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Where to start investing?

Established Contributor

Where to start investing?

Say I wanted to start with $1000. What should I do with it?


TU FICO 8: 743 (10/17) — Ex FICO 8: 732 (11/17)
29 REPLIES
Community Leader
Senior Contributor

Re: Where to start investing?

Your initial post suggests that you may be a fairly young person.  If so, then a great place to start is by opening a Roth IRA.  There are many possible places to choose from (Vanguard, Fidelity, etc.) but it is hard to go wrong with Vanguard, who was the original pioneer in low-expense investing for the common man.

 

Once you have opened the IRA, you'll have to place the money into some fund.  A good choice would be a Target fund (e.g. a Target 2040 fund, say) just as an initial place to park it.  Then spend the next six monhs learning more about investing   A wonderful simple book to try would be If You Can:

 

https://www.amazon.com/If-You-Can-Millennials-Slowly/dp/098878033X/ref=sr_1_4?s=books&ie=UTF8&qid=15...

 

Once you understand more about investing, you can if you choose move your money to some other place.

Super Contributor

Re: Where to start investing?


GrasshopperStudent wrote:

Say I wanted to start with $1000. What should I do with it?


There are so many variables. For each person there is a different answer to that question.

 

Among the factors you should consider

 

-whether you can afford to lose it

-whether you might need to access it in the near future

-whether you're comfortable doing research, and if so how much

-whether you're comfortable actively monitoring, and if so how much

-how old you are

-how healthy you are

-what your goals are

-what your income is

-what assets you have

-how you see the macroeconomic picture and its future

 

etc

 

The suggestion of a good no-load, low-fee, mutual fund family is a good suggestion

because within that framework it's easy to switch from certain types of investments

to others

 

 

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Established Contributor

Re: Where to start investing?

As pointed out, what your goals and risk tolerances are will dictate largely how you should invest it:

 

- If it's your first $1000 and it's all you have saved, the best thing is to leave it in a traditional savings account. You want emergency savings before you start growing money on investments that have risk.

 

- If the goal is to use it in retirement and you haven't maxed out your other retirement vehicles yet (401k, IRA), it's best diverted in that direction. These will have tax benefits, but you can't touch the money without penalty until you're almost 60.

 

- If this is purely investment money with the goal to invest it with no withdrawal restrictions, then the options open up. Some safe starting options in a case like this are an index fund (usually low cost and easy to track) or a mutual fund (higher expense but a bit more managed and customized). As to what type of investment fund to put it in beyond that, you will also have to figure out things like if your objective is growth, passive income from dividends, low risk (bonds), or some mix of the three.

 

You can also jump in with both feet into individual stocks, but I wouldn't recommend that to beginners. Picking individual stocks is like picking race horses - there's a lot of little nuances, funny math, and even some flat-out guesswork that goes into picking winners. This can be the lowest-cost option long-term though as you're self-managing your funds.

Super Contributor

Re: Where to start investing?

I am gonig to make the assumption that you are in the 22-30 age range. I will assume you want to invest in stock and bonds as opposed to putting it just in an high yield savings account. I would take a look at vanguard where you can open up a Target retirement fund in an roth ira. The min to open is 1k and you can get a highly diversfied portfolio to get you on your feet to start off. 

 

Once you learn more about what funds are out there you can switch to another fund if you want.



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Member

Re: Where to start investing?

Just an idea but if you are ok with high risk then I would think about Cryptocurrencies (bitcoin, litecoin, ethereum). I wouldn't invest more than you are willing to lose. Everyone has an opinion on these but the fact is that nobody knows what will happen in the longterm. 

Established Contributor

Re: Where to start investing?


SouthJamaica wrote:

GrasshopperStudent wrote:

Say I wanted to start with $1000. What should I do with it?


There are so many variables. For each person there is a different answer to that question.

 

Among the factors you should consider

 

-whether you can afford to lose it Yes; I'm not looking for anything extremely risky though.

-whether you might need to access it in the near future No, I still have emergency savings.

-whether you're comfortable doing research, and if so how much Tons, I'm really just looking for a nudge in the right direction.

-whether you're comfortable actively monitoring, and if so how much I login to some of my bank accounts every day to watch...

-how old you are < 21

-how healthy you are Average?

-what your goals are Buying a house in ~10 years with a minimal mortgage (I'd rather be able to buy with only a HE loan)

-what your income is I'm a full-time student, so not great

-what assets you have Enough to want to invest the $1000

-how you see the macroeconomic picture and its future I don't think the market maintain the current growth... thus why I'm weary to go straight to such funds

 

etc

 

The suggestion of a good no-load, low-fee, mutual fund family is a good suggestion

because within that framework it's easy to switch from certain types of investments

to others

 

 


 


TU FICO 8: 743 (10/17) — Ex FICO 8: 732 (11/17)
Established Contributor

Re: Where to start investing?


iced wrote:

As pointed out, what your goals and risk tolerances are will dictate largely how you should invest it:

 

- If it's your first $1000 and it's all you have saved, the best thing is to leave it in a traditional savings account. You want emergency savings before you start growing money on investments that have risk.

 

- If the goal is to use it in retirement and you haven't maxed out your other retirement vehicles yet (401k, IRA), it's best diverted in that direction. These will have tax benefits, but you can't touch the money without penalty until you're almost 60.

 

- If this is purely investment money with the goal to invest it with no withdrawal restrictions, then the options open up. Some safe starting options in a case like this are an index fund (usually low cost and easy to track) or a mutual fund (higher expense but a bit more managed and customized). As to what type of investment fund to put it in beyond that, you will also have to figure out things like if your objective is growth, passive income from dividends, low risk (bonds), or some mix of the three.

 

You can also jump in with both feet into individual stocks, but I wouldn't recommend that to beginners. Picking individual stocks is like picking race horses - there's a lot of little nuances, funny math, and even some flat-out guesswork that goes into picking winners. This can be the lowest-cost option long-term though as you're self-managing your funds.


I already have savings, so I don't mind modest risk on this. Since I'm < 21, I can't open a 401k. My side job, however, is self-employed. Would I be able to dump all that into a traditional IRA to avoid tax, or would I still have to pay SS/Medicare?

 

Dividends would be ideal in my book, but I don't trust the market to do wonderfully either since it's already rather high.

 

I guess I could put it all into Equifax stock... jk


TU FICO 8: 743 (10/17) — Ex FICO 8: 732 (11/17)
Established Contributor

Re: Where to start investing?


Zimmerman wrote:

Just an idea but if you are ok with high risk then I would think about Cryptocurrencies (bitcoin, litecoin, ethereum). I wouldn't invest more than you are willing to lose. Everyone has an opinion on these but the fact is that nobody knows what will happen in the longterm. 


Somebody I work with is doing that. As a programmer though I can say almost 100% that the day will come, eventually, that it will all be worth zero overnight.


TU FICO 8: 743 (10/17) — Ex FICO 8: 732 (11/17)
Valued Contributor

Re: Where to start investing?


Zimmerman wrote:

Just an idea but if you are ok with high risk then I would think about Cryptocurrencies (bitcoin, litecoin, ethereum). I wouldn't invest more than you are willing to lose. Everyone has an opinion on these but the fact is that nobody knows what will happen in the longterm. 


That isn't investing that is gambling.  

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