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Investing Thread

addictivepersona

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I have about 8K saved up. I don't want to invest all of it as my car may go, I may have an emergency, et. al. How much would you invest? 4K? I make about 1K a month. Expenses are about $500 a month. I'm sick of just letting my money sit in my savings account. But I don't want to do something risky like the stock market. Have heard about CDs and whatnot, but there's not a high return on those... I'm willing to let this money sit for awhile tho (like, ten years if I gotta)...

Any input is welcome. :)
 
^^ first, saving 8K is amazing, esp. among the types of us who frequent BL ;)

it depends on where you are, but in the US, UK & Canada, at least, you can save on a monthly basis with a $1000 or $2500 initial investment in an index or balanced mutual fund. with dollar-cost-averaging, you come out the winner in the long run (if there, ah, is a long run)

http://en.wikipedia.org/wiki/Dollar_cost_averaging
 
Exchange-rate derviatives (swaps, futures, etc.) if you study up a bit on them beforehand (meaning learning what is good, how to notice trends, how to hedge your profile, etc). Ya, they're risky. But pretty much anything generating a ROR higher than a generic bank CD will involve some element of risk - nothing comes free/easy in life.

Index funds are also good for lower-level investing, but their ROR isn't all that promising.
 
Exchange-rate derviatives (swaps, futures, etc.) if you study up a bit on them beforehand (meaning learning what is good, how to notice trends, how to hedge your profile, etc). Ya, they're risky. But pretty much anything generating a ROR higher than a generic bank CD will involve some element of risk - nothing comes free/easy in life.

Index funds are also good for lower-level investing, but their ROR isn't all that promising.

the question asked was for something lower-risk than the stock market and the assumption was that the OP was not going to learn to become an investment professional, and unless you are a professional, stay away from derivatives with a 10-foot pole. not that you can even get that close to them... nor am I in any way discounting the value of learning about and trading them, but that's not what OP was asking
 
I'd stick with CDs (will probably jump into them soon, myself); if you're allowed to add to them while they gather interest, you can rack up a pretty robust return, at least if you're able to sit on it for a few years.
 
the question asked was for something lower-risk than the stock market and the assumption was that the OP was not going to learn to become an investment professional, and unless you are a professional, stay away from derivatives with a 10-foot pole. not that you can even get that close to them... nor am I in any way discounting the value of learning about and trading them, but that's not what OP was asking

1) Yes, I have professional training in financial analytics via graduate school.

2) The "stock market" (lol isn't that a funny lumped term) isn't any less risky than strong derivatives markets in the current day, assuming the investor is or will be versed in what s/he is giving money to.

Throwing 4k at some financial planner and asking him or her to "do what's best" is no less risky than reading up on current finance and really learning what's moving up/down in the current time, across various sectors. And in fact you learn something from the latter. If not about new terminology, then about diversification and smart planning.

Lower-risk than the "stock market" or what I've suggested? Certain commodities, government-backed notes, or bank investments, MAYBE. Otherwise, forget a higher ROR. CD is your best bet if you have no risk appetite.
 
i consulted my boyfriend on this as he is an investment banker and spent some time as a financial advisor in New York and Philadelphia. he also has an MBA in finance and worked for FINRA in New York. his advice is below:

first, based on wanting to keep some funds aside for emergency situations, etc and taking into account your monthly expenses are $500, you should put aside about $1,000 - $1,500 (i.e. 2-3 months worth of expenses) in cash or a money market account. that way you've got money set aside in case you lost your job, your car needed repairs, etc. a money-market account is essentially an interest-earning savings account that you can write checks from.

that leaves you with $6,500 - $7K to invest. first question is, do you have any debt? if you do, especially high-interest credit card debt, you should pay that off first before investing in long-term instruments. for these purposes, we'll assume you don't have any debt.

since you've stated your time horizon is 10-years, you shouldn't be afraid of the stock market. my advice is, invest in one or two mutual funds that have a long and solid track record. investing in individual stocks doesn't make a whole lot of sense unless your investment funds are in the six-figures + range. mutual funds give you the appreciation of the underlying stocks in the fund and provide you exposure to a much wider range of companies than what you'd be able to achieve by investing in individual company stocks on your own with limited funds. just do a little bit of homework on various mutual funds before you select.

you can either invest in index funds which are tied to certain stock indexes such as the S&P 500 or you can invest in funds managed by professionals and those professionals select the underlying stocks. if you choose the latter, make sure you look at a particular fund manager's history with the fund (i.e. if the fund itself has a strong 20-year track record but the manager has only been managing the fund for the past 3-years, you should discount the previous 17-years to some degree because that manager wasn't responsible for those 17-years of performance.)

you should split the money up across several funds if you want to give yourself diversity and asset allocation. you should definitely have money in a large company/ Blue Chip company GROWTH fund and a large company/ Blue Chip company VALUE fund. if you're willing to take on a little bit more risk, a mid- or small-cap fund. also you can get exposure to other countries' stock markets through an international fund. you can make initial investments in funds with as little as $1,000 and in some cases $500, or even $250. (you can also do a monthly investment that pulls from your checking and invest as little as $50-$100 per month.)

i suggest investing 60-100% of the money spread between a large-cap growth fund and a large cap value fund. if you choose to invest less than 100% in the large-cap funds, invest the remaining across 2 or 3 other funds that give you access to small- to mid-cap stocks and/or international stocks. the theory is that when the US market is down, other markets will be up... when large company stocks are down, small company stocks will be in favor, when growth is down, value will be in favor, etc. however this certainly does not always hold true.

i'd recommend you check out Morningstar and research funds there.

p.s. with only $6 or $7K and no previous investment experience, STAY AWAY FROM DERIVATIVES!
 
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shorted $1,000 worth of BP @ 36 dollars... bought back at 26 :)

I'm a big fan of short selling
 
I have about 8K saved up. I don't want to invest all of it as my car may go, I may have an emergency, et. al. How much would you invest? 4K? I make about 1K a month. Expenses are about $500 a month. I'm sick of just letting my money sit in my savings account. But I don't want to do something risky like the stock market. Have heard about CDs and whatnot, but there's not a high return on those... I'm willing to let this money sit for awhile tho (like, ten years if I gotta)...

Any input is welcome. :)

i think this fonds looks promising:
http://www.wealthcap.com/de/aktuelle-fonds/PrivateEquity12Balance/

BUT: im no professional. ask other people with references what they think about this. dont trust me, im an amateur!!!
 
Your expenses are 500 a month? Damn, how do you do that. We spend probably 400 a month on rent alone plus like almost 500 a month on food (for two people, but he eats more than me). PLus whatever little things but still.. wow. Good for you!

No advice on investing but just wanted to say you're awesome, lol. I was able to save a little over 4 grand once but I spent it all going backpacking in Asia. :D
 
i would, and have, invested in a roth ira, you wont see the money till you are 59 and a half but it will be worth tons more and you wont have to worry about retirement...if you are looking to get the money out sooner i would check out mutual funds as they do not have the same risk (they also dont have the same reward possibility), but with mutual funds you are not liable to tank and lose all your money, just guessing at a stock and buying it is a horrid idea and is almost like gambling....
 
^Isn't that what Jim Kramer does on his TV show?
He's always like "buy this company, they just hired a great new CPA blahblahblah..."
It seems like he's just telling people to buy stocks randomly.
 
Wow, thank you everyone for your input! I'd reply more in depth but I am wicked tired atm, so a few quick things:

- How do I manage only $500 in expenses? I live rent-free as long as I do the cooking and cleaning.

- Roth IRAs... I have heard of them--But what exactly should I be looking for if I look into that? 'Cause I don't *need* the money in ten years... I'd be happy to set aside a few grand now and have it be doubled (at least) when I retire. That'd be awesome.

- Down payment on a house = As great as it would be to have my own house, I'm comfortable where I am right now. Rent-free... Can't beat it.

FuturePig = I started reading your post. Then I realized I'm wayyyy too tired to digest that info. right now, but I truly do appreciate you typing all that out and getting the information for me! I really do. I will read through that probably this weekend.

Same goes for everyone else who gave details--I appreciate it, I really do. I'm just dead this week. Workin' 40 hours instead of the normal 30. Wouldn't think 2 1/2 more hours a night is too bad, 'til ya do it. So, thank you everyone, and I will get back to everyone probably.

Don't take this as a "I've had enough info." post either! Any and all input is still welcome. :)
 
My goal within the 2 years or less.... buy land for house and build it ( around 100 - 200k Totally of the grid) ...
I have always wanted to live of the grid....To me that is as free as you can get in this country...
Grow your own, hunt your own, catch your own,make your own, and even buy things off your neighbors...
 
^ I just came back from visiting a friend who is doing just that - and he did it single-handed (as in design, build...etc) with some friends' physical help. Except that instead of living completely off the grid, he decided to tie in and feed back.

A lot of work for sure, but definitely doable. I myself am contemplating building a dugout hut powered by solar/wind.

I actually agree with unbreakable: the best investment is land.
 
Don't invest in Mutual Funds. Ever. There's no reason any of your money should be going to the people that manage these funds and charge yearly fees when you can manage them yourself for free. If this is for your retirement then your timeline is long enough that you can just pick good companies that will more than likely grow over your lifetime and you'll make a lot of money. Buy them now and forget about them and you'll do a lot more than double your money by retirement. You can open a free IRA or Roth IRA account on etrade.

There are hundreds of good companies to put your money into and not have to worry about watching them. Safe utility companys that sport huge dividends you can set to automatically reinvest like National Grid(NGG), tech stocks that have a lot of growth ahead of them but can be bought cheap right now because of the economy like Nvidia(NVDA), leaders of their industries like Monsanto(MON), sturdy high-yielding sin stocks like Altria(MO) or their international offspin Phillip Morris(PM), international stocks to capitalize on emerging economies like Petroleo Brasileiro(PBR) and PetroChina(PTR), both of which also give you exposure to the oil and energy industry that include stalwart companies like Exxon Mobile(XOM), Chevron(CVX), etc. You can get commodities exposure from great companies like Freeport McMoran(FCX) and benefit from the crumbling of the US dollar. Healthcare is ever-growing. UnitedHealthcare(UNH) is worth a long-term look. I could go on and on and on. It doesn't take a genius to pick good long-term stocks. The richest man in the World isn't one. He made all his money in "investing in companies that he understands". If a company seems to offer a product or service that makes sense to you, buy it.

Just remember, it's the people that have MBAs relating to this shit that got the global economy into the god awful situation its in now. You couldn't pay me to take financial advise from a professional advisor. Do your own research, keep it simple, and you'll be fine.
 
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