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 Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 23 hours, 16 minutes
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 Beginner Investment - Need Some Advice 
#8282041 - 04/14/08 02:26 PM (5 years, 1 month ago) |
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Hi everyone. I've recently steadied myself as far as expenses and income are concerned and am now getting interested in investing some of my money for the long term. I am completely inexperienced in this area and am looking for any basic advice that would keep my money from losing value to inflation while sitting in my savings account.
I just recently turned 23, and I graduated and received my undergraduate degree in biochemistry from a very well-known (and therefore also very expensive) liberal arts college last year. Since then I have started working at the same school for the chemistry department doing research. The money isn't all that great, but the experience is excellent and my time here will be great on my resume.
Like I said, my expenses and income have balanced out and I can now easily put away ~$400 a month after rent/utilities/groceries/loans AND still have a bit leftover for hobbies and bar hopping. I have around $14k in student loans to pay off which easily fits into my monthly balance. I have $21k cash in my savings account from inheritance.
Last month I bought a great new car, a 2000 BMW with 74k miles and a clean history for only $10,500. I am currently getting about 26mpg driving to work every day and I consider this purchase to be one of the best investments I could have made for myself for awhile.
So I am wondering what to do with that $21k that is simply sitting in my savings account earning about $20 a month in interest. I have started adding my $400-500 a month from paychecks but I want to out pace inflation and make this money work for me. I plan to pay off my loans with monthly payments and establish an excellent credit history. Should I be researching mutual funds? I really have absolutely zero experience in this field and am just looking for a direction to get headed in. I am thinking of maybe splitting the money and keeping half as an emergency fund while investing the other half. What do you guys think? Thanks in advance for any suggestions.
Cheers.
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"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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jtbyrd
Stranger
Registered: 08/13/07
Posts: 12
Last seen: 4 years, 10 months
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Re: Beginner Investment - Need Some Advice [Re: Yrat]
#8282226 - 04/14/08 03:20 PM (5 years, 1 month ago) |
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I'd definitely research mutual funds and other investment opportunities. I have a similar economic situation and I started a Schwab account and put most the money in no-load mutual funds recommended by Schwab. I could also have used that money to purchase individual stocks or different mutual funds or whatever else I wanted through that account. You can do it all online and it's pretty easy.
Whether you should buy mutual funds, CDs, individual stocks, put some in a money market account, etc......well, that of course depends on a ton of variables. Taxes are a big thing you'll wanna be aware of...the tax difference between long term and short term capital gains is huge. How often you need to access your money is another big consideration.
Generally, you'll want to keep money in your checking/savings account for everyday use. Maybe look into getting some 1,3, or 6 month CDs for money you'll need in a few months (can't touch money in a CD though till it matures without incurring a big penalty). Then look at mutual funds/individual stocks for long term investing...you prob won't wanna touch that money for years.
If you have a good feeling about a particular company, maybe invest $500-1000 in them....it's quite a bit fun and could potentially be very profitable (or very non-profitable  ) Just remember the risk/reward relationship in investing.
I'm not a financial guru, so be sure to do as much researching as possible. Get that nest egg started early though....the more money you have the easier it is to make even more money.
Definitely don't leave $21k in a savings account though.
Good luck!
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙
 
Registered: 05/08/01
Posts: 17,709
Loc: city of angels 
Last seen: 3 days, 4 hours
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 Re: Beginner Investment - Need Some Advice [Re: Yrat]
#8282237 - 04/14/08 03:23 PM (5 years, 1 month ago) |
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I must sound like a broken record, but in case these topics slipped by, you might want to check 'em out:
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┼ ··∙ long live the shroomery ∙·· ┼
...╬π╥  ╥π╬...
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Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 23 hours, 16 minutes
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Re: Beginner Investment - Need Some Advice [Re: geokills]
#8282277 - 04/14/08 03:33 PM (5 years, 1 month ago) |
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Thanks geokills,
I have been following the stock thread but the retirement one did slip by. I'll get reading 
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"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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debianlinux
Myconerd - DBK
Registered: 12/09/02
Posts: 8,252
Loc: Over There
Last seen: 5 months, 10 days
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Re: Beginner Investment - Need Some Advice [Re: Yrat]
#8282515 - 04/14/08 04:28 PM (5 years, 1 month ago) |
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I'd say getting started at your age with that large of a seed is a great first step no matter which way you go.
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 LunarEclipse
Mr. Dogma Free
Registered: 10/31/04
Posts: 10,678
Loc: The Hand
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Re: Beginner Investment - Need Some Advice [Re: Yrat]
#8283226 - 04/14/08 07:44 PM (5 years, 1 month ago) |
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Quote:
Last month I bought a great new car, a 2000 BMW with 74k miles and a clean history for only $10,500. I am currently getting about 26mpg driving to work every day and I consider this purchase to be one of the best investments I could have made for myself for awhile.
Suze Orman says otherwise. A car isn't an investment, it's an expense.
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Don't submit to dogma.
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Yrat
Hello
Registered: 11/08/07
Posts: 2,030
Last seen: 23 hours, 16 minutes
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Re: Beginner Investment - Need Some Advice [Re: LunarEclipse]
#8283314 - 04/14/08 08:08 PM (5 years, 1 month ago) |
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i consider it an investment. not only with the awesome mileage and the ever rising gas prices, but this car is mint and I will have it for at least another ten years. BMWs don't die easy.
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"There are a thousand hacking at the branches of evil
to one who is striking at the root."
-Henry David Thoreau
Strike The Root
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LunarEclipse
Mr. Dogma Free
Registered: 10/31/04
Posts: 10,678
Loc: The Hand
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Re: Beginner Investment - Need Some Advice *DELETED* [Re: Yrat]
#8283542 - 04/14/08 08:50 PM (5 years, 1 month ago) |
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Post deleted by LunarEclipseReason for deletion: dmfr
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Don't submit to dogma.
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Nashbar
just strange.... on drugs
Registered: 07/16/05
Posts: 3,536
Loc: strawberry field
Last seen: 3 years, 3 months
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Re: Beginner Investment - Need Some Advice [Re: LunarEclipse]
#8287793 - 04/15/08 07:12 PM (5 years, 1 month ago) |
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pay off your debt and learn to DIY. i work on my audi s4, a bimmer can't be any harder.
pay off your debt. did i mention pay off your debt.
debt + a couple bad investments = bankruptcy
you might lose your job next year, you'll lose all your toys right away. move into the parents basement...
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Nashbar
just strange.... on drugs
Registered: 07/16/05
Posts: 3,536
Loc: strawberry field
Last seen: 3 years, 3 months
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Re: Beginner Investment - Need Some Advice [Re: Nashbar]
#8287823 - 04/15/08 07:20 PM (5 years, 1 month ago) |
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after the debt is done, do anything with the cash. buy a house, buy property, buy something.
cash is the worst investment possible. inflation takes 3-7% per year. anything is better than that.
stocks or mutual funds are the way for young people. age 20-30 stocks.
look for a promising IPO, huge% gain or total loss and you've got nothing to lose.
look for a good reliable company stock that's had a bad rap lately, wait for a dip in the price and then buy a little, $1k worth, it'll go up eventually and could turn around good long term. do this with 10 companies and you could get a few that are real winners, maybe a few that crash.
play the percentages, anything is better than losing cash value to inflation...
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debianlinux
Myconerd - DBK
Registered: 12/09/02
Posts: 8,252
Loc: Over There
Last seen: 5 months, 10 days
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Re: Beginner Investment - Need Some Advice [Re: Nashbar]
#8297915 - 04/17/08 10:00 PM (5 years, 1 month ago) |
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Precious Metals do not lose value to inflation.
Stocks are very risky. If you lose 100% to a bad stock turn you lost a hell of a lot more than a measly 7% to inflation.
If I made a stock buying recommendation I would say that you should buy up stocks that have recently crashed hard like bear sterns or some of the sub-prime lenders. Look at how they go from >$80/share to like $4/share overnight but then they find themselves at ~$30/share in less than a year. Buy on the crash and sell on the upside.
Getting out of debt is definitely the 1st step.
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Liquidkick
H2O
Registered: 05/03/02
Posts: 2,635
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Re: Beginner Investment - Need Some Advice [Re: debianlinux]
#8301793 - 04/18/08 07:16 PM (5 years, 1 month ago) |
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BSC is only worth 10 dollars now..
The only reason you should be in BSC is if you are considering a merger arbitrage play. You would short JPM and go long BSC. You will need to calculate a certain ratio based on the stock compensation ratio for BSC and also make sure your broker knows what you are doing so you don't get margin calls etc.
The idea is... You have to cover your JPM short, but BSC will turn into JPM.
a better example would be NWA/Delta.
You would lets say short 5 delta, and go long 4 NWA locking in the 1 share immediate profit of short selling. the ratio is 1.25 delta for a nwa share. They merge and you would get 5 delta to cover your short. You will need to hedge against the bet that the merger will fail. it should be no concern if the price fluctuates... unless the prices of the pairs really go out of whack and are not close in proportionate.
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