Help for an investment noob.
 

Hey guys thought it was about time to start considering making my money work for me and what not. Basically considering starting out making investments and eventually moving on to larger savings.
Anyways can someone point me out in the right direction as to something I can read before I put my money somewhere. Am looking to starting out anywhere up to $500.

Before you start investing, do you have a minimum of 3 months, preferably six months worth of living expenses in a liquid (Read: Savings) account?

The easiest place to put your money with a good amount of liquidity is a money market account. I would recommend ING Direct (ingdirect.com) or Emigrant Direct (emigrantdirect.com). ING Direct has better security and user interface, but Emigrant Direct has a slightly better interest rate (4% APY vs. 3.8% APY).

No minimums, no fees, and the accounts link directly to your bank account. Everything is done online so it's easy too.

A money market account won't make you rich, but will buffer the effect of inflation before you move on to bigger and better investments. ;)

Good luck.

save save save....


then invest after you've got EXTRA money on top of your 6 months living expenses saved up.

I agree, $500 isn't a whole lot, so put that away until you have a larger egg to play with, like $10,000 or so.

Mike

I think there are several factors here.
1. Are you young and just starting out in life - in which case keep it, save it and learn about investments until you know what to do with it.
2. Was it quick and easy for you to make that 500 - in which case, you could use to help you learn quicker and practically about investments if you are OK about losing it in the process. There's nothing like the real thing when it comes to learning.
3. What are your expectations of that 500 - if you want to 'play safe and slow' you can use one of these ING things or something else like it that's a bit like watching paint dry, or you can be more adventurous and go for much higher returns in Forex or something like that.
4. You could invest this 500 in a course that will help you decide how to invest the next 500 profitably.

Well, noone really answered your questions, so I suppose I'll elaborate...

First off, you should always have three, preferably six, months of living expenses in a liquid account. Assuming that you do or you don't care what is recommended...

Although $500.00 isn't a ton of money to start off with, it certainly can be put to use. Especially if you begin investing a specific amount each month.

When I was younger and couldn't afford all that much, I started off with a couple DRIP accounts. A DRIP account is basically a stock that allows Direct Reinvestment of your earnings back into the stock that you had purchased. You can do a bit of research as to what companies offer it.

If, however, you don't want to go with something that carries as much risk as a stock, you may consider investing in mutual funds. I have several different mutual funds, and they withdraw a specific amount from my savings account every month automatically. I started this when I had just turned 18... and it has grown pretty substantially since then (I'm 22 now) Although it may not seem like much every month, it adds up.

Another option you may want to consider is putting it into an IRA, depending on your situation. I would recommend a Roth IRA, but make sure you only do that if you will never, ever, ever, need the money before you retire. Depending on your age/situation, an IRA may not be the best choice for you...

Hope this helps a bit...