Getting Into Investing for the 1st Time (IRAs, brokers, mutual funds)

[AVTechMan]

After reading many threads and articles on people saying how you should invest and have money work for you, I am convinced that maybe I should look into it. Thing is many people say to invest here and invest there, but I don't really see an easy way to get into it like, what a good way to start for beginners?

I am 31 years young and have never invested anything in my life, mostly because I do not understand it. To be honest I find it more confusing and daunting than anything, and I surely don't have a clue on who to find or talk to about investment options. Many people don't want to invest either because of the risks or that they simply don't know how. Obviously storing money in a bank savings account isn't going to do anything as far as building up anything.

I would just simply like to know what is the best way to start out? I know there will be tons of variances and ideas, but someone has to start somewhere, especially when you don't have alot of money to start out. I agree with the fact that instead of me working hard for the money, it should be the other way around and it should be working for me!

But as much as people talk about all the time how you should invest, there obviously must be some good that comes from it.

Any thoughts would be appreciated.

[CTbrooktrout]

You should start out by setting up a Roth IRA; I'm sure you want to retire someday and so you'll be putting money away for the long term here.

Index funds are your best bet. Their performance will be similar to the specific index that they track such as the S&P 500. So if the S&P is up 10% for the year, you'll probably be up 9.8%. The index funds usually trail the actual index by a bit but it's still close. It could go the other way too.

Vanguard ( Vanguard - Mutual funds, IRAs, ETFs, 401(k) plans, and more ) is a well respected mutual fund company with low fees and their S&P 500 index fund is the most popular index fund out there. Monthly contributions would be free if you set up your IRA right through them so check them out.

Once you learn more about the market and research different mutual funds (research the fund's manager's records; look for experience) then you can try and put some money into a more aggressive fund that tries to beat the market.

Or you can try cherry picking your own stocks; but that's for later. Right now is a great time to put money into the market if you have it. Don't put everything in all at once. Spread it out over a few monthly contributions and then keep on contributing each month if you can; up to the current $5K/yr limit.

[AVTechMan]

Some good info there CT, will read into those for starters. Thanks!

[Road Map]

AVTechMan, I know its been a year since you posted, but the following suggestions are timeless for ALL investors.

I knew squat when I first started putting money in the market. I found out the hard way how many crooked players there are at ALL levels in the financial industry. Not just financial planners, brokers, accountants and lawyers.

google "brokeragefrauddotcom" to read what a former arbitration attorney, judge and regulator has to say about the brokerage business.

I'm NOT recommending that you BUY this book, you can borrow it from your library. Thats what I did. If they don't have it, ask them to pick up a copy.

Find out what tricks so-called 'financial experts' use to part you from your money, see just how hard it is to get compensation when things go wrong. Learn how to protect yourself BEFORE you allow ANYONE access to your $$$. Arbitration settlements typically return only 10% of a wronged investors money. What a deal for the thieves, hmm?

Brokerage Fraud-What Wall Street Doesn't Want You to Know
Tracy P. Stoneman & Douglas Schulz..



Another excellent site is: moneyandmarketsdotcom

Martin Weiss, Ph.D has been warning people about the coming market crisis for YEARS. I am grateful I had access to his FREE suggestions last year, when the subprime debaucle first kicked into high gear.

You don't have to believe me, read Martins' credentials for yourself to see what I mean. This guy doesn't play around.


moneyandmarkets.com

Check out the following titles in the archives to see what he has to say about how to protect yourself in the coming reccession:

*note the first article was published in 2004.

05/24/04
Financial WMD-by Martin D. Weiss Ph.D.

12/24/07
Ratings Collapse -by Martin D. Weiss Ph.D.

4-07-08
Distortions, Deceptions and Outright Lies-by Martin D. Weiss, Ph.D.

06-30-08
Sell, Hedge ... or Be Prepared to Lose! -by Martin D. Weiss, Ph.D.

07/18/08
Dead cat bounce! Beware of bear market trap ...
by Martin D. Weiss, Ph.D.

[Sunnydee]

Originally Posted by CTbrooktrout

You should start out by setting up a Roth IRA; I'm sure you want to retire someday and so you'll be putting money away for the long term here.

Index funds are your best bet. Their performance will be similar to the specific index that they track such as the S&P 500. So if the S&P is up 10% for the year, you'll probably be up 9.8%. The index funds usually trail the actual index by a bit but it's still close. It could go the other way too.

Vanguard ( Vanguard - Mutual funds, IRAs, ETFs, 401(k) plans, and more ) is a well respected mutual fund company with low fees and their S&P 500 index fund is the most popular index fund out there. Monthly contributions would be free if you set up your IRA right through them so check them out.

Once you learn more about the market and research different mutual funds (research the fund's manager's records; look for experience) then you can try and put some money into a more aggressive fund that tries to beat the market.

Or you can try cherry picking your own stocks; but that's for later. Right now is a great time to put money into the market if you have it. Don't put everything in all at once. Spread it out over a few monthly contributions and then keep on contributing each month if you can; up to the current $5K/yr limit.

Excellent advice! If your company has a 401K program check it out. Companies often match your contribution in such accounts. If this is the case where you work, you should definitely max out the 401K each year and get the matching funds - it's kind of like getting free money from your employer. You're very smart to start investing now because, through the beauty of compounding, your money will grow over the next few decades and then you'll be well set for retirement. Best wishes.

[forest beekeeper]

Originally Posted by AVTechMan

After reading many threads and articles on people saying how you should invest and have money work for you, I am convinced that maybe I should look into it. Thing is many people say to invest here and invest there, but I don't really see an easy way to get into it like, what a good way to start for beginners?

I am 31 years young and have never invested anything in my life, mostly because I do not understand it. To be honest I find it more confusing and daunting than anything, and I surely don't have a clue on who to find or talk to about investment options. Many people don't want to invest either because of the risks or that they simply don't know how. Obviously storing money in a bank savings account isn't going to do anything as far as building up anything.

I would just simply like to know what is the best way to start out? I know there will be tons of variances and ideas, but someone has to start somewhere, especially when you don't have alot of money to start out. I agree with the fact that instead of me working hard for the money, it should be the other way around and it should be working for me!

But as much as people talk about all the time how you should invest, there obviously must be some good that comes from it.

Any thoughts would be appreciated.

One fraternity that I belong to has money in a Vanguard Mutual fund, and they are losing huge. I have always been leery of mutual funds. But to each his own.

We each advise different strategies.

I did not begin investing until I was 26. I worked in a career field that has 20 year pensions. I took advantage of courses to learn to budget our finances, and courses to learn about taxes and tax planning. I was able to retire when I was 42.

I recommend that you: take investment advise from folks who have been successful in their investing; that you take tax advise from folks who pay no taxes; and invest as much as possible using other people's money, not your money.

Good luck

[Oildog]

Agree that the ROTH IrA is the way to start...after paying off your debts. Many financial advisors will give free advise, but I prefer investing myself. I go through Schwab as they have a number of mutal funds available under many companies. Many w/o load fees.

[HankDfrmSD]

Originally Posted by AVTechMan

After reading many threads and articles on people saying how you should invest and have money work for you, I am convinced that maybe I should look into it. Thing is many people say to invest here and invest there, but I don't really see an easy way to get into it like, what a good way to start for beginners?

I would start out by reading some books, like:

Amazon.com: What Works on Wall Street: A Guide to the Best-Performing Investment Strategies of All Time: James P. O'Shaughnessy: Books

Amazon.com: Martin Zweig Winning on Wall Street: Martin Zweig: Books

Amazon.com: How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition: William J. O'Neil: Books

Amazon.com: One Up On Wall Street : How To Use What You Already Know To Make Money In The Market: Peter Lynch, John Rothchild: Books

I would also read the 13 Steps to Investing, at the Motley Fool:

Understanding Finance and Investing

Hank

[BORGUSX]

While I'm on the same issue as the original poster of this thread, should I open up an online saving account or just invest into something that offer a higher interest rate?

[Oildog]

Originally Posted by BORGUSX

While I'm on the same issue as the original poster of this thread, should I open up an online saving account or just invest into something that offer a higher interest rate?

Why not open an account w Schwab or another discount broker that you can make periodic deposits. First investment would be a Roth IRA. It doesnt cost anything to open, and investments grow tax free until you retire (stick the money into high dividend stocks and funds and let them compond. Max yearly contribution is $4500 I think.