Investing Strategy for 23 year old?

Question

I am 23 and have recently graduated from college and have a good job ($42,000 per year salary + bonus). The only debt I have is about $20,000 in student loans. I have recently begun buying stocks, but I only have about $1,500 invested right now. My stocks are doing pretty well, but I don't have enough invested right now to make any significant gains. I would like to continue to invest more money as I earn more, however I am not sure what my best option is at this point. Should I continue to buy individual stocks, or should I invest in mutual funds or even Roth IRA? I feel that I'll get dinged by taxes if I continue buying stocks and don't start taking advantage of some of the tax benefits associated with IRAs or Roth IRAs. Any advice???

Frank Castle, you're a huge tool. Don't waste my time with your bullsh*t. I suggest you to f*ck off.

Answer 1

Here's a nice perspective. It focuses on automatic tools. I figured you'd like it because when we're young, discipline isn't our strongest quality (heck even when we get old it's not). So maybe you can get a few neat ideas from that article:

http://financialbasics.blogspot.com/2006/12/ways-to-help-you-invest.html

Good luck

Answer 2

Here is the best advice anyone ever gave me. JUST SAVE. The Roth IRA is the best thing since sliced bread. If you don't put in the full $4,000 (and you can afford to) you're nuts. Don't make it an option just do it. Individual stocks can be great but unless you're going to track and watch and just be over the top into it, let a pro do it for you and go with a mutual fund. This isn't a solicitation for business, this is just someone in the business giving back a little. Don't take to much risk, you don't have to if you start early enough and 23 is a great age. While on this topic if your 401k gives you a match, you have to go in up to that magic percentage. That's free money. So up to match in your 401k and then a Roth. Keep in mind with all of this that cash is king. Make sure you have cash on hand too. You don't want to pull out of investments to put tires on your car. Good luck

Answer 3

How is this strategy??

You invest $ 10,000 every year in a mutual fund or stock market and aim to get 15% p.a return on your investment. You continue to invest $ 10,000 every year for 20 years and maintain a return of 15% after taxes. At the end of 20 years you should have $ 1 million in the account.

Once you reach that figure, you may invest it in safe instruments like Bank CD and earn 5% return. You should get an interest of $50,000 every year. You can retire in peace.

Answer 4

First, pay off your loans. Think of that as an "investment" that pays you the equivalent of the interest rate. Second, take full advantage of your employer's 401K plan. If they have any match at all, it's free money. If you can put it into a Roth 401K, that's even better. For the money in your 401K, diversify your investments--especially into foreign investments. The U.S. is in the midst of a long term loss of competitiveness and weakening $ so you don't want all U.S. companies. Until the government allows bigger amounts to be invested in 401K accounts, you should also aggressively save other money for retirement. Even if you max out your 401K, it won't make you rich at age 55 or 65.

Answer 5

Your question contains much sound thinking. I would recommend a Roth to avoid taxes.
I would also recommend staying away from individual stocks as this increases your relative risk level. You have little invested but it is good to develop good investment habits like risk management.
Invest in mutual funds and carefully study the broad classifications of investments available and their associates risk and learn about how to diversify and protect your assets.
Above all, once you invest - pretend the money is not their to spend on toys. Consider it as another's money that you must professionally protect and increase.
Good luck.

Answer 6

You need to figure what your goals are. Usually they involve buying a house, funding retirement, and funding children's education. Due to tax issues, I advocate retirement planning first, then house, then kid's college fund.

Retirement: Max your Roth IRA! By using after-tax dollars now, your compounding is tax-exempt. If your employer offers matching (sometimes up to 50 cents on the dollar) in your 401k/other "qualified plan" maximize the employer contribution first (essentially immediate 50% return) and then maximize your Roth IRA.

House: Live wicked cheap until you can buy. Buy a condo first, before you have kids. If single, collect rent from roommate(s). Pay down condo mortgage ASAP, preferably within 5-7 years (yes it can be done). Sell or rent condo & buy house. If you have condo proceeds, take a shorter mortgage & pay it off faster (5-10 years).

College: Own your children's education. Don't depend on schools to teach them, you teach them! Your involvement in their advancement can save a year or more of college via AP credit, CLEP, and cross-enrollment while in HS. Use the U plan and 529 plans and enroll all your relatives in the UPromise credit card plan.

General: index funds tend to outperform mutual funds. I favor stockpicking over simplicity of fund management. The Motley Fool (fool.com) offers investment instruction for laypeople. There are also many investment advisors who claim they do the legwork for you. The better ones, IMO, are Louis Navellier, Tobin Smith, and Michael Murphy, though there are a number of very good ones (some of whom are associated with Navellier, Smith, and Murphy).

Answer 7

Ask a tax accountant about what type of IRA makes most sense in your situation. Then transfer as much of your stock holdings as legally possible into the IRA. Continue contributing to the IRA to take full advantage of tax benefits. To reach a comfortable retiurement, you will likely need to save and invest more than the law allows you to put into an IRA, so some of your assets will end up outside your IRA. Other things being equal, keep income-producing assets (such as bonds and high-dividend-yield stocks) in the IRA; this will help to minimize ordinary income taxation.

Consider diversifying into bonds (about 20% of your total portfolio should be adequate at this stage) and international stocks. For the time being, avoid real estate, unless it has an attractive current yield.

Answer 8

I think the best way to invest is to study what the best investors are buying and selling and why. Check out http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Good luck.

Answer 9

You seem to ahve alot of answers here that will steer you in the right direction for your investments..

One question i have for you...

You recently graduated, have you consolidated your student loans?

This may be a first step for you to save some more money, and free up additional funds to invest more..

I work with Student Aid Lending, we are a nationwide lender administed by the department of Education (We have a title IV license)

Take a lok at my yahoo 360 profile.. You can find alot of information about student loans and also direct links to my companies website...

http://360.yahoo.com/my_profile-hluduhmi...


Feel free to call or email me and i can process the entire consolidation for you in just 10 minutes over the phone..

I hope this helps, and again, do not hesitate to call or email me with any additional questions!

Jason Fry
Student Loan Advisor
Student Aid Lending
800-964-0642 EXT 114
[e-mail]

Answer 10

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Take a look at the product video.

Answer 11

I'd really look into real estate investment properties, that's your best bet if you want to create wealth, all other investment options don't produce as high a return as real estate does when invested in properly. Look to invest in a stable market such as the midwest that doesn't have as many fluctuations in price as the riskier coastal markets.

Good luck!