I want to start investing, where to start?

[Jesus Pimp]

My sister says I should start investing my money instead of putting it in the bank. Problem is I'm clueless to where to start. Are there any good books or sites out there? I'm currently working an entry level job and save about 600-800+ bucks a month. What's the best thing to invest in for my situation?

[Cynthetiq]

first save money....

then invest money.

the costs of trading stocks, paying broker fees will eat up your profits at such low amounts. WITH THE EXCEPTION of NO LOAD mutual funds, but you may have read about the scandal of mutual funds in the past couple of weeks and may be concerned about them.

That's the only place that you could at least save some money.

DO NOT BUY INTO AN ANNUITY... because then you cannot get your money out until the end of the term which is when you are close to 65.

Quite honestly save your money, either in the bank or in a tin can, but save it. Read about investing. Investing for Dummies is a good start, so is Mutual Funds for Dummies.

A stockbroker vs. a monkey, vs. person throwing darts, all average about the same over time.

[dimbulb]

the point is to avoid brokerage fees, and to spread your risk out. For any beginning investor, there is no way you can build a sufficently diverse portfolio that will diversify your risk.

Do not try to play the markets or try to pick stocks. It probably won't work.

My advice is to stick with no load funds, especially index funds. Things like the Dow or the S&P500. That way you're essentially buying into the growth of the economy.

Remember to have at least 2-3 months worth of expenses in liquid assets ( cash or money market funds) before you start investing. Remember that stock investing is for the long term.

And take any advice you get with a big pinch of salt. ME? i just got out of college. no money to invest. but if i were to invest, that's what i'd do.

[SecretMethod70]

depends what you're investing for.

I'm a big fan of the Roth IRA. And, if you're eligible for it (i.e. self-employed, independant contractor, etc), I REALLY like the SEP IRA.

[Sho Nuff]

Your best bet is to find a competent money manager that you trust and let them lay out a plan for you. I used to work in the financial services field and a good advisor can honestly make all the difference. There are a few key things to look at though:

1. Advisors are trained to usher you toward investment tools that will tie up your money. Place and emphasis on flexibility.

2. The advisor wants your business for commission. Some advisors will fade away once you are on the books as a client. Interview many advisors. Ask them every question you’ve ever thought of about investing and take notes. Bleed them dry. This will not only show you if the person knows their stuff, but you will also see what their character is. If they try to rush you out you know that person will bail on you, but if they stay and field all your questions and can communicate financial information to you in a way that you understand then that person may be a good choice. An investment relationship should last a long time and be based on good communication. Be sure to let them know in advance that you will need a lot of time because you have a lot of questions.

3. Don’t let them sell you the dream of an overly aggressive portfolio. They will tell you that this is the best time to get in the market aggressively while stocks are down, which may be true. But the stock market is always going up and down. If you are investing for the long term, slow and steady wins the race. As your relationship with the advisor grows then you can start testing the waters with some aggressive positioning but I wouldnt start by investing in an aggressive manner. If you still have 20+ years to retirement you'll have no problem saving more than enough to retire.

4. Educate yourself on the market. Once you are in, think of your investment advisor as the interim president of your money. Learn the market and bounce questions off the advisor but please keep it to a reasonable level. As an advisor I was more than happy to answer questions, but I had some people calling me every couple of days asking questions. If I had the time Id talk to them all day, but an advisor eats by adding more clients. Servicing existing clients is important but it has to be balanced with the workload of finding new clients.

5. GIVE REFERRALS!!! If you like your advisor, refer him/her to your friends. Advisors LOVE referrals and will sometimes offer you financial rewards. It will also make you a priority customer in their eyes and they will work harder to protect your money.

6. Learn about stock options. Stock options are high risk high reward investment tools that you can use on your own if you crave a little excitement and aggression in the market. The options industry council offers free training in trading stock options. Go to a few sessions and they will teach you how to make money regardless of the direction of the market. Many major firms send their new employees to these classes. They are high quality and tour many major cities.

Even though I have a degree in finance and have been an advisor and an equities trader, I still have 2 accounts with advisors that I trust. It’s always good to have as many opinions and people gathering intelligence as possible. I also play the options market when I see something hot on the horizon.

[j8ear]

If a 401k is available to you, your wisest investment move would be to max out your possible contributions, imho.

-bear

[BonesCPA]

Originally posted by Cynthetiq
DO NOT BUY INTO AN ANNUITY

AMEN!

First - Pay off all debt, especially credit cards. Then go into the mutual funds. You really don't have to pay too close attention to them since (in theory) the managers are paying attention to them on a daily basis.

Remember, the key to all investing is the time frame. If you will need the money in the short run (less than 2 years) be more conservative. If you are looking to be Warren Buffett, look more aggressive.

[locoslomo]

All good advice...you might also check fool.com for more information. The key, as stated above, is to understand and leverage the time value of money.

[Bamrak]

1. get out of debt- if not you're basically borrowing money to invest, and chances our your return won't match your loan %.

2. if you have a matching 401k at work, invest to the max of their contribution, after that go to Roth IRA's. They grow tax free, so more for your bucks. Ideally you want to invest about 15% of your income. If your 401k and the Roth's don't meet that, I would suggest growth stock mutual funds with at least a 15-25 year track record with around 10-12% overall growth.

3. while investing, begin saving for a rainy day. I would think 4-6 months of your income in a decent money market fund for easy access.

If you do those things, you'll be ahead of 95% of the people in the US. I've been following Dave Ramsey's plan for a while, and he has made a huge impact on my finances, I've paid off $13k in debt in about a year, which obviously makes me a believer that it works. I'm 25 and will be buying a $150,000 house with cash in less than 10 years.

[sailor]

Books? Yes--THIS one I swear by. The author takes a very good and RATIONAL look at investing, it is the best guide I have found.

Basically, the idea is to completely avoid individual stocks. What you want is a total cap mutual fund. That way you basically own every stock there is, and thus your returns are exactly what the stock market as a whole does. This means you cant have any better-than-the-market years--but you also cant have any that are worse. And in the long run, it does better than smaller funds or picking individual stocks, by far. Many funds will outdo the market one year, but there is NO way to accurately predict which ones will, and they very rarely do it for more than one year running.

I strongly suggest that book. He has a longer one out that goes more in depth into it if you are interested--A Random Walk Down Wall Street. The one in the link above is a shortened version with more to do with personal finance rather than the more philosophical approach to the market that the longer book takes.

[Boo]

To get out of debt and get ahead you MUST pay yourself first.

Participate in any IRA that your employer has first. Look for matching funds. Start putting $500 a month into CDs at the credit union for 2 years (put it on a spreadsheet if you don't believe that it works). Keep renewing. This money will keep you from diving into credit when a big ticket item sneaks up on you. The only things to owe money on are a home/real estate, education to improve your market value and a car.

Then look into mutual funds/real estate/small business.

[wraithhibn]

Get into a Roth IRA and max out your contributions every year. As for something to invest in, I would look at index funds. I like playing with the QQQ, the Nasdaq 100's symbol. That way it moves with the market if you want little management.

[jwells777]

Depending on how comfortable/how much exposure you are/have with money, I highly recommend starting by reading any number of books that provide a basic look at investing/gaining wealth. I enjoyed The Millionaire Next Door: The Surprising Secrets of America's Wealthy, but I have also heard that the Rich Dad/Poor Dad series is nice as well. After you read a few basic guides to wealth, I recommend picking up a reference that explains several of the basic investment vehicles (i.e. stocks, bonds, options, etc) that are available and decide what seems congruent with your needs. At this point, I would start heavily researching whatever investment vehicles you want and ultimately start investing.

Don't throw everything you have or even an amount of money that you would be devastated if you lost into your first investment. Instead, take a small amount (i.e. 1K-4K) and consider it a learning experience. Even if your first couple of investments don't have huge returns, the knowledge and experience that you are gaining is of immense value so you are still winning. Finally, remember that lots of people will have a _very_ convincing argument for why their advice is the next big thing and will make you so much money. They do not always have your best interest in mind so don't be afraid to ask for second opinions or to walk away for something if it just doesn't feel right. You are taking some of the first steps towards financial freedom, quite possibly one of the greatest feelings on earth.

Good Luck!

[viejo gringo]

Your investment needs will be totally different from mine---mine is based on security, then income...

I deal with a firm in Iowa, and I live in deep south Texas....but I trust my broker---and to prove that, I finally met him this year after dealing with him on the phone for 15 years....he always covers my a-- . and gets most of his fees from the other end...
PM me or send an email and I will send you the info or the 800 number to talk to him.....

Money markets, savings accounts and CD's are paying very little....I have tax free's that pay 5 to 7%---but you need to talk with someone you can trust to set something up that fits your needs..

I know...I live off of these investments..

My oldest son just put a bunch with them---but it took a lot of time to study and set it up.

[Cynthetiq]

because we have a new forum

*bump*

[NoSoup]

My advice? If you are thinking of investing seriously for the long terms, you can look into drip accounts that cost very, very little to partake in.

www.motleyfool.com <----- simply wonderful, FREE site

Also, their books are very well written & informative, I would suggest you read them as well

[macmanmike6100]

No load mutuals are a good start, but stick with those with a 5-star rating. Also, hear hear on motleyfool.com - they're great.

[Force 10]

Originally posted by Jesus Pimp
My sister says I should start investing my money instead of putting it in the bank. Problem is I'm clueless to where to start. Are there any good books or sites out there? I'm currently working an entry level job and save about 600-800+ bucks a month. What's the best thing to invest in for my situation?

Keep saving, do nothing until you understand it completely. Once you understand it completely, don't be afraid. There are so many places to invest, choose one that intrests you.

Start here: www.investopedia.com