Lux Investing
Should I invest for income or for growth?
If I am a grad student in my late twenties and won't be working for a few years and have $150,000 to invest, would it be better to invest it in a portfolio designed to generate income in order to help with living expenses while im in college. Or would it be better to put $50,000 to the side for living expenses and invest $100,000 in mostly equity?
Public Comments
- First, put your money for expenses aside and let alone the investment portfolio. if you have that tight budget, emotional effect might disrupt your investment decision. having done that, if you have low risk appetite, go for income portfolio. let say the stock able to yield 5% from $130,000, you can get $6,500 every year! and imagine if you reinvest the dividend back, you'll be getting double compounding effect year after year! and this without having to discount your required expenses.
- Since you are a grad student, are you able to cover your day to day expenses by doing TA work, or finding grant money or wokring with your grad program? I would try to invest the entire amount with an eye towards not touching it for a long time and maximize your investment horizon. The first thing I would do is open a Roth IRA. Maximum Roth IRA contributions for someone your age are $4000 this year and $5000 next year. A Roth allows you to grow your retirement investment tax free and is tax-free (mostly) upon withdrawl too. Next, if you've already exhausted any income possibilities, calculate what your monthly expenses are and set aside some amount in a high yield online savings account. These accounts let you access your money and there are no minimums, but they're paying 5% aprs or more. Check www.bankrate.com for local rates. A $50,000 balance with a 5% apr would be throwing off about $208/month. Since I'm assuming this isn't enough to cover your monthly expenses, your balance would also be decreasing. Then, put the $100k balance in a long term, growth focused account and don't touch it. Since you are young, this is your nest egg for when you will be ready to buy a home. Since you are young, you should invest in growth opportunities with a long time horizon. Just commit to leaving that portfolio intact for 7-10 years.
- This is a rather complex question with some unanswered questions. Where did the money come from? If it is loan money, you should invest in something that is lower risk and will allow you to retain principal. Here's the thing...if you have the ability to study stocks that you purchase, use the money to invest in the stock market. For the most part, if you can pick decent stocks (blue chips will provide income through dividends, smaller cap stocks will provide capital appreciation), you can diversify among the two. Plus, put some in bonds too...but in your late 20s, you have time on your side to recover from market decline. The one caveat is the fact that this money may be needed for future expenses and if you are in stocks that are too risky, you may lose needed income. With that amount of money, it would be hard to say Put it all in mutual funds. You can add mutual funds to the mix for optimal diversification. If you are a grad student, you are smart enough to do homework on stocks in the market. This would provide the highest return as long as you can keep up with the news on the stock. Ron, ChFC
- I know someone that has a similar amount to you in currency strategy and doesn't have to work anymore. The reason that some predict that Mark Vincellete will be on the cover of Time magazine is because of his brilliant strategy he developed for the Forex market. He is revolutionizing investing for the average investor. Making huge amounts of money and retiring young is not just for hedge fund managers. Investors who follow this program have been making unheard of returns. Due to compliance issues I cannot reveal the returns on investment but when you demo the program you will see for yourself. Once you see the power of the program you will confidentially tell everyone you know about it. That is why the company is growing 40% a month with no advertising. This is a Forex hedge strategy that reduces the risk in the market and anyone can do it because of its simplicity. It takes about 10-20 minutes a week if that. You can follow the strategy with play money until you see how it works and are comfortable with investing. Don’t take me word for it though. Try it out for free. Watch the video presentation on the site below. It will explain everything through the video. www.demofreedomrocks.com. Take care RULE OF 72 5000 @ 12% a month = 1.6 million in 4 years. 19 million in 6 years.
- If you are a young person with that much money, and you are not familiar with investing, you should seek out a fee-based investment advisor. Find one that charges for their time and is not associated with any particular investment firm. You might be set for life if you set up your portfolio correctly. Just remember to keep them costs low.
