New to Investing Need Help!?

Question

Hey guys im brand new to investing and really have no idea on what to look for or even if i should be. I just turned 20 and finally have a job im looking to make some money but i dont know where i should or how to invest my money. I dont have a lot of money to use/start with around 100-500 dollars. but once i start getting more income to use i will. ive looked into a little bit of cds and mutual funds any suggestions on what i should do? please id love some advice, thanks everyone.

Answer 1

1) buy and read the books "Investing for Dummies" and "Mutual Funds for Dummies" by Eric Tyson.

2) Put the rest of the money in a bank, saving or CD until you have at least $2500 (or $3,000 for Vanguard).

3) Then look at mutual funds (I like Target Retirement funds from T. Rowe Price or Vanguard as a good "starter" well diversified fund).

Answer 2

401k plans are your best option for several reasons.

Number 1.   Contributions to 401k plans are done with pre-taxed dollars.  For example, you stated you could contribute 1,200 per year (I assume you meant 100 a month).   You also mentioned you had a salary of 10,000 a year.  The same 1,200 contributed to a CD or a mutual fund is done after you have been taxed.  So then, 1,200 is taxed at 25% which means you really only have 900 to invest (after taxes).  If you invest in a CD or mutual fund you would have to find a CD/mutual fund that returned at least 25% to catch up to the 1,200 you could have invested in a company 401k.  The odds are very, very slim that you could find such a CD or mutual fund.   CDs return about 3 to 5%.

Number 2.  Most companies will match 5% of your base salary if you contribute a certain percentage.  5% of 10,000 is 500.  What does that match mean?  It means when you contribute 1,200 you get a free 500.  Your overall contribution will be 12,500.  401k plans are the only plans that give you a free contribution.

Number 3.  If you contributed 1,200 your Adjusted Gross Income (AGI) for tax purposes would be reduced by 1,200.  Which means that instead of being taxed on 10,000 you would only be taxed on 8,800.  This may drop your tax bracket which means that instead of being taxed at 25% you may fall into a lower tax bracket (maybe 23%).  2% of 10,000 is 200 saved.  Which means that you can contribute an additional 200 to your 401k plan.  A 1,200 investment into your 401k plan really equates to a 1,900 investment when you include your employer’s 500 contribution and 200 tax savings.

Of note.  I am not sure what you tax bracket is...my assumption of 25% was just that...an assumption.

Answer 3

One way to invest money safely and receive a larger return than from a bank is to start a home business that allows you to receive  residual income. Besides the income, there are a great number of tax deductions for having the home biz, which makes it even more attractive of an investment to a lot of people.I encourage you to take a look at what I do:

I am looking for serious partners who want their own legitimate home business. We're a group of men and women who work from home and online (Must have internet access). We have an amazing support system, there is no selling, and we train you for free. You can work full- or part-time and you choose your own hours. We are partnered with an incredible INC 500 Company. We are not an MLM, or get-rich-quick scam, and better yet, there is no risk. Here's my website: http://www.workathomeunited.com/Cari

You can also email me at: [e-mail]

If you email me, please include your phone number so I may call you back with all the details. You should be fully informed before you make a decision for any business. This business is especially good for you because it does not require a large investment, and remember what I said before, There Is NO Risk!

Make it a great day!

Answer 4

Without having more information about your personal information, such as age, current income and other data such as risk tolerance, martial status, and demographics it would be very inappropriate for me or any other person to provide specific investment information in this type of media

There are many people just like you that are, or were looking to invest and those that did bought Mutual Funds and/or Exchange Traded Funds (ETFs).  One purpose of mutual funds is to help investors like you, who are either just entering the investment world or who have no investing experience.  Once you feel you at least have an understanding of investments you should look into ETFs which are similar to mutual funds but are traded on the exchanges.

Mutual Fund companies as well as ETFs have an entire array of products many will fit your needs. You can go to the MSN.Money website

http://moneycentral.msn.com/home.asp  it has an entire section on mutual funds and Exchange Traded Funds.  Read about the various products and in doing so you will be getting investment ideas and at the same time educating yourself about investing.

You could also contact the funds companies for more information.  I have found that Vanguard & Fidelity can meet your needs for mutual funds.  The service and information they provide is all free and you will find it helpful

Answer 5

If the place you work offers a 401K, check into it.  Often the companies will match your contribution to a certain level. If not, talk to your bank about an IRA.  Does the place you work have a credit union?  They often offer modest investment, often by payroll deduction.

Don't worry about breaking into the stock market right away, the stock market is greatly overpriced and should be taking a tumble soon.

Answer 6

here are some steps to  prepare you. These are basic steps everyone should complete before investing anything.

Step 1.

First decide what kind of brokerage you want to work with. You can open a brokerage account in your bank, with a large full service brokerage or an internet brokerage. I find when I get help, most people want to sell me things that are better for them….

So I use http://www.scottrade.com because it’s cheap and easy with low frills. I like their streaming quotes and I do my own research and make my own investments. But any low cost internet brokerage service is fine.

Step 2. get a subscription to Barrons or Investors Business Daily… Do this for 6 months or a year. At first, It seems a bit mysterious, but pretty soon you start to understand the terms and things that investors are looking for and what they are afraid of.

Step 3. If you have some money to invest, put it in 3 month CD’s right now. First the market is unstable and second you have some homework in Step 3 to do before you do any investing.

Step 4. Go out to the internet and search on the following subjects. Become very familiar with the concepts.

Asset allocation

Long term investing

inflation  

Roth ira vs ira

Large med small cap

Value vs growth

Indexed mutual funds

No load mutual funds

ETF

Sector funds

Bonds CD preferred stock

dividends

International funds

Market cycles

volatility

Fundamental analysis

Technical analysis

In most cases, I think it is wise to use indexed mutual funds and ETF to build the base of your portfolio.

Step 5 go to http://clearstation.etrade.com/ and sign up for a free account. Play around there by looking at graphs and fundamentals. If you click on the graph names, you will get clear information about what the graph means and how to interpret it. I think it’s also a good idea to pretend you have $10,000 and start buying and selling on paper. Keep track of where you are each day for a month… It’s a lot easier to lose play money then real money….

WARNING: don’t rely on technical analysis alone. These graphs are good at telling you WHEN to buy and sell, but not WHAT to buy.

Don’t get involved with futures, currency, options (unless you get stock options at work), commodities, annuities or other derivative type investments at this time.

It would be wiser to build a portfolio with broad based asset allocation through diversified mutual funds and etf's (After you have spent a lot of time in step4, you will understand what this means and why it is wiser)

Good Luck