Ways To Start Investing Money for Amateurs..?

Question

I've been out of college for 2 years and seemingly all my $$ goes into paying student loans & other bills. I'm looking to increase what I have. What's the best way to start off investing $500-$1,000? The stock market isn't doing that well & I'm looking for something that will almost guarantee an increase. Does anyone have any great advice?

Answer 1

I have been doing this for years. The Stock Market is just like Las Vegas.
Rule #1 Save automatically, at least 5-15%
Put all money in a conservative account with low fees
Invest in Blue Chip Only (Not GM, maybe Oracle, Intel, Duke)
Mutual Funds, Bonds, REIT's, Do not speculate on Stocks or Gold. You wont beat the big boys.

Do not trust the Stock Market, or Financial Planners--brokers will tell you to invest in this and that because they get a commision wheteher you lose money or not. Take advantage of interest rate like 5-6-7% by buying bonds, CD's. Avoid fees and maintenance fees.

Answer 2

Actually, the stock market has done quite well this year, and since 2000. Historically, invesrors have made about 11% per year in the stock market. However, many "experts" say a 6%-7% gain is about all we can expect each year for a while. They really don't know. No one does.

If you have credit card debt, you should pay those off first because you are probably paying more than 6% (or even 11%) interest on that. The same might be true on your student loans. If so, pay those off, too.

While you're doing that, you can learn about the stock market, mutual funds, etc. One thing you could do, just to get the"feel"of the market is to invest maybe $50 per month in a mutual fund that invests in high quality stocks. That way, you wi;ll do what is known as "dollar averaging". Look for "no-load" funds. You don't pay a commission on these when you buy them or when you sell.
Also check their expense ratio, and make sure it is below 1%.

Vanguard, and T.Rowe Price are two good families of mutual funds. There are others.

Whatever you decide, Invest gradually, have patience, and don't sell if the price goes down to less than you paid. That might be the time to buy more.Then your loss is only on paper, until you sell. It takes discipline, and courage.

You could also consider good high quality stocks that have dividend reinvestment plans("DRIPS")

Good Luck.

Answer 3

If you want safety, then look into opening a high-yield online savings account. You can find them earning between 5.00% to 5.50% annual percentage yield. There is a list here at http://www.emoneycentral.com

If you want to put money into the stock market, you should anticipate that a loss is possible. However, investing in stocks for periods of 10 years and longer has historically given some of the best returns. To start out, a low-fee index fund from a company like Vanguard is worth getting. http://www.vanguard.com