Here’s my situation: I’m a 20 y.o. college kid w/ a small amount of excess money, that, if left available, will probably be burnt on crap. I’m looking at investing (probably about 1000-2000$) for the future. Ideally, this would be set-up as a retirement account, or possibly just a long range investment. I’m looking for something that would generate money over the long term and be relatively tax exempt. I dont know too much about what i should be looking at as far as accounts (ie, IRA’s, CD’s, etc.) and am just wondering about some different ideas. Not really too excited about getting into the stock market, but was just interested in what all i should be considering.
Thanks!
(dont worry, i’m definetly gonna talk to my folks about this)
IMHO, knowing nothing else about you and trying to be a radio talk show host financial advisor, I’d say a Roth IRA and a good mutual fund (American Funds’ Growth Fund of America, for example) are your best bet. I just think individual stocks have too much inherent risk.
I’d be happy to give some specific advice. PM me if you’d like to chat.
This is what I do for a living. If you started investing now and quit at age 35. You’d have more money at retirment than someone who started at age 35 and kept investing until 65. Time is your friend. It compounds, it outlasts market problems. If you hate risk, a fixed interest no expense Tax deferred annuity is your friend. You have time to be in the market, and a mutual fund is a lower risk way to do it. You could take $50 a month and dollar cost average that into the market as well a plop it there. There is too much to go into on a forum. The basic principles are a great guide. Buy low, sell high, don’t chase the market, time is your friend, be diversified etc. If it’s too good to be true it is. Making money is hard work, most folks pissed at the market had it easy in the late 90’s and now it’s hard work. Here’s one you never hear and it’s mine. Chear on a lousey market. Unless your retired and need your money soon, buying low is the only way to leverage your dollars. Buying low = a bad market. Bad for the retired, but along the way a bad market until you need it allows you cheap shares. If I could have dumped every dollar in the market when the Dow was at 1000, I’d not be sitting here now. Dow over 12000, doesn’t do me any good. In fact give me what we have now for the next 20 years, then turn on the gas.
I have a sharebuilder account, it has low fee’s to buy and they are higher to sell, also they let you buy fractional shares. The number of companies offered is limited (every company that I’ve wanted to buy has been on it).
I buy companies that either own a lot of intellectual property or do something that is undervalued right now. Two companies that I bought recently were xybernaught (if you build a computer that you wear you will violate one of their patents, think defense department) and FuelCell Energy (kind of self explanatory).
I don’t know where you go to school but if you look outside of Stanford or MIT there are a ton of businesses that sprang up from smart kids. Find a smart kid and force him to make you rich.
In the U.S. Edward Jones handles my retirement account. I have had excellent results with them. I have also used Merrill Lynch and had my own E-Trade accounts and owned numerous mutual funds with Janus, the former Invesco and many others.
Edward Jones means I don’t have to ever worry about my money. If I need a few bucks for this or that I call my guy up (his name is Jay) and have him wire it into my checking account. If I call before 11 AM it is there by 2 PM. Awesome.
Edward Jones produced results for me during a period in the U.S. economy when everyone else was losing money. They are conservative and consisitent. Based on my results, I can recommend an Edward Jones financial advisor for U.S. held retirement accounts.
I found myself in your position when I graduated from college. I had taken out student loans at 4% reinvested at 8% and paid them off. With the excess I put $1k into an IRA. Haven’t touched it, looked at it or anything else since then. I usually just shred the statements w/out looking at them. Your post made me wonder what it was at. Close to $2500.
$1000-$2000 of $ isn’t going to get you very far in the stock market…not even enough to open an account most places. So, don’t go this route. (I got screwed in my 1st stock deal and crawled back home to tell my dad…wasn’t a good site that day)
Basically, you have a couple routes.
Savings - Some form of savings or interest bearing account. Enough so you won’t spend it. At the same time, you can’t take it out…which may be a bad thing.
Investment - Chose your poison, share the risk…and the reward
Do something - My buddy and his dad bought a spring water franchise in 1990 for $5000. They started bottling water and selling it to stores. They were barely pulling a profit, but enjoying growing their business. One day, my buddy (still in college) get a call from a guy that bought the bordering territory. My buddy looks through his contract and sees he gets 1st right of refusal. He sues the company for $500k and gives the attorney $175k. He’s left with around $250k after tax. Needles to say, he bought all the bears for the next few years…
My point is that you’re young and learning. Use the money WISELY and put it torwards something useful that will grow…whether that be learning, money, etc…
Heck, start another Billionaires Boy’s Club or MIT Poker Team!