cancel
Showing results for 
Search instead for 
Did you mean: 

$5K - $10K Investing

tag
Anonymous
Not applicable

Re: $5K - $10K Investing

While I actually think it's been an excellent time to invest in individual stocks (phenomenal gains on many since the March lows), if you're new to investing and just want something better than the negative return you'd currently receive keeping it in cash (inflation will outpace current interet rates), I'd advise looking into something with Wealthfront or another **bleep**-near-free roboadvisor.  Set your risk tollerance then sit back and let them manage the tax-loss harvesting, rebalancing, etc.

 

Maybe start with a Roth while you have time to fill it up for 2019,  then move in to 2020 after July 15.

 

-Father O'

Message 11 of 16
iced
Valued Contributor

Re: $5K - $10K Investing

It will depend on your goals with the investments. Looking to generate passive income? Dividend stocks. Supplement retirement savings? Growth stocks. Saving for a short- to medium-term purchase like a home? Something lower-risk like bonds.

 

I second the posts that if you're just starting out, ETFs are a good place to start since you don't have to do tons of research and they have some hedging built in since they contain a mix of many individual stocks. There's ETFs for all of those categories and more. 

 

As you get comfortable with investing and trading, you can branch out and explore new avenues from there.

Message 12 of 16
Anonymous
Not applicable

Re: $5K - $10K Investing


@Kinglord wrote:

Hi all, since in quarantine I have been able to settle my debts and also put away some change.  With that said, I am looking at investing between $5K - $10K.  This will be after my normal 401K and Cash savings.  A little background I am in my 30s, making around $100K.

 

I will take any and all advice.  Cheers, and thank you!


 

My advice is for you not to invest anything at all.  Not because I think it's a bad time to invest...honestly I think it's a pretty great time to invest.  However, from your post I get the vibe that your not ready to invest.  Before I started investing in the stock market I spent months just learning about investing in general before I ever decided to buy a single share.  I figured out quickly that I didn't want a growth strategy...I just hate the idea of having to sell equity and something like the 4% safe withdrawl rate I just personally view as to risky over the increasing human lifespan. 

 

However, others do go for a growth strategy and have success with it and don't like dividend stock which is what I invest in.  If a company doesn't pay a dividend I just won't bother with them because I do want the cashflow.  Currently reinvesting the dividends but later I want them to pay the bills.  That's me however and others want high growth companies that they can buy shares of and have them go up in value by a few hundred percent if not over a thousand percent so they can sell them and make a profit.  It's a different investing mentality.      

 

Since you are just asking "what should I invest in?" without giving any info about what you are looking to do my advice would be learn what kind of invest my style you want first and what you are interested in first before putting a single penny into the market.  For example if you want a dividend investing strategy and you were looking at investing in one of the four stocks DFS, NSC, SO or LAMR we could give you are thoughts on the matter which may or may not be helpful to you.  Now if you want a growth strategy and were looking a growth strategy and were looking at buying SHOP, TSLA, AMZN, etc. people on here could give you your opinion on that which may or may not be helpful to you.  



Now you might decide you want nothing to do with buying individual stocks at all and just put money in index funds.  However, again unless you do your research your not going to know that.  Personally I don't like buying the index...a lot of companies in index funds I don't want a single penny of my money going to them for a whole host of reasons but again that's me and a lot of people don't feel that way.  

 

So in summary OP don't invest anything right now.  Take a few months study up on investing and then when you figure out what you want to do go do that and then ask questions based on the strategy you have already chosen.  

Message 13 of 16
Revelate
Moderator Emeritus

Re: $5K - $10K Investing

TBH to create any semblance of a balanced portfolio you need many equities: betting it all on a single stock is like going all in at the craps table.

 

It probably takes around 20 individual equities to create a diversifed portfolio; while I don't entirely subscribe to that theory as you have to start somewhere, an ETF is an easy entry point and you get diversification from Day 1.

 

I'm not quite so sanguine at it's being the right time to get in right now as you can't really time the market: since the nadir in March I'm up over 40% and as a result I'm looking more towards shoring up my debt outlay while I still have this ridiculous cash flow.  I'm going to be dollar cost averaging in the new 401K which starts on Tuesday and will cap that out, and I'm going to throw every available dollar I can into the loopy ESPP that my company offers... and the rest, bye bye auto loan, and then I'll see from there but I'm seriously considering paying my new mortgage down to 78% and doing a refi to dump the PMI and Escrow.

 

I finally got through my druken fiesta spending with the exception of tax payments which are going to come, and unfortunately I totally missed the wonderful buying opportunity that was two months ago, but I'll be OK. 

 

Understand what you need in the future and build your financial plan around that.

 




        
Message 14 of 16
M_Smart007
Legendary Contributor

Re: $5K - $10K Investing

Just to add a small tidbit to @Revelate's comments on picking individual stocks.

(I highly agree with Him on his post)

 

 

Just some advice from one of the most successful investor's in the world ..

(If you get an add, just refresh the page.)

https://www.cnbc.com/2020/05/22/warren-buffett-most-people-shouldnt-pick-single-stocks.html

 

And while I do agree with Buffett's advice, I have been able to pick mutual funds that have out performed the S&P 500.

Message 15 of 16
Anonymous
Not applicable

Re: $5K - $10K Investing

As far as how many stocks someone should own goes the opinion on that varies dramatically.  For example Charlie Munger who is Warren Buffet's friend and investment partner for decades doesn't even own 10 stocks.  He really doesn't recommend owning dozens upon dozens of stocks for that matter.  People tend to preach diversification in investing but that can lead to "Diworsification" if you go to far with it which is common with people buying tons of stock across dozens of companies and not really understanding what they even own.  If you can't give a clear and concise one minute sales pitch of what you own and why you own it to someone who asks why you own stock in that company that means you do not understand what you own and that is a problem that needs to be corrected. 

 

As far as why Buffet advocates buying the index but really doesn't practice what he preaches is because he doesn't want people just buying random stocks which unfortunately is what most people end up doing.  Just watch some youtube "investor channels" and you will see people with 100 different stocks in there portfolio with them unable to clearly explain why they own those stocks and not even sure what the company they own shares of really even do for that matter.  They are literally clueless but hey they got "diversification". 

 

If you want broad diversification then just buy an index if you want to buy individual stocks be strategic.   

Message 16 of 16
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.