23 year old graduate in good financial situation ... how should I invest/save money/?

Question

I just graduated with a masters, got a well paying job, and I'm living at home for a year. I also have decent money coming in from a part-time business. I'm looking for advice on where I should focus my extra funds ... I want to invest a lot, save a lot for a house, and pay off student loans ASAP.

Here are details ...

After taxes income/month: ~$3500 (that is after investing 8% into 401k with company matching 4%)

2nd business income/month: ~$2000

Student Loans: ~$35,000 (half subsidized)

I also pay my parents $300/month, which covers food, car insurance, phone bills, utilities, etc. I fill up my gas tank around once a week, so like ~$250/month. Food and drinks for the week shouldn't be more than $100, I don't party TOO hard, so like $400/month. I'd like to invest a good portion of the funds I have left over, I have all the electronics and stuff I need. I'd also like to buy a house in 2-3 years.

Sorry for the length, does anyone have some general advice for me? Thanks!

Answer 1

I´ve been investing for more than 20 years and trading for almost 14, and I can tell you that if you want to make BIG and FAST profits, I recommend you trading rather than investing, trading can help you to go from rags to rich.

If you are investing, you must have already achieved some degree of financial success, long term stock investing and FOREX can help you to diversify your money and become much richer than you are today.

My experiences as a Nasdaq Market Maker, Head trader of several brokerage firms, and currently as a professional trader and private hedge fund manager, I can suggest you that:

We trade because we want quick, short term profits on a consistent basis. We want to cash flow the market. Milk it like a cow.

Make consistent, small, short term gains rather than trying to hit a home run on every trade. Don't ever forget that.

Don't marry a stock, marry the idea of making money trading stocks. That's the only way to do it.

For me "All stocks are equally worthless”

I don't hold on to any illusion that the stock market will continue to go up and provide a nice retirement for me.

I could care less which way the market goes. It's irrelevant to me if the market goes higher, crashes or moves sideways for the next 50 years. I really could care less. Stocks are just four letters with two prices next to them that I use to make a living trading.

Trade ONLY when you have a clear, easy and identifiable advantage, because without a CLEAR EDGE your odds of success are NO better than a flip of a coin… That´s why so many new traders (and investors) lose money.

Take a look at any daily chart of any index or stock and you'll probably see the most volatility and the biggest opportunity for profit during the first Hour of the stock market's opening.

The popular thinking and conventional wisdom is that you should wait about an hour before you start trading.

But if you do, you'll miss the big, fast moves that stocks make as all the amateurs let their emotions out through their online accounts, usually right after they read some news headline or hear Maria Bartiromo go off about a stock on CNBC.

It's easy to see why trading the open is the market's prime time for profiting from other online traders.

The market's open is very volatile - that is the perfect environment for LARGE, FAST profits.

Learn to trade as a professional Market Maker, not as an emotionally driven amateur trader or investor with few thousand dollars in an account at Etrade.

There isn't any other time during the day or any stock you can invest in, that can make you 1, 2, 3, 5, 7 or more points in minutes OTHER than during the first hour the stock market is open, that means: if you are buying or selling short a 1000 shares per transaction, you´ll make $1000,$2000,$3000,$5000 or $7000 Usd "IN MINUTES !!!" not in a day, not in a week, not in a month or in a year, in less than 60 minutes... That's why I love trading the open so much.

I trade only when I have an edge and that means "only the first hour the market is open".

If you are a beginning trader, you can give yourself an unfair advantage in the market trading this way.

I can carry on for hours on how to make money trading online, but if you ask me:

"What is your best advise?

I will say:

Give yourself a BIG favor and go to this "Top Secret" site and learn how to get by yourself the BEST stocks that will make the largest and fastest day trading profits you´ve ever seen.

www.onehourtrading.com

After you review this site you won´t need any system, strategy, book, software, guru or mentor to tell you what to do, you will be able to profit HUGE every day.

Besides, you´ll learn:

• The right amount of money to start trading…

• The best Online broker out there…

• Learn how to enter and exit a trade in seconds making Huge profits…

• Make more money than most day traders simply by trading one hour a day!!!

• How to reduce stress, limit risk and stay disciplined like a Pro.

• The 4 basic rules you should know, that every successful trader know, and amateurs don´t even imagine.

• How to trade against the amateurs and avoid like the plague doing it against the professionals , and why this will put you ONE STEP AHEAD of all traders.

• What causes more devastating trading loses than any other factor... and... How to avoid this pitfall! (Even savvy traders often fall victim to this! )

• Not to spend most of your day in front of a computer dealing with complex charts, software or technical analysis.

• Learn how to read the market´s open to make a huge profit just a few minutes after the opening bell.

All this and a lot more…

Good luck and good trading,

John Fontaine

Answer 2

Buying a house is the best option..but before giving u any further suggestions please also tell me that extra source of Income....

Waiting for the reply:-)

Answer 3

A general guideline from most financial planners would be to build up a savings account with 6 months worth of living expenses.  Put this money in an online high yield account and set it aside.

It sounds like you are doing everything right...

If you have the $ though, you should maximize your contribution to your 401(k) -- $15,500 for 2008

Student loans - you likely aren't paying a high interest rate on them right now since they are tied to Prime / LIBOR and that is currently quite low, so I wouldn't be in a big rush to pay them off.

House - you can't escape the news about how terrible the housing situation is.  For those who saved their $ though, now is an incredible buying opportunity FOR THOSE WHO PLAN TO LIVE IN THAT HOUSE.  If you are trying to buy a house then sell it in a few years, you'd then have to make an estimation as to whether we are really at the bottom of the market yet (I think we are far from it).  

Keep in mind that you get tax benefits when you take out a mortgage.

So, I'd start to think about what you could reasonably save towards puchasing a house in the next 2-3 years, and then take a look at what you can currently get for that kind of money (your $ plus a mortgage).