NT I Need to Invest... Best Options from experience?

[theta]

Originally Posted by fortheloveofthegame8

I would suggest "A Random Walk Down Wall Street" ... After reading that book, I will never purchase stock in an individual company. Here's a brief description of the book:




"After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but random. Since stock prices cannot be predicted in the short term, argues Malkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally managed portfolio in the long run, but investors can avoid expense charges and trading costs, which decrease returns."




[font=verdana, arial, helvetica, sans-serif]That's why I suggested ETFs to the OP. If I were you, I would create an account on UpDown.com and practice with "play" money for a few months before investing any actual money. I'm currently doing this myself with a portfolio of only index funds.[/font]

[font=verdana, arial, helvetica, sans-serif]
[/font]

[font=verdana, arial, helvetica, sans-serif]EDIT: I forgot to mention .... I would suggest Scottrade if you would like to trade online. I've been very pleased with them and they only charge $7 per trade.[/font]

http://www.youtube.com/v/Te8gbJLQWVA?f=videos&app=youtube_gdatahttp://www.youtube.com/v/Te8gbJLQWVA?f=videos&app=youtube_gdata

 

[scarface2k1]

just a heads up, you need 10k to invest in US Treasuries.

 

[fortheloveofthegame8]

Originally Posted by rsdplaya

Originally Posted by fortheloveofthegame8

I would suggest "A Random Walk Down Wall Street" ... After reading that book, I will never purchase stock in an individual company. The author believes in the Efficient Market Hypothesis and states that it is impossible to consistently beat the market (at least, after trading costs). Here's a brief description of the book:




"After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but random. Since stock prices cannot be predicted in the short term, argues Malkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally managed portfolio in the long run, but investors can avoid expense charges and trading costs, which decrease returns."




[font=verdana, arial, helvetica, sans-serif]That's why I suggested Index Funds to the OP. If I were you, I would create an account on UpDown.com and practice with "play" money for a few months before investing any actual money. I'm currently doing this myself with a portfolio of only index funds.[/font]

ehhhhhh, i know the theory and all sounds good but the truth is you can outperform the market with individual stocks.  it's not easy of course, so i see why you would lead OP into the index fund game, but to say it can't be done, not true.

know the company's your investing in!  know their financial statements, future prospects, product development, expansion strategies, etc.

for example: let's say Company X plans to expand into Europe and plans to produce revenue growth of 5% by doing this...if you buy the stock at this price, this 5% of growth estimate is already reflected in the stock price (depending on what you believe)...but what if it explodes and increases revenue growth by 15%, your stock is gonna JUMP, outperforming the market.

I agree with you to an extent. I'm not saying that you cannot outperform the market, but rather I am saying that you cannot consistently outperform the market. Obviously, many stocks will outperform the market, otherwise no one would invest. However, if you believe in even the semi-strong version of the EMH, then it is impossible to pick portfolio of stocks that will consistently outperform the market. For those that aren't finance majors, here's the argument:
The Efficient Market Hypothesis (EMH) has three parts:

- The Weak Form: All past information is reflected in stock prices (e.g. you cannot profit by examining stock patterns; technical analysis does not work)

- The Semi-Strong Form: All public information is reflected in stock prices (e.g. you cannot profit from information in the news or a company's financial statements; technical and fundamental analysis does not work)

- The Strong Form (Most disagree with this): All public and private information is reflected in stock prices (e.g. you cannot profit from insider information) ... Like I said, this is most-likely untrue.

Therefore, if you believe that the Semi-Strong Form is true, then it is impossible to pick a stock and KNOW that it will experience that 15% jump that you mention. You may expect a 5% jump and the stock can exceed/not meet expectations (with its stock price changing accordingly), but you cannot consistently know which stocks will outperform the market.

However, if you must choose to invest in stocks, investing in the following are likely to provide the most successful results according to the CFA Exam:

- Define your risk and create a diversified portfolio. Most systematic (market) risk can be diversified away with a portfolio of 30 stocks.

- Concentrate on neglected "mid-cap" stocks, since more popular stocks are likely to  be priced efficiently

- Buy stocks with low price-to-book ratios

- Follow monetary policy for market timing

Similarly, the CFA Exam readings also states, "You can match the market and minimize taxes and trading costs by investing in ETFs. It is unlikely that individual investors will be able to outperform the market. Investing with this strategy should result in performance that is equal or better than the performance of most active portfolio managers."

Therefore, given the OP's level of experience with investing, an ETF such as SPY would most likely be the best investment route. He can buy the ETF and forget about it (e.g. he does not need an active investing strategy). There may be up/down short-term fluctuations, but in general, there should be a long-term increase and it is likely to provide a better return than a CD or his savings account. Furthermore, it's also more liquid since he does not have any withdrawal restrictions.

 

[itsamazingg]

Originally Posted by JoseBronx

bricks

Or bet your 10 g's on Money Mayweather this Saturday.

 

[juggy4805]

If you wanna keep it in a savings account at least go with INGdirect. Good interest rates. CD's are worthless unless you have real money to put in to one. 2% on 5 g's for a five year CD will net $500 but 5 years is a long time..

 

[nomoplayinga]

find yourself a FEE based financial planner and schedule an appointment. Don't invest anything in till you speak to a professional who has an established history with results. Something like only 6/10 brokers outperform the dow in growth let alone an inexperienced investor with a lack of proper education in the market. Chances are a Roth IRA will be your best choice.

 

[reigndrop]

Originally Posted by fortheloveofthegame8

Originally Posted by rsdplaya

Originally Posted by fortheloveofthegame8

I would suggest "A Random Walk Down Wall Street" ... After reading that book, I will never purchase stock in an individual company. The author believes in the Efficient Market Hypothesis and states that it is impossible to consistently beat the market (at least, after trading costs). Here's a brief description of the book:




"After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but random. Since stock prices cannot be predicted in the short term, argues Malkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally managed portfolio in the long run, but investors can avoid expense charges and trading costs, which decrease returns."




[font=verdana, arial, helvetica, sans-serif]That's why I suggested Index Funds to the OP. If I were you, I would create an account on UpDown.com and practice with "play" money for a few months before investing any actual money. I'm currently doing this myself with a portfolio of only index funds.[/font]

ehhhhhh, i know the theory and all sounds good but the truth is you can outperform the market with individual stocks.  it's not easy of course, so i see why you would lead OP into the index fund game, but to say it can't be done, not true.

know the company's your investing in!  know their financial statements, future prospects, product development, expansion strategies, etc.

for example: let's say Company X plans to expand into Europe and plans to produce revenue growth of 5% by doing this...if you buy the stock at this price, this 5% of growth estimate is already reflected in the stock price (depending on what you believe)...but what if it explodes and increases revenue growth by 15%, your stock is gonna JUMP, outperforming the market.

I agree with you to an extent. I'm not saying that you cannot outperform the market, but rather I am saying that you cannot consistently outperform the market. Obviously, many stocks will outperform the market, otherwise no one would invest. However, if you believe in even the semi-strong version of the EMH, then it is impossible to pick portfolio of stocks that will consistently outperform the market. For those that aren't finance majors, here's the argument:
The Efficient Market Hypothesis (EMH) has three parts:

- The Weak Form: All past information is reflected in stock prices (e.g. you cannot profit by examining stock patterns; technical analysis does not work)

- The Semi-Strong Form: All public information is reflected in stock prices (e.g. you cannot profit from information in the news or a company's financial statements; technical and fundamental analysis does not work)

- The Strong Form (Most disagree with this): All public and private information is reflected in stock prices (e.g. you cannot profit from insider information) ... Like I said, this is most-likely untrue.

Therefore, if you believe that the Semi-Strong Form is true, then it is impossible to pick a stock and KNOW that it will experience that 15% jump that you mention. You may expect a 5% jump and the stock can exceed/not meet expectations (with its stock price changing accordingly), but you cannot consistently know which stocks will outperform the market.

However, if you must choose to invest in stocks, investing in the following are likely to provide the most successful results according to the CFA Exam:

- Define your risk and create a diversified portfolio. Most systematic (market) risk can be diversified away with a portfolio of 30 stocks.

- Concentrate on neglected "mid-cap" stocks, since more popular stocks are likely to  be priced efficiently

- Buy stocks with low price-to-book ratios

- Follow monetary policy for market timing

Similarly, the CFA Exam readings also states, "You can match the market and minimize taxes and trading costs by investing in ETFs. It is unlikely that individual investors will be able to outperform the market. Investing with this strategy should result in performance that is equal or better than the performance of most active portfolio managers."

Therefore, given the OP's level of experience with investing, an ETF such as SPY would most likely be the best investment route. He can buy the ETF and forget about it (e.g. he does not need an active investing strategy). There may be up/down short-term fluctuations, but in general, there should be a long-term increase and it is likely to provide a better return than a CD or his savings account. Furthermore, it's also more liquid since he does not have any withdrawal restrictions.

Eugene Fama, is that you?

 

[fortheloveofthegame8]

Originally Posted by nomoplayinga

find yourself a FEE based financial planner and schedule an appointment. Don't invest anything in till you speak to a professional who has an established history with results. Something like only 6/10 brokers outperform the dow in growth let alone an inexperienced investor with a lack of proper education in the market. Chances are a Roth IRA will be your best choice.

I don't think the OP wants a ROTH IRA. If you invest in this, its for your retirement and you cannot touch your investment until your 59.5. Now, that's not to say that investing for your retirement is a bad idea. However, given the OP's situation, I don't think he wants to wait that long ...

 

[fortheloveofthegame8]

Originally Posted by reigndrop

Eugene Fama, is that you?

Not quite, I'm Kenneth French 

 

[isiahil]

Originally Posted by fortheloveofthegame8

Originally Posted by rsdplaya

Originally Posted by fortheloveofthegame8

I would suggest "A Random Walk Down Wall Street" ... After reading that book, I will never purchase stock in an individual company. The author believes in the Efficient Market Hypothesis and states that it is impossible to consistently beat the market (at least, after trading costs). Here's a brief description of the book:




"After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but random. Since stock prices cannot be predicted in the short term, argues Malkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally managed portfolio in the long run, but investors can avoid expense charges and trading costs, which decrease returns."




[font=verdana, arial, helvetica, sans-serif]That's why I suggested Index Funds to the OP. If I were you, I would create an account on UpDown.com and practice with "play" money for a few months before investing any actual money. I'm currently doing this myself with a portfolio of only index funds.[/font]

ehhhhhh, i know the theory and all sounds good but the truth is you can outperform the market with individual stocks.  it's not easy of course, so i see why you would lead OP into the index fund game, but to say it can't be done, not true.

know the company's your investing in!  know their financial statements, future prospects, product development, expansion strategies, etc.

for example: let's say Company X plans to expand into Europe and plans to produce revenue growth of 5% by doing this...if you buy the stock at this price, this 5% of growth estimate is already reflected in the stock price (depending on what you believe)...but what if it explodes and increases revenue growth by 15%, your stock is gonna JUMP, outperforming the market.

I agree with you to an extent. I'm not saying that you cannot outperform the market, but rather I am saying that you cannot consistently outperform the market. Obviously, many stocks will outperform the market, otherwise no one would invest. However, if you believe in even the semi-strong version of the EMH, then it is impossible to pick portfolio of stocks that will consistently outperform the market. For those that aren't finance majors, here's the argument:
The Efficient Market Hypothesis (EMH) has three parts:

- The Weak Form: All past information is reflected in stock prices (e.g. you cannot profit by examining stock patterns; technical analysis does not work)

- The Semi-Strong Form: All public information is reflected in stock prices (e.g. you cannot profit from information in the news or a company's financial statements; technical and fundamental analysis does not work)

- The Strong Form (Most disagree with this): All public and private information is reflected in stock prices (e.g. you cannot profit from insider information) ... Like I said, this is most-likely untrue.

Therefore, if you believe that the Semi-Strong Form is true, then it is impossible to pick a stock and KNOW that it will experience that 15% jump that you mention. You may expect a 5% jump and the stock can exceed/not meet expectations (with its stock price changing accordingly), but you cannot consistently know which stocks will outperform the market.

However, if you must choose to invest in stocks, investing in the following are likely to provide the most successful results according to the CFA Exam:

- Define your risk and create a diversified portfolio. Most systematic (market) risk can be diversified away with a portfolio of 30 stocks.

- Concentrate on neglected "mid-cap" stocks, since more popular stocks are likely to  be priced efficiently

- Buy stocks with low price-to-book ratios

- Follow monetary policy for market timing

Similarly, the CFA Exam readings also states, "You can match the market and minimize taxes and trading costs by investing in ETFs. It is unlikely that individual investors will be able to outperform the market. Investing with this strategy should result in performance that is equal or better than the performance of most active portfolio managers."

Therefore, given the OP's level of experience with investing, an ETF such as SPY would most likely be the best investment route. He can buy the ETF and forget about it (e.g. he does not need an active investing strategy). There may be up/down short-term fluctuations, but in general, there should be a long-term increase and it is likely to provide a better return than a CD or his savings account. Furthermore, it's also more liquid since he does not have any withdrawal restrictions.

I agree with giving the advice you did to the OP, but the part I have bold is BS. there are too many people who beat the market consistently that can't be explained by the EMH. The most famous being Buffet of course. He has been beating the market for decades. Using that theory he is just extremely lucky. 

 

[rsdplaya]

Originally Posted by fortheloveofthegame8

Originally Posted by reigndrop

Eugene Fama, is that you?

Not quite, I'm Kenneth French 

 

[fraij da 5 11]

Good help in here, thanks for the responses everyone... I guess im going to ask around with people I know to see who knows what about investing in something other than CDs...



Or maybe ill just go with Bricks.


Either way I got a lot more research to do.

 

[fortheloveofthegame8]

Originally Posted by isiahil

I agree with giving the advice you did to the OP, but the part I have bold is BS. there are too many people who beat the market consistently that can't be explained by the EMH. The most famous being Buffet of course. He has been beating the market for decades. Using that theory he is just extremely lucky.  

I don't doubt that there are people who beat the market more than others, but I'd consider them the exceptions rather than the rule. There are always outliers and I have not seen anything strong enough to refute the semi-strong form of the EMH. You should check out the book "When Genius Failed" ...
Amazon product ASIN 0375758259
As far as Buffet, he gained most of his wealth through investing in under-valued businesses, not stocks. He's unique in the fact that when he likes a company, he buys a large interest, often firing management and replacing them with his own. Therefore, it's his business-sense that made him wealthy. 

 

[biggie62]

Private Equity Firm.

 

[hizzle]

Invest in an S&P 500 stock index fund. Over the long run, the annual return after factoring in inflation is somewhere around 8-10%.A lot of times you can do this straight through your employer. They often have an option of funds to pick from and one of them is a fund that mimics the S&P 500.http://www.fool.com/mutua...exfunds/indexfunds01.htm

 

[reigndrop]

Originally Posted by fortheloveofthegame8

Originally Posted by reigndrop

Eugene Fama, is that you?

Not quite, I'm Kenneth French 

Private Equity Firm.

Maybe in one that will close shop next year

OP, Just buy some SPDR's.  They'll track the SPX, and they're liquid, so when you need the money, just cash them out.

 

[nomoplayinga]

Originally Posted by fortheloveofthegame8

Originally Posted by nomoplayinga

find yourself a FEE based financial planner and schedule an appointment. Don't invest anything in till you speak to a professional who has an established history with results. Something like only 6/10 brokers outperform the dow in growth let alone an inexperienced investor with a lack of proper education in the market. Chances are a Roth IRA will be your best choice.

I don't think the OP wants a ROTH IRA. If you invest in this, its for your retirement and you cannot touch your investment until your 59.5. Now, that's not to say that investing for your retirement is a bad idea. However, given the OP's situation, I don't think he wants to wait that long ...

WRONG!

you sir are confusing the traditional IRA with a Roth IRA. There is No Mandatory Distribution Age in a Roth IRA account, which is one advantage over the traditional IRA.

 

[me no pass]

sports betting >

 

[fraij da 5 11]

Originally Posted by nomoplayinga

Originally Posted by fortheloveofthegame8

Originally Posted by nomoplayinga

find yourself a FEE based financial planner and schedule an appointment. Don't invest anything in till you speak to a professional who has an established history with results. Something like only 6/10 brokers outperform the dow in growth let alone an inexperienced investor with a lack of proper education in the market. Chances are a Roth IRA will be your best choice.

I don't think the OP wants a ROTH IRA. If you invest in this, its for your retirement and you cannot touch your investment until your 59.5. Now, that's not to say that investing for your retirement is a bad idea. However, given the OP's situation, I don't think he wants to wait that long ...

WRONG!

you sir are confusing the traditional IRA with a Roth IRA. There is No Mandatory Distribution Age in a Roth IRA account, which is one advantage over the traditional IRA.

I like what you're getting at here... More info on Roth IRA's?

 

[rsdplaya]

Originally Posted by fraij da 5 11

I like what you're getting at here... More info on Roth IRA's?

get one through vanguard.

 

[dirtylicious]

Actually the Roth IRA and the traditional IRA do have a distribution age...

the "R" in IRA is "Retirement"

The good thing about the Roth is that it's already taxed.. while you may not think this is a good thing. your income level while you are young may is generally lower than when you're older...so your tax on income now will be less than your income when you're 60.

The Roth is a good investment though if you don't need the 5K at all.

 

[swizzc]

Originally Posted by Dirtylicious

Actually the Roth IRA and the traditional IRA do have a distribution age...

the "R" in IRA is "Retirement"

The good thing about the Roth is that it's already taxed.. while you may not think this is a good thing. your income level while you are young may is generally lower than when you're older...so your tax on income now will be less than your income when you're 60.

The Roth is a good investment though if you don't need the 5K at all.

Not necessarily.  This assumes that taxes will always be increasing (if Dems continue to hold office, this will be true).

 

[swizzc]

another bad thing about roth iras is that once you reach a certain tax bracket you are no longer allowed to contribute

 

[kingofthesouthga]

good post

 

[nipxd]

Originally Posted by swizzc

another bad thing about roth iras is that once you reach a certain tax bracket you are no longer allowed to contribute

Most ppl i talk to nowadays are nowhere near the tax bracket for them to be disqualified so i would def. recommend the Roth IRA for low income family...or young ppl who want to start early. Paying taxes before interest can take a huge load of your final investment....imagine that lump sum u have to pay when you finally get your money back....BAM!

Me personally, as a young person, i like to take risk with my money in small businesses. I've always liked to invest my money into human capital, such as business ideas among friends and their talent. So far has worked out great. Hooked up with 2 of my boys who have unique talents and we have turned $10K from November 2009 to almost $50K altogether...and this summer is spewing with new ideas. Human capital > monetary capital IMO. It is so hard to find ppl who are serious about making big moves nowadays....All want it, most just talk, and few actually do it.

We do plan on moving to the stock market soon...when we have a strong grasp of everything, thorough research and a comfortable expensable income to invest. That, i can not wait.