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9/22/2017 12:11:25 AM
Posted: 7/24/2005 7:06:43 PM EDT
I've read everywhere about how people start investing in compounding interest accounts when they're young and how much it's turned into by the time they're sixty. Of course, being a highschooler at the time most of it went in one and out the other but now after my first year of college I've very quickly realized the value of a dollar and want to start one of the miracle investments.

Most people I've talked to say they wish they would have started at my age because then the compounding interest would have worked it's magic. I refuse to be one of those people by the time I'm 30. I want to start NOW and not have to worry so much in the future.

I want to start with all I can afford right now, which is $500. I've been told about 100 different ways to invest it but I want something like I've described above, something taking advantage of the whole compounding interest thing. I have no idea where to start. All I know is I would like to be able to add to it when I can afford to and I don't want it to be high risk. I want something that is low risk but will develop over time.

Can anyone lend some advice or point me to someone who can?

Thanks,
Nate
Link Posted: 7/24/2005 7:35:34 PM EDT
My opinion (I started when I was 23, now 44):

1. When you have eligible income, Traditional or Roth IRAs investing in growth-oriented mutual funds.

2. Company 401k. Again, use growth-oriented investments.

3. Regular, steady investments. Force yourself to save.

Many brokerages and banks have useful info on their websites. I use Fidelity Investments for my brokerage and mutual fund accounts. My company uses JP Morgan and their investment products for my 401k.
Link Posted: 7/24/2005 8:53:26 PM EDT

Originally Posted By SWS:
My opinion (I started when I was 23, now 44):

1. When you have eligible income, Traditional or Roth IRAs investing in growth-oriented mutual funds.

2. Company 401k. Again, use growth-oriented investments.

3. Regular, steady investments. Force yourself to save.

Many brokerages and banks have useful info on their websites. I use Fidelity Investments for my brokerage and mutual fund accounts. My company uses JP Morgan and their investment products for my 401k.




+1, very good advice.

I'd go with a Roth IRA, good for withdrawing for educational expenses down the line if you need them.

I use Fidelity for my Roth IRA, TRowePrice for my mutual funds, and Scottrade for my "fun" stock trading. I like to diversify my companies I deal with in investing before I even invest with them
Link Posted: 7/24/2005 9:06:06 PM EDT

Originally Posted By roboman:

Originally Posted By SWS:
My opinion (I started when I was 23, now 44):

1. When you have eligible income, Traditional or Roth IRAs investing in growth-oriented mutual funds.

2. Company 401k. Again, use growth-oriented investments.

3. Regular, steady investments. Force yourself to save.

Many brokerages and banks have useful info on their websites. I use Fidelity Investments for my brokerage and mutual fund accounts. My company uses JP Morgan and their investment products for my 401k.




+1, very good advice.

I'd go with a Roth IRA, good for withdrawing for educational expenses down the line if you need them.
I use Fidelity for my Roth IRA, TRowePrice for my mutual funds, and Scottrade for my "fun" stock trading. I like to diversify my companies I deal with in investing before I even invest with them



Roth is the way to go...
If you need money 5-10 20 years down the road you can withdraw up to the entire amount - interest---penalty free...Priceless

When you get a good job open a 401 k through your employer as well.
The earlier the better...The miracle of compounding. Wish the Roth was around when I was your age
Link Posted: 7/24/2005 9:09:11 PM EDT

Originally Posted By JosieWales:

Originally Posted By roboman:

Originally Posted By SWS:
My opinion (I started when I was 23, now 44):

1. When you have eligible income, Traditional or Roth IRAs investing in growth-oriented mutual funds.

2. Company 401k. Again, use growth-oriented investments.

3. Regular, steady investments. Force yourself to save.

Many brokerages and banks have useful info on their websites. I use Fidelity Investments for my brokerage and mutual fund accounts. My company uses JP Morgan and their investment products for my 401k.




+1, very good advice.

I'd go with a Roth IRA, good for withdrawing for educational expenses down the line if you need them.

I use Fidelity for my Roth IRA, TRowePrice for my mutual funds, and Scottrade for my "fun" stock trading. I like to diversify my companies I deal with in investing before I even invest with them



Roth is the way to go...
If you need money 5-10 20 years down the road you can withdraw up to the entire amount - interest---penalty free...Priceless

When you get a good job open a 401 k through your employer as well.
The earlier the better...The miracle of compounding. Wish the Roth was around when I was your age



Exactly! Compounding interest in a beautiful thing. I'm only 20 and have been investing in some stocks for the last 2 years. I only now got into the Roth IRA and what not. I'm not even old enough to legally buy a beer but I'm still kicking myself in the ass for not starting a Roth earlier! Start as soon as you can! Even if it's a savings account that makes 3%, the earlier you start, the better you'll be later!
Link Posted: 7/25/2005 12:45:20 PM EDT
Start with a money market account. Money market accounts gain interest and you can get the money out with a check if you need it. Since you don't have a lot of money invested, you probably need the money as a safety net until you have some built up. Money markets invest in short term investments like CDs and are very safe. You could invest directly in CDs but then your money is stuck for the period of the CD, 6 months, a year or 2.

Mutual funds are a good way to go to start exposing yourself to more risk in the stock market. Once you have enough to spread your risk, move on to individual stocks.

Once you have some cash reserves, you can put some into an IRA but the money is somewhat stuck. You do get some back as a tax break though, so it's best to do this if you have a decent income. You can get it out in an emergency, but I'm sure it would be a big hassle. I have a self-directed IRA where I can invest in individual stocks and other investments. If you aren't comfortable with that, you can invest it in a mutual fund.

Eventually, you will want real estate so don't tie your money up so you can't get it. Watch out for insurance policies disguised as mutual funds. They will screw you. It was possible for me to use my IRA to invest as a down payment on my first house without penalty.

Since you are in school, take a class on investing. That was one of the classes I've gotten the most out of.
Link Posted: 7/25/2005 9:24:13 PM EDT


I took no loans my first two years of college. Had I taken out the maximum amount of loans and invested in Microsoft, I could have paid off the loans at the end of college and had a sizeable sum left over.

YMMV. Hindsight is 20/20. You win some you lose some. Void where prohibited.

Jim
Link Posted: 7/27/2005 8:21:49 AM EDT
VTSMX
Link Posted: 7/28/2005 2:06:21 PM EDT
As soon as I turned 18 I started a mutual fund with $100 down and put in $100 per month for about 8 years. I stopped contributing in 2002 and decided I could do better on my own. While I still own my mutal fund(witch outperforms the market by a little), I consistantly outperform it with my Scottrade account. The more I trade and watch my investments grow the more I learn. I am very confident in my trading now and have even been trading options (161% gain in 3 weeks rules)

Anyhow for you I would also recommend starting with a mutal fund.

senorFrog recommended an index fund, and you can't go wrong with that!

If you don't want to go with a fund, you can open an account at Scottrade for only $500. Each trade is only $7 and each aditional deposit minimum is only $100. Start an account and buy a nice Blue Chip stock (ex: GE, Home Depot, Microsoft, Motorola, J&J, Suntrust) Some of these pay out a nice Dividend too. Then ad to your positions when you have some extra cash.


If you really want to maxamize gains over a long period of time I have 3 words for you "Dollar Cost Averaging".

"Dollar Cost Averaging" means that you buy into your stock or mutal fund on a regular basis. Once a month, once a week.... dosent matter, you will buy on the ups and on the downs but it really helps over time to get the best buying prices instead of buying all at once.

Time is Ticking! Don't wait! Start now, and be patient... so what if what you buy drops 10% if it is a great company just think of it as a good buying oportunity!

Good Luck!
Link Posted: 8/2/2005 7:03:29 AM EDT
[Last Edit: 8/3/2005 11:31:18 AM EDT by Q3131A]
Start at morningstar.com and lipper.com. They rate mutal funds. Find a no-load one you like that has performed well over the last year or so. Open the Roth with the mutual fund and contribute as much as you can to it every year.

If it performs well, it will compound and will be tax free for life.
Link Posted: 8/3/2005 11:35:18 AM EDT

Originally Posted By GC456:
senorFrog recommended an index fund, and you can't go wrong with that!




Ric Edleman makes some pretty good arguments against buying index funds.

www.ricedelman.com
Link Posted: 8/6/2005 5:19:32 PM EDT

Originally Posted By Marksman762: Can anyone lend some advice or point me to someone who can?
Find wealthy/successful people around you, then ask them to refer you to the professionals they use.
Link Posted: 8/12/2005 9:53:39 PM EDT
www.vicefund.com No matter how bad things get, people still smoke and drink.
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