Investment Strategies? Mutual Funds, Stock Market. What's The Best For A Beginner?
Mutual funds, hands down. Stay away from stocks or you’ll be putting all your eggs in one basket. With a mutual fund, you’ll be investing in a group of stocks instead of just one, so the odds of losing money are much lower.
Pick a mutual fund that focuses on the types of companies you want to own stock in: blue chip, technology, health, oil, etc. Buy your funds from an internet firm like Vanguard.com or T Rowe Price.com which offer no load, no fee, funds. Don’t pay someone to buy a mutual fund for you!
Since you’re a beginner, read the online lessons Vanguard.com offers for free or go to Morningstar.com and read their lessons for free, too. Each site also rates mutual funds so you can see which ones are risky.
If you are a novice mutual funds would be much easier to handle. Investing in individual stocks is no walk in the park. Please read my profile and send me an email telling me a little bit about yourself.
Any beginner should read…read…read. Get a fairly decent idea of your plan before you ” plunk down the money”.
Finance/yahoo…moneycentral/msn…and others have ” beginners investing ” sites.
Most likely you can start with mutual funds or ETF’s…. ETF’s you can buy in smaller amounts than most funds…and you get a little more diversity ( safety) by being spread over different sectors of the market(s). When you see how things progress, and you’ve got some profit ( hopefully)… take a shot at something in your fund that is doing well…or your best ETF ” sector”…
General advice: currently the best places for your money is in ” international” funds, or American companies that do 50% of their business internationally…world trade is not ” booming”, but pretty close!
Metals, materials and the countries that ” feed” those things to China and India are good choices.
Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too risky. Most folks have a dificult time buying a properly balanced portfoilio of stocks on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy 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.
Buying a house instead of renting will save you a lot of money in the long run. You don’t have to pay rent and you build equity in your house instead. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don’t know how to handle deadbeat renters, you can have trouble.
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/planni… http://www.fool.com/school.htm http://sec.gov/investor/pubs/assetalloca… http://www.diehards.org/readsites.htmhttp://finance.yahoo.com/education/begin…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/… https://ais2.tiaa-cref.org/cgi-bin/WebOb…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
ETFs (If you have less than $2,000.00 USD)
Mutual Funds (If you have less than $25,000.00 USD)
Start by learning.
The Bogleheads Guide to Investing by Taylor Larimore Mel Lindaur and Michael LeBoeuf .. good for beginners and an easy read.
I always suggest an easy way to start is a Target Retirement Fund. Vanguard has a bunch. I like it because it gives you a mix of Stock Bonds and Foreign and changes the allocation as you get older.
An Excellent concept . On stop shopping. Just keep adding and forget it. Open it 30-40 years later and poof you are a millionaire. If only I could keep from messing with it I would be really rich instead of comfortable.
Good Luck Gerry
Heck if I know but I want to come back later and check out what advice you get = )