Lux Investing
How can I invest my money wisely?
I have 2,000 dollars I would like to invest... I am not trying to make money fast but save my money and invest it wisely.. Do you have any ideas because I have no clue. I am putting money on my 401k but it actually went down. so can someone give me ideas how to invest my money in something that will actually benefit me.. like CD's can someone explain those
Public Comments
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- CDs wont benefit you as an investment. They will grow one or percent a year, basically the same as keeping your money in your mattress. You can either invest in index funds that try to copy what the entire economy does (ie, go down 40% the last 12 months), or research and pick out individual companies that you like. With $2000, you really can't diversify with individual companies, so your best bet is an index fund (Vanguard has the lowest fees). Right now, stocks are cheap, so 5 years from now, your money will hopefully double or more.
- Cd's are great, but make sure the interest rate is higher than the current and expected inflation rate so you actually make money. if the inflation rate was 3% and the interest rate was 2%, you would end up with more money, but it would be worth less than the money you started out with.
- Your 401 (k) is for the long term, so keep contributing. First, make sure you have an emergency account, like a money market or savings account that holds around 6 months of living expenses. This is money you can get to if you need it. Since you contribute to an employer sponsored plan, I'd look into a Roth IRA. It builds long term tax free earnings, qualified withdrawals can begin at age 59 1/2 pending you've owned it for 5 taxable years, and you can borrow against the principal at any time. And unlike a traditional IRA, you never have to take a required distribution like with a traditional or 401 (k), meaning you can allow it to continue to grow. http://individual.troweprice.com/public/Retail/Retirement/IRA/Roth-IRA/
