I have six thousand to invest but don't know where to...?

Question

I'm interested to invest it on stocks but don't seem to know where to begin.HELP...

Answer 1

For someone that does not have too much knowledge of the stock market or of stocks in general, it is a better idea to consider a mutal fund or perhaps a couple of mutual funds. That way you receive a diverse holding of securities and avoid the problem that the one or two stocks you might pick turn out to be lame horses.

Unfortunately, not all mutual funds are good investments. About 70% underperform the market in general. I do have a couple of recommendations that I can make, but you should be very skeptical of such recommendations.

Morningstar ratings are a good source of advice and you can find them on Yahoo Finance under mutual fund screener. All mutual funds are sold directly by mutual fund companies and they all have web sites where you can down load the forms and prospectuses.

My preference for mutual funds are those that hold stocks in smaller to mid sized companies. But large cap stocks have under performed the market for so long that they may be ready to make a run.

I would split the $6,000 into two parts and pick two different mutual funds managed by two different companies.

Here is a screen of mid-cap stocks with better than a 10% annual return over the last 5 years and rated 4 stars or better.

http://screen.yahoo.com/a?cc=MB&nm=&proy=&mgrt=&rtmin=4&rtmax=&retrmin=&retrmax=&risrmin=&risrmax=&trytd=&troy=&trty=&trfy=160%2F&mii=%2F5000&mfl=&er=.01%2F.99&namin=&namax=&tomin=&tomax=30&mmcmin=&mmcmax=&vw=1&db=funds

Here is a screen of large-cap stocks with better than a 10% annual return over the last 5 years and rated 4 stars or better.

http://screen.yahoo.com/a?cc=LB&nm=&proy=&mgrt=&rtmin=4&rtmax=&retrmin=&retrmax=&risrmin=&risrmax=&trytd=&troy=&trty=&trfy=160%2F&mii=%2F5000&mfl=&er=.01%2F.99&namin=&namax=&tomin=&tomax=30&mmcmin=&mmcmax=&vw=1&db=funds

You will notice that the mid-cap stocks outperformed the large cap stocks by several percentage points.

Answer 2

Have to go with mutual funds or close-end investment cos (mutual funds that trade like stocks - ADX & PEO are example) for that small amount. Do not get trapped into thinking there is a lot to know & doing a lot of research instead of just starting NOW! Can buy either of the above 2 1st large cap stokcs & 2nd Energy stocks - or a s&p 500 index fund @ schwab.com or the like right now. Stay away from banks, investment programs/schemes, & investment advisors as they have nothing you need. Just be sure you have some reserves. [e-mail] if have further qs.

Answer 3

$6000 wont make or break you at this point. If you have any debt, pay it off with this first. If you don't want to do any research than get into a mutual fund. There are many different ones out there. If you are interested in research, then get into an online stock trading sight (my suggestion would be scottrade). You can start with $500, get the feel of it, and see what its all about. If you like it and do well, then you can invest the rest. You can get your money back out quickly also if you need it.

Answer 4

There are only TWO rules to investing:

1) Don't lose money -and-
2) Don't forget rule #1

Having said that, I would stash the money in a high yield savings/checkings account and then THINK about the following:

a) Do you have the right temperment to invest?
b) What are your areas of expertise? You should invest only in areas that you're knowledgable about.

Once you've thought about a) and b), I would study the successful investors and then imitate them. Here are a few investors who are outstanding:

1) Warren Buffett
2) Martin Whitman
3) Peter Lynch
4) Benj Gallendar
5) Benj Graham
6) Charles Munger
7) David Dremen
8) Michael Irwin
9) Phil Fisher

There are many good websites to learn about investing. One of them is

1) The Motley Fool - www.fool.com
2) Value Investigator - www.valueinvestigator.com

Finally, you can subscribe to various newsletters including
1) Capital & Crisis - http://www.agorafinancial.com/THE_PUBS/FST/index.html - It's only $59/yr and it's very good
2) Value Investor Insight - www.valueinvestorinsight.com - a bit pricey, but you can learn a lot
3) Outstanding Investor Digest - www.oid.com - also pricey and very infrequent, unpredictable publishing - but very educational as well.

Hope this helps!

Answer 5

I would buy U.S. government savings bonds specifically the series EE bonds which have a variable interest rate thats calculated to stay ahead of the rate of inflation so you get more bang for your buck when you cash them in. The last time I checked the interest rate was about 7% which is not too shabby. You can even purchase them over the internet at www.treasurydirect.gov. They are one of the safest investments you can make because they are backed up by the U.S. government. Hope that helps.

Answer 6

To access your situation..we need to know your financial goals. How old are you? Do you want to use this for short term or long term gain? Is this for retirement or something else? What is your risk threshold?

If you are conservative, I would suggest putting your money in high yield savings online accounts like emigrantdirect or ingdirect. CD's (Certificate of Deposits) are fine too, but you cannot touch them until they come to term. I would also invest in bond funds that give modest yield with less risk than stock funds or stocks. Also, money market funds are fine, but yield is not as great as it once was years ago.

If you are moderate, I would spread your money amongst bond funds, stock funds, and savings/money market funds. Large Cap (Blue chip) stock funds give decent yield and are safer than smaller cap stock funds. Mid-Cap stock funds are also reasonable. Just be sure you do your research..you can even research on Yahoo! Finance.

If riskier and/or long term, I would diversify to include small-cap, mid-cap, large-cap, and even foreign funds. You can even invest in some individual stocks as well ..just be sure you do thorough research and avoid penny stocks as not to be burned.

This is very general advice..so I hope this helps.

Franco: I will not get in an argument with you. The asker's question was good but one would need several more details into what she believes is important. Some people are willing to risk more to gain in short term..whereas others are not. I would not want to give advice without know the asker's desires and profile.

Answer 7

What's your time horizon? Will you be making future contributions? Do you have an emergency fund set aside? Have you considered funding a Roth IRA if appropriate?

Start by asking yourself these questions. Then put the money in a CD or high yielding money market (emigrant direct.com) for a while until you do some research. I'd recommend finding a good mutual fund(s) to put the money into...Vanguard/Fidelity/American Funds for example. Find someone local you can speak with and in person.

Good luck.

Answer 8

If I had that much to invest, I would probably invest it in computer software. Especially since computers are a definate profit making business and they are going to be around for a very long time.

Answer 9

Depends on a lot of things. How old are you? How stable is your employment situation? What is the probability distribution against time of when you will want, or need, to draw on the money? How much risk are you willing to take? What is your tax situation? You could talk to a broker at any full-service brokerage house and get some ideas.

Answer 10

Some self important dudes are trying to impress us by asking the asker idiotic questions, such as how much risk are you prepared to take. How the hell do you answer that? Two pounds of risk, or 6 inches, or 10 degrees? What is a lot of risk for one person is nothing for another. Wake up dudes!