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savafan
02-15-2008, 05:34 PM
I've been thinking recently about investing some money in the markets, but I really don't have a clue how to get started, and I don't really feel comfortable allowing someone else to manage my assets for me. Are there any zoners here who play the markets and know where I can look to get some good information on where to start?

15fan
02-15-2008, 05:52 PM
What's your time frame? Will you want the money back in 6 months, 2 years, 10 years, or 25 years?

How much risk are you willing to take? If your portfolio goes down by 5-10% over a short period of time, is it going to give you an ulcer and keep you from sleeping?

Are you looking to establish an account and regularly put more money into it over the long run? Or is this money that you want to invest so that in 2-3 years you have money for a down payment on a car/house etc?

Do you want to pick specific stocks, or do you want someone else to pick them for you? Or do you want to go the mutual fund route?

Lots of things to think about, but mainly your time horizon and risk tolerance / aversion levels will dictate the direction that you should go.

Unassisted
02-15-2008, 05:57 PM
Morningstar.com is a good objective source for advice on stocks and mutual funds. Using their ratings will help you avoid getting into an investment that is riskier than you are looking for.

I made some lousy choices in the last 5 years when buying and selling stock, so I came to the realization that I'm better off investing in mutual funds than picking stocks. You may be a whiz at picking stocks, but it can be expensive to find out that you're not. :)

If you can find an investment counselor who works on a fee basis, rather than a commission basis, you'll have less to fear about getting one who chooses investments that benefit him/her rather than you.

westofyou
02-15-2008, 06:10 PM
One word..... Plastics.

oneupper
02-15-2008, 07:06 PM
The Motley Fool.( http://www.fool.com ) is a good place to start. They'll try to sell you their advice, but there is quite a bit of free useful information for novices on the site. And its not TOO boring.

Look under Investing: Basics.

Rojo
02-15-2008, 07:12 PM
Index funds are good for the long haul. I'm thinking of getting back into the market, mostly for fun. Going into a recession, the CW says that "drugstore" stocks like Proctor & Gamble, Colgate-Palmolive and Gillette are a safe bet. But everyone knows this and their overpriced.

Another thing to keep in mind is that the boomers are heading into old age. I'm looking at pfizer (viagra) and Carnival Cruise lines.

Man, I know it's in trouble and auto stocks take a battering in a recession but Ford is trading for under $7/share. So...tempted.

savafan
02-15-2008, 07:17 PM
I'm looking for both short term gains, as well as planning for a secure retirement.

Ltlabner
02-15-2008, 08:17 PM
I'm looking for both short term gains, as well as planning for a secure retirement.

Forget the short term gains and focus on the long term, IMO. Unless you plan to go "all in" and learn the market, spend a lot of time studying it, and really focus on it you likely woln't be able to hit the "big score". It can be done, and some might tell you it's easy, but the turtle approach provides a better payout than the rabbit. You'll get far greater returns over time via compounding interest and the benfits of time than getting quick scores in the short term (especially with a few short-term losses ballancing out the short-term gains).

I've posted it before, but I wouldn't worry about buying into mutual funds unless all of your debts (except mortgage and maybe auto) are retired. Makes no sense to invest if you have credit card debt, student loans, etc.

Also, I'd max out my 401k contributions ESPECIALLY if your employer matches it. Even if they don't, max out the 401k. Then look into the ROTH IRA. You can purchase mutual funds under the ROTH IRA so you can minimize risk and get the tax free growth. Focus on these first so you get the tax benefits.

Only when your 401k and your ROTH are maxed out would I worry about other investments.

SandyD
02-15-2008, 08:49 PM
"Idea", not necessarily "advice"

Unless you can truly contribute the legal max, which I think is c. $14000, contribute as much as you can ... and at least as much as your employer matching funds will apply ... then increase your contribution by 1%/yr, or /qtr. You won't notice the difference.

Red in Chicago
02-15-2008, 10:49 PM
"Idea", not necessarily "advice"

Unless you can truly contribute the legal max, which I think is c. $14000, contribute as much as you can ... and at least as much as your employer matching funds will apply ... then increase your contribution by 1%/yr, or /qtr. You won't notice the difference.

Definitely contribute as much as your employer will match, but after that, depending upon the investment choices, you may find their plan options are worth it.

savafan
02-15-2008, 11:09 PM
My employer will match 6% of my income, but I'm not eligible to enter our 401K plan until next January, which is the next date to enter following my first year of employment.

BuckeyeRed27
02-16-2008, 12:50 AM
First go ahead and figure out exactly what you want to dedicate to each goal. You should put as much as you can afford to the retirement goal, but remember anything that goes into those accounts is gone until you are at least 59 1/2.
Since you can't do your 401k you should do an IRA this year for sure. You have until April 15 to put in 4k for last year and you can contribute 5k for 2008. When you can do your 401k my advice is to put in at least what your employer will match and then go into the Roth. If you do that and max our your Roth and still want to save go ahead and put more into your 401k. The 401k max is $15,500.
As far as the investments in those accounts I would advise you to go into target date retirement funds. Lots of companies have theses (T Rowe, Fidelity, Vanguard) and they are a safe way to invest for a retirement goal. They will give you a good asset allocation for your time horizon and will gradually get more conservative over time. If you don't know what you are doing investing and picking funds, then don't. That's what these funds are for and they will take care of your money and do all the hard parts of investing for you. Over time if you educate yourself and learn more about how to research and what you are looking for and how to look for it then by all means take more of the control for yourself. But starting out that way is just stupid.
For shorter term goals I would take a similar approach but consider being more conservative for any goals under 5 years and not putting any money in the stock market for any goals under 2 years. Rates aren't the best right now but money markets and CDs are still your best bet to preserve your captial.

SunDeck
02-16-2008, 09:27 AM
I don't have the time or the expertise to pick products on my own, but I use the tools provided by Vanguard (http://www.vanguard.com/) to educate myself. The first thing you have to do is determine a few things about yourself- how risk averse are you? How far from retiring are you? How much is the future Mrs. Sava going to contribute to the plan? Stuff like that. It is difficult to plan long term when you have a lot of uncertainty in your long term goals (like will you and the future Mrs. Sava be creating any little Savas?), but two things are pretty certain- your investment horizon and your risk tolerance.

I am pretty conservative (ie, risk scares me), but at the same time I am just about twenty years from retirement. Therefore, my fear of losing money is tempered by the fact that I know it's a marathon and not a sprint. I used Vanguard's website to learn about the proper mix of investment vehicles for someone my age and went from there. And a nice option that several of those companies are offering now are packages of funds that are preset to change the mix as you get closer to retirement. Looking at the profiles of those funds can be very educational.

With that introduction, I'll offer a few suggestions:

First, retire any bad debt you have (credit cards and other high interest loans). The interest you pay on those loans is eating away at any gains you are making on investments.

Learn about commissions, loads, fees. Mutual funds offer ease and convenience, yet there is often a hefty price to pay for it. Just look at it this way- for every percentage point of fees you pay, that is a percentage point of gain lost. Brokers like to say "look at the return and don't get focused down in the fees", but they don't tell you that the only way to truly offset high fees is with more risk. This is why John Bogle of Vanguard is so revered- he has railed against actively managed funds for years in favor of indexed funds with microscopic fees.

Invest in vehicles that are matched by your employer first. If they will match 6%, then your overall contribution is 12%. That's a pretty nice chunk.

Research, research, research. Go to Investopedia (http://www.investopedia.com/) and learn about investing. It's a pretty steep learning curve at first, but the more you work on it, the more comfortable you become with making decisions. Investment advisers and brokers make money by helping investors make decisions. However, unless you know more about investing than the average customer, it is very difficult to analyze their advice, which puts you at a disadvantage.

If you want advice, I second the recommendation to seek a financial planner who you can pay a flat fee for a plan. By eliminating a commission based relationship with an adviser you put them in a position to give you objective advice, untainted by their desire to make money from your investments.

Short term gains? Sorry, I am not oriented towards that. However, since the economy is in the tank right now, there are going to be plenty of opportunities to invest in undervalued companies. The opportunities are out there, but I just don't have that orientation.

vaticanplum
02-16-2008, 03:59 PM
First, retire any bad debt you have (credit cards and other high interest loans). The interest you pay on those loans is eating away at any gains you are making on investments.

I recently learned that the majority of my school loans are unsubsidized. Is there any way to change that? This is the only debt I have and it kills me to think that in the end it's going to cost me quadrillions more in interest than the loans themselves.

Ltlabner
02-16-2008, 07:44 PM
I recently learned that the majority of my school loans are unsubsidized. Is there any way to change that? This is the only debt I have and it kills me to think that in the end it's going to cost me quadrillions more in interest than the loans themselves.

Is there any penalty for paying them off early? If so, I'd pour every dollar I could scrape together into paying them off, instead of just paying whatever the monthly tab is.

I'm not sure how student loans are structured, but if you are able to pay them off early, you'll save a ton in interest payments.

SunDeck
02-16-2008, 09:49 PM
I recently learned that the majority of my school loans are unsubsidized. Is there any way to change that? This is the only debt I have and it kills me to think that in the end it's going to cost me quadrillions more in interest than the loans themselves.
I agree with Ltlabner. I paid off my student loans a couple years early, but I just waited until there was a few thousand left and wrote a check for it. Man, it was great being two incomes without kids.

Anyway, you will cut a lot off the interest just by adding extra dollars to your monthly payments. Make sure the lender knows to apply that amount to your principle.

Consolidating may be an option and that may result in a lower interest rate, too.

cincinnati chili
02-16-2008, 09:52 PM
I entrust my money to a guy at the end of my block named Squish.

MaineRed
02-16-2008, 10:30 PM
I'd call this guy:

http://tinyurl.com/39bqnj

pedro
02-17-2008, 01:13 AM
I entrust my money to a guy at the end of my block named Squish.


pills and powders baby. powders and pills. we spent the night last night in beverly hills. there was this chick that looked like beverly sills. we got killed. tights and skirts baby. skirts and tights. we used to shake it up in shaker heights. there was this chick she looked like patty smythe. she seemed seemed shaky but nice.

vaticanplum
02-17-2008, 02:49 PM
I agree with Ltlabner. I paid off my student loans a couple years early, but I just waited until there was a few thousand left and wrote a check for it. Man, it was great being two incomes without kids.

Anyway, you will cut a lot off the interest just by adding extra dollars to your monthly payments. Make sure the lender knows to apply that amount to your principle.

Consolidating may be an option and that may result in a lower interest rate, too.

Yeah, they are consolidated and I put as much extra toward them every month as I can. I have some savings and I've considered just throwing it all at the loans, but the truth is it would still barely put a dent in it while depleting me of all my emergency money.

I will make sure that the extra money is going toward the loan rather than the interest though. Never even thought about that -- good point.

I was just floored when I found out how much was unsubsidized vs. subsidized (unsubsidized tends to have a far worse interest rate). The ratio is like 6:1. That distinction between those two is made when you're given the loans, and I was in college and didn't understand it nor would I have had any say in changing it if I had. The thing that infuriates me is that I didn't qualify for work study my last two years of college. I had to leave a job I loved because they weren't allowed to pay me, presumably because my mother was making "too much" money. So they couldn't let me work for my government money and help pay off my school right away, but rather they piled me with unsubsidized loans that they knew they'd make a ton off of later. I'm very grateful that I had the opportunity to go to the school I wanted which I couldn't in a million years have afforded without loans, but the way they dole it out is very screwed up.

bucksfan2
02-18-2008, 09:42 AM
My dad set me up pretty well so I have used a broker for a while. It is a guy my family trusts so I feel confident with him. Personally I like having a person to talk to and would rather have a professional manage my money than myself. That said I have a few friends who have gotten into etrade or ameritrade and invested over the web. They enjoy it because the buy and sell fees aren't high and you don't have to invest much. They like it because of the east to buy and sell. If you are conservative I would look towards mutual funds and bonds. When I was interested in stocks I looked at good companies that paid pretty good dividens.