I am 20 yr old male attending college for accounting. I pay my way through college and have about 00 in a savings account. However, i want to take some out of my account and invest it in something. I was thinking about putting it into a IRA or a CD? What about , , or at my age? I am confused on how i should start right now. Is it too young for me to even think about investing? I want to start off young so when i am older i have saved up already. Any advice or opinions would be greatly appreciated. Thanks

 

  • Joe 9:05 am on March 15, 2010

    You should invest in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

    If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.

    I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion

    If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

    Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

    Sources:

    http://www.vanguard.com/VGApp/hnw/planningeducation
    http://www.fool.com/school.htm
    http://sec.gov/investor/pubs/assetallocation.htm
    http://www.diehards.org/readsites.htm
    http://finance.yahoo.com/education/begin_investing
    http://finance.yahoo.com/funds/basics

    Asset Allocation Calculators
    (Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
    https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
    https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval
    http://www.ifa.com/SurveyNET/index.aspx

    Web forum: http://www.diehards.org/
    (Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)

    529 plans: http://www.savingforcollege.com

  • robert w 9:05 am on March 15, 2010

    congrats, u may get out of college with out debt. suggest u visit daveramsey.com for some hard knocks commonsense approach to ur money that isn’t taught in college. keep the money liquid for emergencies that Will appear b4 u finish school. when u got an other 5K saved and have finished the site then think about investing. u will need that more sooner than later is college.

  • $so fresh so clean$ 9:05 am on March 15, 2010

    Man, if all young people thought like you and me. I love everything about investing. People don’t realize the "making money without working for it concept." I’ve been interested in investing since I was 19. I’m 22 now, and I know more about money than some finance majors at my school. Question: do you want to make quick money, or are you looking at the long term? If long term, then go with a low-fee IRA (T.Rowe Price, Vanguard, Fidelity.) If for short term, go with a high yield savings account, such as HSBC or ING direct Orange savings account. You can also go with a high yield money market fund (mutual fund) or money market account. Any more questions you may come up with, just hit me up. Good luck.

  • f r 9:05 am on March 15, 2010

    The reason that some predict that Mark Vincellete will be on the cover of Time magazine is because of his brilliant strategy he developed for the Forex market. He is revolutionizing investing. Making huge amounts of money and retiring young is not just for hedge fund managers. Soon to be a Forex industry standard investors following this program have been making unheard of returns. I have not seen anything like this. Due to compliance issues I cannot reveal the returns on investment but when you demo the program you will see for yourself. Once you see the power of the program you will confidentially tell everyone you know about it. That is why the company is growing 40% a month by word of mouth and has traders in 81 countries. This is a Forex hedge strategy that reduces the risk in this emerging market and anyone can invest because of its simplicity. It takes about 10-20 minutes a week to manage your account. You can follow the strategy with play money until you see how it works and are comfortable with investing. Don’t take me word for it though. Research the strategy. Watch the video presentation on the site below. It will explain everything through the video. http://www.currencyleader.com. Best Regards

    RULE OF 72
    $5,000 @ 12% a month = 1.2 million in 4 years. 19 million in 6 years.

  • Frank Castle 9:05 am on March 15, 2010

    Do you already have a house?

  • Tom H 9:05 am on March 15, 2010

    You should definitely put some money in an IRA & invested in stocks as soon as possible. But make sure you have eliminated any needless debt first, and do set aside enough cash (in a high yield money market fund) to avoid a crisis. Go with a discount online broker like E*Trade, TD Ameritrade, Sharebuilder, etc.

    Avoid the common advice to get into some risky hot stocks. The faulty wisdom here is that you are young, & if you lose it all, you’ve got time to earn more. WRONG! A slightly above average stock investment can yield fabulous returns over a 30 or 40 year period. DON’T squander your youthful investment years on flakey investments.

    I like high dividend paying stocks with the dividends automatically re-invested. This is called a Dividend ReInvestment Program or DRIP. You can invest in individual stocks, mutual funds or ETFs. The possibilities are endless.

    A boring but decent choice is a large cap equity income fund such as the Vanguard Equity Income Fund (a mutual fund, ticker VEIPX) or the roughly equivalent Vanguard ETF with the ticker VTV.

    A larger initial purchase should be made when the market has a big decline like in early March or mid August. If you want to pick all your buy points you should use the ETF because each purchase is a lower cost stock commission. On the other hand, if you want to add $50 or $100 per month after the initial purchase, then this can be done at zero commission cost with the mutual fund.

    If you choose the mutual fund approach make sure it is a "no load" fund and has a low "expense ratio."

    As you start to build the wealth in your account, you should probably consider diversifying into mid-cap US stocks and into international stocks and maybe a good bond fund.

  • ct_leo21 9:05 am on March 15, 2010

    Well,depend on the risk u are willing to take.Basically investment is only for those who have extra $.If the $ is for you study,I think it’s wise u put in FD.I am in the money market,and the risk involve is too high for u.Good Luck.

  • LA Guy 9:05 am on March 15, 2010

    You’ve got a lot of long winded answers so far, so I won’t take up too much of your time. Your young, so stay away from bonds and go for as many of the following as you can: (1) put $1000 in an IRA and then fund it as much as you can, (2) request information from a good investment company (I use T. Rowe) and pick a 4 or 5 star mutual fund that is heavily, of not 100%, in stocks and invest $1000 in there and set-up auto payments for a couple hundred dollars a month to go in. (3) keep saving up 20% for your down payment if you decide you want to buy a house.

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