Investing. "Real Money"

[Annthrax]

Okay guys how does one invest and where does one begin, I have talked to a few people and haven't really come up with a conclusion on how to invest. say you have a few hundered dollars and want to invest hopefully make some money in the end. I dont know where to start or if someone can help me out. Thank you.

[wrathblade]

type in google:

how to start investing?

[Spectral]

If you have a few hundred dollars, you're not investing in any meaningful sense. Keep it in easily liquid form for emergencies.

[stuck4cash]

Okay guys how does one invest and where does one begin, I have talked to a few people and haven't really come up with a conclusion on how to invest. say you have a few hundered dollars and want to invest hopefully make some money in the end. I dont know where to start or if someone can help me out. Thank you.

Since it's such a small amount, a house/shares is kind of out of the question. Well, house anyway, you might get some shares for that but I'm not sure it's the best way.

Investing money in a bank (ie, savings account) comes to mind, low return but it's also safe. Probably not a lot to gain on the back of a few hundred dollars though.

One other potential with a potentially higher rate of return is to invest into something that has a low entry cost with a high return. There's usually a higher risk involved but with the right research you could pull it off. This list would include things like comic books, trading cards, etc. If you take this option though you'll need to find someone that works in that field and do a lot of research. People can and do make lots of money on it, but it's riskier than a savings account and will require a good knowledge of the field.

For me, it's working your butt off and putting it into a low risk, low return investment until you've got money for a house or shares. The return on that is usually better with a reasonable amount of risk.

[Arcilux]

Basically, there are safe investments and volatile investments. Stocks are volatile (i.e. you can gain a lot but you can lose a lot) Bank accounts are safer, in that you will most likely not lose any money, but the gains are really small.

If you want stock market, I would personally suggest looking for dividend stocks and doing a long hold. Basically, buy a stock that pays dividends, then just forget about it. That's what I do, pay attention regularly to make sure the company isn't going bankrupt, and just let the quarterly dividends pay themselves out.

Also, even you can invest as much or little in the stock market as you want. I started with $400 in high school, and then just add more about twice a year.

[Kivimetsan]

Well its not as simple as just buying some stocks and winning. You need to have some what of an idea about how markets work, along with an economics or business related background.
If you have neither, but you follow global trends and read a lot, then you can be really successful.
Imho if I was you, id start off with something really safe, but which is also really easy to manage. Depending on your country, id check the price of silver and start buying that. The reason being is that the value of silver and gold have gone up recently due to the economic crisis and they will continue to go up now that the Fed have started Quantitative Easing 'Infinite'.
As the value of the dollar is reduced, the value of gold and silver goes up.
Yeah im old fashioned, but these are really safe and easy to manage investments. Neither are very volatile either.

[Annthrax]

Basically, there are safe investments and volatile investments. Stocks are volatile (i.e. you can gain a lot but you can lose a lot) Bank accounts are safer, in that you will most likely not lose any money, but the gains are really small.

If you want stock market, I would personally suggest looking for dividend stocks and doing a long hold. Basically, buy a stock that pays dividends, then just forget about it. That's what I do, pay attention regularly to make sure the company isn't going bankrupt, and just let the quarterly dividends pay themselves out.

Also, even you can invest as much or little in the stock market as you want. I started with $400 in high school, and then just add more about twice a year.

and where are you at currently :P

[Ssith]

i'd suggest talking to someone about a mutual fund, and starting small but throwing more money into it as time goes by. it'll add up faster than a savings account/bond, with the risk being relatively mitigated by the nature of the fund. they'll invest your money allocated the way you define when you create the account. X% in stocks, X% in hedges, X% savings, etc. you won't see checks, as they'll just reinvest the interest and dividends, but you can cash it out - total, or in part - at any time if you need the money.

[Arcilux]

and where are you at currently :P

Deposited a total of 4,200 so far, stocks worth $5,400. This has been about 5 years, had some bad luck back in 08/09. About an 8% ROI, which while far from ideal is a lot better than I could have gotten in money market or CD's

[Auloria]

When I started investing, I found The Motley Fool to be a very useful source of information. www.fool.com

Blackrock iShares recently slashed expense ratios on their ETFs, making them very competitive. I like this box diagram: http://us.ishares.com/solutions/core_products.htm
So for example, you can put what you want to allocate to bonds in AGG (or split between ILTB and ISTB), what you want to allocate to foreign stocks in IXUS (or split between IEFA and IEMG), and your US portion in ITOT (or split among IJR, IJH, and IVV). If you don't want to think about it all, I'd say put everything in IVV or SPY or similar, which tracks the S&P 500, which is sort of the benchmark for success. I'm thinking of moving my account to fidelity.com, which lets you trade these iShares ETFs for free.

When I first got started, I put most of my money in SPY and then a few stocks just to have fun and learn and see what my tolerance to market ups and downs were. Now, I have somewhat arbitrarily decided to divide my portfolio into 20% bonds, 20% foreign market, 60% US market, and all I do is rebalance as necessary. It is crucial that you do not let emotion drive your decisions, or you will be selling low (when the market tanks and "looks bad") and buying high (when the market is back up and "looks good"). Do the opposite of that.

[Arcilux]

When I started investing, I found The Motley Fool to be a very useful source of information. www.fool.com

It is crucial that you do not let emotion drive your decisions, or you will be selling low (when the market tanks and "looks bad") and buying high (when the market is back up and "looks good"). Do the opposite of that.

I still use fool as well as forbes and kiplingers.

As for emotion, that also works for picking which stocks to buy, The first stock I bought was Activision Blizzard, purely because I played WoW and thought they had to be an excellent company. Did some more research later, realized that it just wasn't a stock I really wanted to be holding.

I would also say avoid REIT, Real Estate Investment Trusts. They pay huge dividends but are extremely volatile and get taxed at a higher rate than standard dividends.

[Rukentuts]

Diversify. Once your sums get high enough (like a decent IRA) you should really just have a financial adviser manage it.

[Skippy88]

Talk to someone at your local bank. They should be able to point you in the right direction. I'm personally with TD Waterhouse for my banking for no reason that my nephew's dad works there and I trust him for the most part. He obviously wants more of my money to invest because that's his job which I have resisted so it's best to play within your comfort zone. I am mostly in retirement saving plans myself.

[Daelak]

Okay guys how does one invest and where does one begin, I have talked to a few people and haven't really come up with a conclusion on how to invest. say you have a few hundered dollars and want to invest hopefully make some money in the end. I dont know where to start or if someone can help me out. Thank you.

401k following mid-growth index mutual funds. Safest and proven best return. Don't try an active portfolio manager, their returns are worse or almost even to indexed mutual funds.

[Grym]

For a few hundred dollars, I suggest this OP:

If you want stock market, I would personally suggest looking for dividend stocks and doing a long hold. Basically, buy a stock that pays dividends, then just forget about it. That's what I do, pay attention regularly to make sure the company isn't going bankrupt, and just let the quarterly dividends pay themselves out.

Also, even you can invest as much or little in the stock market as you want. I started with $400 in high school, and then just add more about twice a year.

And go for ones that has good dividend records instead of ones that try to retain earnings for growth, and slowly add more stocks (not necessarily the same stock) as you have more spare cash, and just let that annual dividend earnings slowly get higher in the future.

Fun Fact: not sure in the US, but in the UK dividend earnings has lower tax rate than income tax (due to double taxing?) so your earnings on dividend would be taxed less.

[Gheld]

Do you have any debt?

If you have debt, investing is dumb, because paying down debt leads to higher gains than investing.

It's actually sad, the number of people I know who talk about investing while throwing minimum payments at a maxed out credit card.

[Arcilux]

Fun Fact: not sure in the US, but in the UK dividend earnings has lower tax rate than income tax (due to double taxing?) so your earnings on dividend would be taxed less.

Same in the US for ordinary dividends (not REIT dividends), at least for now. That might change with the fiscal cliff, but as of 2012 ordinary dividends are taxed at a flat 15% rate in the US

---------- Post added 2012-12-07 at 11:49 AM ----------

Do you have any debt?

If you have debt, investing is dumb, because paying down debt leads to higher gains than investing.

It's actually sad, the number of people I know who talk about investing while throwing minimum payments at a maxed out credit card.

Not always, depends on the interest rate of the debt. For me, the stock market is giving about 8% ROI, my student loans are 5% interest, mortgage is 3.25%, and auto loan is 0.9%. Investing yields a higher payout than I am paying in interest on my loans.

[TequilaFlavor]

With little money to invest and no personal knowledge, leave it be.

I've just seen too many people get scammed or just flat out lose money because of bad investments and it would have been much wiser just to put it on a savings account in the bank.

Imho, you should either have extensive personal knowledge about the market you're going to invest into - personal knowledge as in not depending on other sources that might be scamming you or just be false - or just "fool around" with investments if you are really, really stacked.

And I'm talking about the "I've got a few million dollars/euros lying around, let's just invest 100-200 grand for shits and giggles into x" kind of stacked.

[someotherguy]

Not always, depends on the interest rate of the debt. For me, the stock market is giving about 8% ROI, my student loans are 5% interest, mortgage is 3.25%, and auto loan is 0.9%. Investing yields a higher payout than I am paying in interest on my loans.

That is correct, in your case investment is fine. You do have to account for 15% tax you will pay on capital gains though, but it's still worth it.
If you had a house loan at lets say 4%, you would also get tax deduction on that interest, so that debt isn't too terrible as well.

The OP is talking about few hundred dollars, I would suggest investing with no fees. I would suggest just opening an IRA at this point, and avoiding paying taxes on those few hundred.

[The One Percent]

type in google:

how to start investing?

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