy to learn.

[bigboibob]

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