What's the best way to invest $20,000?

Question

I've got about $20,000 that I want to invest, but know next to nothing about investing. I do have an IRA which I just started. Should I put it in there? Should I look for a mutual fund? Don't be afraid to dumb it down... I'm here to learn. Thanks!

Answer 1

Open the IRA and put your the max in it.the open a brokerage account and put the rest.

Build a diversified portfolio of stocks and bonds.If you are young, go for 20-80% split. Load up on hi-yield stocks like utilities and top quality banks. You may want to get  more foreign stocks than US ones.

Answer 2

Buy a no load small cap value fund

     or IEP - run by Carl Icahn

Answer 3

Invest your money on a well diversified mutual fund that has averaged 10-15% rate of return for the last 20-40 years.

By law you can invest $5,000/yr in your IRA ($6,000 if you are 50+ years old). And you can invest up to $15,500/yr in your 401k ($16,500 if you are 50+ years of age). You can put all the money in a SEP IRA if you are self-employed or own a businesss.

Good Luck

Answer 4

I have been managing funds since 1997, and this is what I always tell my clients:

- diversify your portfolio, no matter what size it is.

- allocate part of your portfolio to fixed income investments (bank CDs, bonds, rental property)

- allocate the other part for capital growth (stocks, managed forex, options/futures).

- if you are risk averse, allocation should be 80-20 in favor of fixed income investments.

- if you want higher returns, allocation should be 50-50 for both fixed income investments and for capital growth.

Hope this helps!

Jim http://jsforex.blogspot.com

Answer 5

Better open a high yield account in a bank in Eastern Europe. You will get a 12% APY with NO RISK. All deposits are insured by the government.

If you had $20,000 to invest for 5 years at 12% p.a. compounded yearly, it would be worth $35,247 after 5 years.

I have opened such a high yield account 5 years ago. Email me for more info.

Good luck!

Answer 6

Since you state you have virtually no investing experience you want to keep it simple.....thus you should invest in Index Funds,  a type of mutual fund.

I would suggest you split your 20 K into

A) an index that follows large caps  

B) an index that follows international funds

C) a Balanced fund ( holds both Stocks and Bonds )

To make it real easy for you, check Fidelity or Vanguard as they have index funds in both A & B as well as a regular mutual fund( s )  in type C.  

The other key is what mutual funds charge you ( the expense ratio ) and Index funds have the lowest expense ratio's of any type of mutual fund.  Over the course of time that means something.

  

Very brief primer:

Mutual funds invest in a specific area....say just energy or financial ( these would be sector mutual funds as they buy stocks of just companies that fit the area they invest in )

Other mutual funds invest in say companies of certain financial size ( ie the companies market captialization, basically what it is worth )  so they may invest in only small, mid, or large type companies.

Mutual funds are run by managers who pick the stocks that they think will do best for the type of fund they run. They may be right, they may pick wrong.

Index Funds also will go by a category, but they own ALL the stocks.  Thus with an Index Fund you will earn an average rate, not  too high, not too low.   With the other mutual funds the stocks they pick may perform very well--thus earning you a great rate of return,  or conversly they might do poorly, loosing you lots of money.

With an Index Fund you will make or loose money depending what the overall market does, as you own all the stocks in the category you have chosen, as you will have all the winners and all the loosers, so it averages out.

Go to Fideltiy or Vanguard's web sites, they can be very informative.