Investing for beginners

[Timm250]

I'm surprised no one has mentioned ETFs. Similar to mutual funds but trade on the open market like a stock.

 

[dougtrr2]

There is a lot of advice given. You have to do what works best for you. I don't want to have to keep checking on my investments and adjusting depending what is going on in the world. I would rather hire a financial advisor to do that for me. In simplistic terms you could just invest in an indexed mutual fund that is invested in the S&P or other other index. But then your rate of return would exactly reflect the market, good or bad. With a financial advisor there are strategies that can reduce those fluctuations. If you go with an advisor, pick one that you are comfortable with. Ask blunt questions about his fees. But I remember a response Dave Ramsey had about fees on 401ks. Essentially he said "It isn't the fees that are the problem, it is the fact that the 401k isn't funded in the first place."

As a side note on 401ks. I found out by accident that once I reached the age of 59 1/2 I could roll my 401k out of my employers plan into a qualifying 401 without any penalties. I could do that once a year. Most employer plans are limited in choices. Once I found that out in moved my 401 to my financial advisor. I thought I heard something about it actually being a federal law that applies to all 401's but I didn't check it out.

Doug in SW IA

 

[dalola]

Investing *properly* is tricky, due to nearly unlimited personal variables & goals. Plus, you're getting a late start. You can't afford to make mistakes.

Financial advisors seem to get a bad rap, and rightly so in many cases. But there are many good ones out there, and they can be very effective in helping maximize an individuals portfolio, especially those intimidated & uneducated about investing.

My suggestion would be to ask around locally, trusted friends, family, local reputable businesses, for a respected advisor, and set up a meeting.

There are many, many personal questions you'll need to address, before any plan can be set forth. Good luck!

 

[hawkeye08]

Clark Howard has some podcasts also that explain investing..

 

[/pine]

Anyone shorting travel, leisure and lodging issues ??

 

[MinnesotaEric]

There is a lot of advice given. You have to do what works best for you. I don't want to have to keep checking on my investments and adjusting depending what is going on in the world. I would rather hire a financial advisor to do that for me. In simplistic terms you could just invest in an indexed mutual fund that is invested in the S&P or other other index. But then your rate of return would exactly reflect the market, good or bad. With a financial advisor there are strategies that can reduce those fluctuations. If you go with an advisor, pick one that you are comfortable with. Ask blunt questions about his fees. But I remember a response Dave Ramsey had about fees on 401ks. Essentially he said "It isn't the fees that are the problem, it is the fact that the 401k isn't funded in the first place."

As a side note on 401ks. I found out by accident that once I reached the age of 59 1/2 I could roll my 401k out of my employers plan into a qualifying 401 without any penalties. I could do that once a year. Most employer plans are limited in choices. Once I found that out in moved my 401 to my financial advisor. I thought I heard something about it actually being a federal law that applies to all 401's but I didn't check it out.

Doug in SW IA

If I was to invest in an index fund, I'd invest in a dividend index fund so I'd always outperform the market because of the dividend exposure.

 

[TnAndy]

IMO... there is no real "investing" on Wall St. All the big money makers pump and dump, Day trade, HF trade..all in effort to make money right now. The suckers i.e. "Long term investors" give them the money to play with, and have no recourse when things fail.
..The stock market is a suckers bet. ..A very select few make a very large amount of money..the rest get peanuts. Several years ago I cashed out every single equity I had and bought real estate... best thing I ever did for my financial future.

I have found the same thing thru the years. At one time, the small investor could do OK....today the market is so rigged, you'd be better off walking into any casino and playing against the house. Real estate has been very good to me, with precious metals as a long term place to park funds.

 

[kenmac]

I have had my Advisor for many years. I couldn't have run my business, invested, and known what to do as far as tax advantages available to me

Different advisors charge different rates. Mine gets .5%.

On another note. If you choose to use an advisor. Find one that is a Fiduciary

 

[WoodDuck]

I'm surprised no one has mentioned ETFs. Similar to mutual funds but trade on the open market like a stock.

I've started purchasing more ETFs the last few years in my private IRA. Usually much lower net expense fees than normal mutual funds, while being invested in the exact same underlying stocks and securities, at the same percentages of ownership, as competitive mutual funds. ETFs are not an option in my 401K plan at work, only mutual funds to pick from in it, so I usually don't buy mutual funds in my private IRA. Mainly buy ETFs with a few "premium" stocks for that account. I actively trade around some of my base positions as well; selling off part of my position shares in something when the price is really high, then buying those same shares back when a major price drop comes. (Like last week, I increased my position on several items Thursday and Friday, because the price was significantly lower than my cost basis on those items.) The trick is: not to be 100% invested when a buying opportunity arises. If all your cash is all tied up in the market when things "go into the red" like they did last week, you can't buy any of the bargains unless you sell something at a loss, or deposit more money into the account. (If possible. There are caps of how much money you can add to some types of accounts, such as Roth IRAs.) If you've already contributed the max to an account, and all the cash is "in-play" in the market when a pullback occurs, you just have watch everyone else buy the bargains while you sulk about it. Been there, done that.

 

[KennyG]

If you've already contributed the max to an account, and all the cash is "in-play" in the market when a pullback occurs, you just have watch everyone else buy the bargains while you sulk about it. Been there, done that.

But if you're not fully invested (at least to your target equity share, which generally shouldn't be 100%), when the market unexpectedly jumps higher, you miss on that end. It's a trade off and I'd rather just have my chosen money in the market and let it take care of itself. Market timing is for people who want to spend a lot of time watching the market.