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If you plan to learn about investing/trading, I would keep a sizeable portion of your account in safe investments and invest a smaller portion at first to get your feet without harming your nest egg. For example, you have $10,000 in a 5% CD. You can expect to get $500 in income each year. If you use the rest of your brokerage account to invest in stocks, you should limit your investment losses to $500 each year so you're not losing any wealth in any given year. In order to achieve that goal, you might need to set aside about $2500 in the account for investment in funds or stocks and limit the loss to 20 percent of your investable funds ($2500 x 20% = $500).
I say invest in the S&P 500 (Standard & Poor 500) through Vanguard or Fidelity or the mutual fund of your choise. The S&P 500 is a collection of 500 different stocks, such as General Electric, Proctor & Gamble, IBM, Exxon-Mobil, Wal-Mart and 495 other stocks. Investing in the S&P 500 will spread the risk around. You can have this in your IRA. This is meant to be a long term investment (10 years or longer).
I wouldn't have my 401k all in company stock, but try to diversify into other things. Enron employees who had all of their 401k money in company stock are now facing a cold and lonely retirement.
What a terrible time to start investing in a bear market that has dropped 20 percent. With the structural problems in our economy we will see Dow 10000 before we ever see Dow 14000 again.
If you insist in putting money in the market go with VTI, a ETF that mirrors the entire stock market.
What a terrible time to start investing in a bear market that has dropped 20 percent. With the structural problems in our economy we will see Dow 10000 before we ever see Dow 14000 again.
Look at the bright side. The OP is in his 20's and has 40 years to go until retirement. Buying stocks in a down market with stock prices getting cheaper is a good thing . It's better than buying stocks in a bull market with high stock prices (maybe stocks that are overpriced). The market will come back - granted it might be a couple of years from now. But the OP has time on his side.
[quote=questioner2;2553519]What a terrible time to start investing in a bear market that has dropped 20 percent. With the structural problems in our economy we will see Dow 10000 before we ever see Dow 14000again. /QUOTE]
Actually, that is the best time to start investing... when the market is down. Your money buys you more shares, and when the market recovers (which it always does) then you are way ahead of the game. If you wait until the prices are high again you will get less for your money.
I think the best thing the OP can do is to go on-line to Fidelity, T Rowe Price, or Vanguard and look at their Targeted retirement funds. Its all about asset allocation, and even though I have been trading stocks for decades I am leaning more toward these things nowadays. They have fund managers who watch the underlying stocks much more closely than I (or anyone else who has a job!) can. Decide when you want to retire and pick the fund that is closest to that date, like Retirement 2040, and put your money there. It will be very growth oriented now and as you get closer to retirement it will become more income-oriented.
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. It's better than buying stocks in a bull market with high stock prices (maybe stocks that are overpriced). The market will come back - granted it might be a couple of years from now. But the OP has time on his side.
