Investing Advice

[Derrk]

I'm relatively young, i have a fair chunk of change currently burning a hole in a low-interest money market account. But i want to make my money start working for me. Any advice?

One thing I'm leaning towards doing is just putting my money into a better money market account with higher interest rates, but I'd also like to look for something with higher returns. 

The Idea of CDs are interesting to me, except I'd rather have something more liquid in case i need to pull my money out of it. 

I want to get into the stock market, but have no idea where to start really. Everyone's been telling me it may be too volatile to invest in right now. 

 

I'm 22, working full time, going to a state school. What do you think would be best for me?

[Radium_Angel]

1 hour ago, Derrk said:

I'm 22

Look at this image

 

https://virtueofselfishinvesting.s3.amazonaws.com/uploads/reports/2017/4675/history_of_market_corrections2-hires.png?link=mktw

 

The answer is obvious. Invest in IT/Tech, be in it for the long term (40+ years)

[Derrk]

10 minutes ago, Radium_Angel said:

Look at this image

 

https://virtueofselfishinvesting.s3.amazonaws.com/uploads/reports/2017/4675/history_of_market_corrections2-hires.png?link=mktw

 

The answer is obvious. Invest in IT/Tech, be in it for the long term (40+ years)

I'll check this out later. Work internet blocked it. I got my mom to invest in AMD when it was at $13/share. I should've bought a some but i didn't really have the capital for a large investment at the time

[Derrk]

Just now, Derrk said:

I'll check this out later. Work internet blocked it. I got my mom to invest in AMD when it was at $13/share. I should've bought a some but i didn't really have the capital for a large investment at the time

annddd just looking at it, it crashed really hard... lol

[AngryBeaver]

Look in to mutual funds of getting yourself a decent investor. My grandmother back when I was about 12 yrs old opened me a account with her investor and started me out with $500.. then made me the deal that if I came up with 500 dollars by my Bday every year to invest in it... she would match it.

 

Well my grandmother passed away probably 8 years ago, but that account is still there and I still put money in it. I have found that the few times I have borrowed money from my account... that my investor has more than made up the withdraw by the next time I use it. For me at least he has done a great job of investing my money and I have seen good constant growth. Just remember anytime the markets crash or drop down low.... INVEST.

Now once your account gets up enough... you can use it to fund down payments on real estate / property. Which is another good place to invest. I have slowly been purchasing real estate to turn in to rental properties so that I can create a nice consistent income that doesn't require anything from me. So once you have your money being used for that, then you really start to see the gains. For example a house in a decent area with a 1300 monthly mortgage, will bring in 1500-1800/m in rental income. I am using a rental service so that is what I am left with at least, they take a cut because they handle all the problems and find the tenants.

[Derrk]

12 minutes ago, AngryBeaver said:

Look in to mutual funds of getting yourself a decent investor. My grandmother back when I was about 12 yrs old opened me a account with her investor and started me out with $500.. then made me the deal that if I came up with 500 dollars by my Bday every year to invest in it... she would match it.

 

Well my grandmother passed away probably 8 years ago, but that account is still there and I still put money in it. I have found that the few times I have borrowed money from my account... that my investor has more than made up the withdraw by the next time I use it. For me at least he has done a great job of investing my money and I have seen good constant growth. Just remember anytime the markets crash or drop down low.... INVEST.

Now once your account gets up enough... you can use it to fund down payments on real estate / property. Which is another good place to invest. I have slowly been purchasing real estate to turn in to rental properties so that I can create a nice consistent income that doesn't require anything from me. So once you have your money being used for that, then you really start to see the gains. For example a house in a decent area with a 1300 monthly mortgage, will bring in 1500-1800/m in rental income. I am using a rental service so that is what I am left with at least, they take a cut because they handle all the problems and find the tenants.

Where's a good place to start? Until i'm able to do more research,  I'd like something i don't really have to think about & can just throw money at.

[AngryBeaver]

Get an investor then. You will need to look some up for your area and then do some research on them to make sure they are good at what they do.

[Derrk]

Just now, AngryBeaver said:

Get an investor then. You will need to look some up for your area and then do some research on them to make sure they are good at what they do.

would that be someone like an individual, or an investing group like vanguard or schwab?

[AngryBeaver]

4 minutes ago, Derrk said:

would that be someone like an individual, or an investing group like vanguard or schwab?

If can be either.

[Derrk]

1 minute ago, AngryBeaver said:

If can be either.

okay, i gotta do my research. Thanks for the advice!

[Radium_Angel]

55 minutes ago, Derrk said:

annddd just looking at it, it crashed really hard... lol

But it will rise again, given enough time. You only lose money if you pull it out for less than you bought it for...

[dalekphalm]

11 hours ago, Derrk said:

I'm relatively young, i have a fair chunk of change currently burning a hole in a low-interest money market account. But i want to make my money start working for me. Any advice?

One thing I'm leaning towards doing is just putting my money into a better money market account with higher interest rates, but I'd also like to look for something with higher returns. 

The Idea of CDs are interesting to me, except I'd rather have something more liquid in case i need to pull my money out of it. 

I want to get into the stock market, but have no idea where to start really. Everyone's been telling me it may be too volatile to invest in right now. 

 

I'm 22, working full time, going to a state school. What do you think would be best for me?

First things first, the fact that you have some investment already (even lower interest) is better than most people.

 

Second: don't buy stocks directly, unless it's "for fun".

 

Third: You have a lot of options on how you invest your money. You can use traditional investments from banks or investment companies, or you can use one of the newer systems like "Robo investments", which are lower fee than traditional investments.

 

Whether you go with a robo investment, or a traditional one, the actual choices are pretty similar. You've got Mutual Funds, GIC's, and various other types of funds or investments.

 

Also make sure to take advantage of any sort of tax advantageous investment accounts available in your country - In Canada, we have something called a "Tax Free Savings Account" (TFSA for short) - TFSA's aren't actually savings accounts, but more like... "containers". TFSA's are tax exempt - including from capital gains tax or income tax when you decide to withdraw the money (capital gains tax is a tax on how much profit you earn in an investment). TFSA's have a yearly deposit limit though (currently $5500 CAD per year, but it used to be higher).

 

So anyway, with a TFSA, you deposit money into the "account", and then you can use that account to invest the money into various actual specific types of investment accounts. It can actually be any number of investment types, from simple savings accounts to actual investment funds.

 

Your country may have similar things that you can take advantage of.

 

Basically, you want to pick a fund that is well diversified, and has the risk level you're comfortable with - higher risk means higher potential gains. Typically, higher risk investments aren't actually bad per se, but often lose money in the short term (only to regain and earn even more in the long run.

 

How liquid you want the money is also important. Some investments, like GIC's, tend to have locked in terms. Eg: You pay the bank $5000, and in 5 years, they pay you your money back plus the returns of the investment. GIC's have a guaranteed minimum interest return, but can go above that if the fund performs particularly well.

 

A regular fund invests in a combination of stocks, bonds, real estate, etc. These are typically not locked in to a specific term, but can take a week or two to actually get the money back into your account if you make a withdrawal.

 

If you need the money to be available at a moments notice, then you basically have to keep the money in a simple savings account - so find one with the highest possible interest (though even the best will typically not even match inflation).

 

So, things to consider:

1. How long are you investing for? Short term? Medium? Long?

2. How quickly do you need the money available? Instantly? A few days notice? A few weeks? Or can you be without the money for potentially years?

3. What's your risk level? I'd probably suggest a balanced ("medium") level of risk to start - decent potential returns, with little risk of losing it all.

 

If you already have a bank that you deal with, speak to one of their financial advisers about what options they have available. Make sure to ask about ALL fees, since there can often be management fees, etc.

 

Also check out Reddit - there's a healthy investment community there.