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dimbulb · 06-17-2005, 05:19 PM

I would avoid stockpicking. The majority of actively managed funds (and these are run by full-time professionals whose jobs are to pick stocks) underperform the market after fees and expenses.

Depending on your situation (e.g., do you need a source of emergency money, or can you count on someone in the case of an emergency? ) I would:

1. Read and find out more about investing. I strongly suggest www.diehards.org

2. Build up an emergency fund, somewhere between 3-6 months of living expenses. Put this into something relatively accessible and liquid, such as an ING Direct account, which at 3% APR, barely covers inflation.

2. Invest for the long-term. Buy and hold forever. I would start putting money into a Roth IRA. This lets your investments grow tax-free until retirement. This makes a lot of difference when taking compound interest into account. You can put up to $4000 a year of after-tax money into this. I would strongly advise opening one at www.vanguard.com. They have a very wide range of very low-cost mutual funds. The strongest correlation between any factor and investment returns is the expenses of a mutual fund.

4. Decide on an asset allocation (between stocks and bonds). A rough rule of thumb is to hold your age in bonds (i.e, hold 20% of your assets in bonds if you are 20 years old)

5. If its too complicated, consider the Vanguard Target Retirement funds (for your age, I would probably suggest the 2045.) It automatically adjusts the risks and asset allocation, assuming that you will be retiring in 2045. So the risk profile starts off aggressive, and automatically becomes less risky as 2045 approaches. Its holdings are primarily in the Total Stock Market Index, and Total Bond Market Index, and International Stock indices. So you'll be broadly diversified across the entire US economy, and the world economy as well.

I'm not with vanguard, but most of my money is. .......

By the way, Warren Buffet strongly advises most investors to invest in index funds.

06-17-2005, 05:19 PM	#5 (permalink)
dimbulb Riiiiight........	I would avoid stockpicking. The majority of actively managed funds (and these are run by full-time professionals whose jobs are to pick stocks) underperform the market after fees and expenses. Depending on your situation (e.g., do you need a source of emergency money, or can you count on someone in the case of an emergency? ) I would: 1. Read and find out more about investing. I strongly suggest www.diehards.org 2. Build up an emergency fund, somewhere between 3-6 months of living expenses. Put this into something relatively accessible and liquid, such as an ING Direct account, which at 3% APR, barely covers inflation. 2. Invest for the long-term. Buy and hold forever. I would start putting money into a Roth IRA. This lets your investments grow tax-free until retirement. This makes a lot of difference when taking compound interest into account. You can put up to $4000 a year of after-tax money into this. I would strongly advise opening one at www.vanguard.com. They have a very wide range of very low-cost mutual funds. The strongest correlation between any factor and investment returns is the expenses of a mutual fund. 4. Decide on an asset allocation (between stocks and bonds). A rough rule of thumb is to hold your age in bonds (i.e, hold 20% of your assets in bonds if you are 20 years old) 5. If its too complicated, consider the Vanguard Target Retirement funds (for your age, I would probably suggest the 2045.) It automatically adjusts the risks and asset allocation, assuming that you will be retiring in 2045. So the risk profile starts off aggressive, and automatically becomes less risky as 2045 approaches. Its holdings are primarily in the Total Stock Market Index, and Total Bond Market Index, and International Stock indices. So you'll be broadly diversified across the entire US economy, and the world economy as well. I'm not with vanguard, but most of my money is. ....... By the way, Warren Buffet strongly advises most investors to invest in index funds.