T Nation

Planning for Future

Hi everyone I would like to start off by saying growing up in a houselhold where making ends meet was the goal, it was never a priority to learn how to invest. Now that I am in college I think it is time I take steps in securing a better financial future.

I have been doing alot of reading and will continue to do so, but at 19 I would like to start actually investing now.
I have $8,000 to invest and have some ideas of what to do wit it but, I am looking for some input from my elders first.

First, off I think I should invest in an index fund, I like to vanguard 500 index: minimum $3000

Second, Invest in good stocks: $3000

Now with the last $2000 there is not much I can do, I could put it in the index fund or I was thinking I could try some type of swing trading holding stock for a couple of dsays or weeks then selling. However I doubt it will be real profitable with $2000.

Last question I have really only been studying investing and trading, so I am not familiar with things like IRA’S. Would getting one even though I am doing all of the above be beneficial/necessary?

Thanks

[quote]maverick88 wrote:
Hi everyone I would like to start off by saying growing up in a houselhold where making ends meet was the goal, it was never a priority to learn how to invest. Now that I am in college I think it is time I take steps in securing a better financial future.

I have been doing alot of reading and will continue to do so, but at 19 I would like to start actually investing now.
I have $8,000 to invest and have some ideas of what to do wit it but, I am looking for some input from my elders first.

First, off I think I should invest in an index fund, I like to vanguard 500 index: minimum $3000

Second, Invest in good stocks: $3000

Now with the last $2000 there is not much I can do, I could put it in the index fund or I was thinking I could try some type of swing trading holding stock for a couple of dsays or weeks then selling. However I doubt it will be real profitable with $2000.

Thanks [/quote]

The Vanguard 500 is a good low cost index fund.
What do you mean by “good stocks”?
For the last $2,000 think about an international fund or individual small caps.

I don’t buy into the mumbo jumbo of trading based on “technical analysis”. I read a good article today comparing “trading stocks” and “buying businesses”.

http://www.fool.com/investing/value/2008/06/16/avoid-the-mistake-that-cost-buffett-8-years-of-bet.aspx

What are your sources for information?

If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

[quote]streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.[/quote]

If kids learn anything from this thread, they should learn the Rule of 72:

[quote]streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.[/quote]

what he said. Forget individual stocks, go with a mutual fund.

It’s been a topic as of late, but if you haven’t read Dave Ramsey, do so.

He shows the power of compounding with an example of someone your age, and someone who starts at age 26.
The math is so mind boggling, I want to slap anyone in the face that looks at it and doesn’t realize how dumb we Americans are when it comes to money (myself included).

[quote]streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.[/quote]

Yeah then a week later I can die and leave it to my kids J/K. I understand that one should learn to invest in more secure funds like index funds, bonds etc. but it is to passive, I am choosing to buy into an index fund as a more secure investment. My goal however is to learn to pick long term stocks and then trade to make to big gains, risky sure but with better rewards.

[quote]jehovasfitness wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

what he said. Forget individual stocks, go with a mutual fund.

It’s been a topic as of late, but if you haven’t read Dave Ramsey, do so.

He shows the power of compounding with an example of someone your age, and someone who starts at age 26.
The math is so mind boggling, I want to slap anyone in the face that looks at it and doesn’t realize how dumb we Americans are when it comes to money (myself included).[/quote]

Is he anything like the guy who wrote rich dad poor dad? I am looking to learn more about trading and investments (stock,bonds,derivatives) not really things like, don’t use all types of credit cards, only these and at certain times. Debt and bankruptcy things of that nature?

[quote]jehovasfitness wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

what he said. Forget individual stocks, go with a mutual fund.

It’s been a topic as of late, but if you haven’t read Dave Ramsey, do so.

He shows the power of compounding with an example of someone your age, and someone who starts at age 26.
The math is so mind boggling, I want to slap anyone in the face that looks at it and doesn’t realize how dumb we Americans are when it comes to money (myself included).[/quote]

Forget individual stocks? If You bought google stock a couple years ago each share price would have gone up over 300 dollars.

[quote]streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.[/quote]

I’m quite ignorant when it comes to this topic, but what are some good resources for learning about mutual funds?

To be honest, I prefer to manage my own stocks than let a fund manager do it. It does take more work though.

There’s nothing wrong with putting together your own portfolio with individual stocks. You just need to be sure you have the TIME and PATIENCE to RESEARCH your stocks and then manage the positions with DISCIPLINE.

If you’re putting together a portfolio for retirement you can’t go wrong with the blue chip stocks like Coke, P&G, J&J, McDonalds etc. These guys perform in bull markets and don’t collapse in bear markets.

IRA’s are a great investment as well.

Jim Cramer’s Mad Money book is pretty informative. In the first half he doesn’t talk about picking individual stocks, (which he isn’t very good at IMO) but instead talks about general investing strategies and how to go about building wealth from a young age.

[quote]ab_power wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

I’m quite ignorant when it comes to this topic, but what are some good resources for learning about mutual funds?[/quote]

One of the best free resources around.

http://www.fool.com/school/basics/basics.htm?

source=ifltnvpnv0000001

[quote]xXSeraphimXx wrote:Forget individual stocks? If You bought google stock a couple years ago each share price would have gone up over 300 dollars.
[/quote]

Yup. And if you bought it in Nov 07, you’d be down $180. Don’t get me wrong, I only buy individual stocks. But focusing on one stock like Google to show how much you can grow your money is only presenting one side of the story.

[quote]xXSeraphimXx wrote:
jehovasfitness wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

what he said. Forget individual stocks, go with a mutual fund.

It’s been a topic as of late, but if you haven’t read Dave Ramsey, do so.

He shows the power of compounding with an example of someone your age, and someone who starts at age 26.
The math is so mind boggling, I want to slap anyone in the face that looks at it and doesn’t realize how dumb we Americans are when it comes to money (myself included).

Forget individual stocks? If You bought google stock a couple years ago each share price would have gone up over 300 dollars.

[/quote]

And how many google’s are there?

For every start up that makes billions, there’s thousands more that tank.

With 8k you probably don’t have enough to pull together a well diversified portfolio, and as others said, mutual funds may be the way to go. Don’t discount current market conditions either. Sure there’s bargains to be had, but picking them is going to be the challenge.

Ultimately I think you need to ask yourself, how would you feel if you lost that 8k?? If you can honestly say that you wouldn’t be too upset then you might want to take some risks, personally I think you’re in a good position to lay down a great financial future for yourself if you just take a simple conservative approach and don’t try and re-invent the wheel.

If you haven’t already done so, read Graham’s The Intelligent Investor and pay particular attention to the opening section about the difference between investing and speculating.

[quote]xXSeraphimXx wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

Yeah then a week later I can die and leave it to my kids J/K. I understand that one should learn to invest in more secure funds like index funds, bonds etc. but it is to passive, I am choosing to buy into an index fund as a more secure investment. My goal however is to learn to pick long term stocks and then trade to make to big gains, risky sure but with better rewards.
[/quote]

Two things;

#1. I’m a little confused, are you the OP? It sounds like it from these posts.

#2. Assuming you are the OP, based on this post and your others, the best thing you could do with the 8 grand would be to send it to me. I’m a nice guy and I will use it wisely and grow it to help support and enrich my family. With your current way of thinking it will go to taxes, brokerage fees and ultimately into the hands of more savvy investors who may very well be creeps.

Or, you can change your mind set, open a ROTH IRA and invest 4 grand of it in the Hussman Strategic Growth Fund. Then, next year put the other 4 grand in the same fund. Your money will be safe there for decades and grow steadily in both up and down markets.

In the mean time, you can learn to play the market with money you work hard for and even harder to save. This is the money you will be a better player with. The eight grand you didn’t earn or scrap for is money you will too easily squander. Don’t be a dumb shit with it. Put it where it’s safe and forget about it for a long long time.

A quick note to all investors who don’t have a lot of experience investing. If you are thinking about trading in any type of market, know this, the other people trading in the markets have more experience than you and they are out to take your money.

[quote]on edge wrote:
xXSeraphimXx wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

Yeah then a week later I can die and leave it to my kids J/K. I understand that one should learn to invest in more secure funds like index funds, bonds etc. but it is to passive, I am choosing to buy into an index fund as a more secure investment. My goal however is to learn to pick long term stocks and then trade to make to big gains, risky sure but with better rewards.

Two things;

#1. I’m a little confused, are you the OP? It sounds like it from these posts.

#2. Assuming you are the OP, based on this post and your others, the best thing you could do with the 8 grand would be to send it to me. I’m a nice guy and I will use it wisely and grow it to help support and enrich my family. With your current way of thinking it will go to taxes, brokerage fees and ultimately into the hands of more savvy investors who may very well be creeps.

Or, you can change your mind set, open a ROTH IRA and invest 4 grand of it in the Hussman Strategic Growth Fund. Then, next year put the other 4 grand in the same fund. Your money will be safe there for decades and grow steadily in both up and down markets.

In the mean time, you can learn to play the market with money you work hard for and even harder to save. This is the money you will be a better player with. The eight grand you didn’t earn or scrap for is money you will too easily squander. Don’t be a dumb shit with it. Put it where it’s safe and forget about it for a long long time.[/quote]

Yeah its me the computer at my grandmothers house has a different account.

I didn’t work for it? where the hell do you think it came from the sky? Like I said investing in secure funds is smart, but many people on here refuse to research and pick their own stocks they think its impossible.

I plan on putting money into index funds, IRa, etc. But my goal is to trade in the market. I dont want to invest all my money to finally have a lot of it whe I’m 65.

[quote]maverick88 wrote:
But my goal is to trade in the market.
[/quote]

Your goal should be to make money. Think about it.

[quote]maverick88 wrote:
on edge wrote:
xXSeraphimXx wrote:
streamline wrote:
If you placed all eight thousand into Mutual Funds right now, you’ll have about two million at 65. Invest that same amount every year for six years and the only thing you will have to worry about. Is living long enough to spend it all and taxes.

Yeah then a week later I can die and leave it to my kids J/K. I understand that one should learn to invest in more secure funds like index funds, bonds etc. but it is to passive, I am choosing to buy into an index fund as a more secure investment. My goal however is to learn to pick long term stocks and then trade to make to big gains, risky sure but with better rewards.

Two things;

#1. I’m a little confused, are you the OP? It sounds like it from these posts.

#2. Assuming you are the OP, based on this post and your others, the best thing you could do with the 8 grand would be to send it to me. I’m a nice guy and I will use it wisely and grow it to help support and enrich my family. With your current way of thinking it will go to taxes, brokerage fees and ultimately into the hands of more savvy investors who may very well be creeps.

Or, you can change your mind set, open a ROTH IRA and invest 4 grand of it in the Hussman Strategic Growth Fund. Then, next year put the other 4 grand in the same fund. Your money will be safe there for decades and grow steadily in both up and down markets.

In the mean time, you can learn to play the market with money you work hard for and even harder to save. This is the money you will be a better player with. The eight grand you didn’t earn or scrap for is money you will too easily squander. Don’t be a dumb shit with it. Put it where it’s safe and forget about it for a long long time.

Yeah its me the computer at my grandmothers house has a different account.

I didn’t work for it? where the hell do you think it came from the sky? Like I said investing in secure funds is smart, but many people on here refuse to research and pick their own stocks they think its impossible.

I plan on putting money into index funds, IRa, etc. But my goal is to trade in the market. I dont want to invest all my money to finally have a lot of it whe I’m 65.
[/quote]

Sorry for my bad assumption. Most people start investing their savings before they accumulate 8 grand. That, with your stated family history about not saving, I guessed you came into the money.

I understand your desire to have money now, that’s reasonable. I’m sure you want to save for a home or something like that. I can’t fault that. It’s also good to start the retirement nest egg early (power of compounding).

Everyone here knows it’s possible to pick winning stocks but we also know that the odds are against it. Even if you do pick a winning stock it can be tough making a profit on it. In '96 I put 25 grand into two funds; Tech Value (now Firsthand Tech Value) and Invesco Telecommunications (now defunct). The value of those two positions ballooned to well over 100 grand by 2000. By the time I got out of them in the early 2000’s I had a little more than the 25 grand I started with. I got lucky and picked winners but had know idea when I needed to cash in.

You’ve gotta learn the signs to get out as well as how to get in a stock. These lessons are best gained with a small amount (or a virtual trading account) rather than your whole nest egg. Good luck.

[quote]Hanley wrote:
maverick88 wrote:
But my goal is to trade in the market.

Your goal should be to make money. Think about it.[/quote]

“Making money” (via time and compounded interest) is boring, “trading” is exciting. Watch sports is boring. Watching sports with money on the outcome is exciting. Maybe excitement is the real goal.