Lux Investing

Can you recommend ways or places to invest for a beginner?

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 how aggressive you want to be. 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. 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. Buying rental property can also be a good investment. However, being a landlord can be hard work, and many people are not good at it. If you don't know how to handle deadbeat renters, you can have trouble. 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.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2007/vitindex.html http://www.fool.com/school.htm http://sec.gov/investor/pubs/assetallocation.htm https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
2. http://finance.groups.yahoo.com/group/TradingZoom/ - best stock picking site for small caps.
3. open up a mutual fund account with a no load company...the best being vanguard or fidelity. from there choose one of their stock mutual funds...sp500 and observe/read closely
4. I agree with Zioncanyon. Fidelity, Vanguard, and also T Rowe Price are all excellent. Also Royce Funds for small cap stocks. Buy a copy of "investing for Dummies". Excellent primer for beginners. Here are the links to the mutual fund sites. T Rowe Price http://mutualfunds.troweprice.com/?rfpgid=10875&scn=Mutual_Fund_I_Want_to&origins=prospect Fidelity http://personal.fidelity.com/products/funds/funds_frame.shtml.cvsr Vanguard http://personal.fidelity.com/products/funds/funds_frame.shtml.cvsr Royce Funds http://www.roycefunds.com/funds/index.asp?
5. If your employer has a 401k plan, that is the best place to get started. The problem you face is that there are so many investment sales people (brokers etc.) and websites; all eager to get your money. So before you begin: Ask yourself - how interested am I in investing? Interested enough to keep studying as you invest? That's the key. Successful investing takes more than information. It takes time and experience -- diligence. And, you must learn to control your emotions. Emotions are the cause of most of the money lost in the markets. Mine included. (The old maxim is you have to lose money four times before the lesson sinks in.) Check out www.extramayo.org; it's free. If what you read there is interesting to you, then join a nonprofit group like American Association of Individual Investors, a great resource.
6. To learn the basics of investing, check out any of these sources: 1) Mutual Funds for Dummies, by Eric Tyson 2) http://www.invest-for-retirement.com has my free downloadable book. Chapters 19 and 23 are the most important. 3) The Boglehead's Guide to Investing 3) http://www.investopedia.com has some excellent tutorials To find a good, low-cost mutual fund provider, these two are clearly the best: - http://www.vanguard.com - http://www.fidelity.com When you learn about investing, pay particular attention to the topics of asset allocation and costs. Many beginners first start by looking for funds that have demonstrated good past performance. Unfortunately, the literature shows that past performance usually does not continue because of the law of "reversion-to-the-mean". Costs are a much better prediction of future performance.