Lux Investing

Looking for advice on investing for a beginner. Can you help?

I was interested in dabbling a little bit into investing, but i have no clue where to start. Is there someway I can like issue a small percentage of my paycheck to an investment professional and have them put the money where I will get the best results or am i best trying some other method. Please keep in mind that I am talking very small investments here. I make a little around 40K per year and was just wondering if there was a little something i could do with a portion of it.

Public Comments

1. You should invest in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund. If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free. I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments. Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however. Sources: http://www.vanguard.com/VGApp/hnw/planningeducation http://www.fool.com/school.htm http://sec.gov/investor/pubs/assetallocation.htm http://www.diehards.org/readsites.htm http://finance.yahoo.com/education/begin_investing http://finance.yahoo.com/funds/basics Asset Allocation Calculators (Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.) https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval http://www.ifa.com/SurveyNET/index.aspx Web forum: http://www.diehards.org/ (Many investment web forums are overrun by scam artists. This one seems the most legitimate site.) 529 plans: http://www.savingforcollege.com
2. Mutual Funds would be the way you would want to go at this point in time. This will atleast help guard against the volitality of the market. An Investmnet Professional could help you set up a number of things in order to meet your goals and hopefully exceed your expectations. BTW, If you don't have one, consider getting an IRA whether a traditional or Roth is up to you. (These are retirement planning vehicles which are invested in mutual funds) Please note these do have tax penalties if you do withdraw your money earlier then 59 1/2
3. http://www.investopedia.com The site has a stock market game. If you are anything like me, it is easier to learn from doing then anything else. You need to set your mind as if it was for real though - this way you actually do the homework and research required to make money in the Stock Market. Homework is key for us small investors because paying outlandish broker fee's will cut into profits too much. Online discount brokers such as http://www.scottrade.com is good because it is only $7 a trade with a $500 minimum account balance. Do you have a 401K? This is your best option and should be your first (tax deductible).
4. Learn to do it yourself. Joe has some good starting points.