Poor man's investing: OK. With $1000 dollars, no knowledge of investing, what's my 1st step?

Question

I pull in about 1000 monthly AFTER taxes, bills, and misc. I want to find a way to make my money work for me instead of blowing it on material things. I've tried to read books on investments but I can't understand much...perhaps I need to start off more simple?

Answer 1

first thing is to start an IRA at your local bank and put that first $1000 into a 6 month CD. That way while you are doing your research you will be earning a higher return than your savings account or your mattress will provide you. And, it keeps you from frittering it away.

Next, you need to add to that amount. Take $500.00 each month and put it into that IRA in a monthly CD. Each month roll it over into another monthly CD. You continue to do this until that 6 month CD matures.

This whole time you will be educating yourself on investing...reading, watching CNN, Fox, PBS. Anything that has a money/investing themed show you need to watch.

At the end of month 5 you'll want to open a Vanguard IRA. When your 6 month CD matures you will want to roll the proceeds of that PLUS all of the other CD's that you've been putting your money into over to your Vanguard account. Your bank will help you do that.

At that point you will have about 3,800 which should allow you to invest in the S&P500 index fund. Leave your money there....The first 8 months of each subsequent year you should put $500 a month in that fund. Do this until you feel comfortable investing in other assets.

The remaining months you should be investing $500 in a ROTH IRA. Do the exact same thing with that that you do with the traditional. Accumulate in CD's until the balance gets large enough to transfer to Vanguard...accumulate in S&P at Vanguard until large enough to diversify.

Basic premise is to get your money investing in the lowest cost options around. It's silly to buy stocks with low balances. Each month you will incur a $7 transaction fee for a $500 purchase. Vanguard's fees will be 1/2 of that amount.

This should give you about 2-3 years to learn about investing. It's not a rush...and you are making your money work for you in the meantime so you can sleep at night and feel good about your retirement.

As for the other $500/month? Savings account...treat yourself on occasion but savings account until you have 3-6 months of your pay saved up. You need an emergency slush fund that is liquid. Don't assume nothing bad will happen. Prepare as if it might...After you've saved that. I'd consider opening up an AFTER-TAX brokerage account and putting money into tax-free municipal bonds. accumulate those too....End result is that you'll retire with 4 different revenue streams. Social Security, Tax Free Roth distributions, Tax-Free municipal bond interest payments, and Taxable IRA distributions.

Answer 2

I watch the tv show mad money daily for 2 years now. The best advice from them is do not invest in stocks until you understand how the stock market works and how much risk you can take financially. The stock market doesnt work anything like average people think it does. I turned to sharebuilder for my first stock investments. Their website has learning tools as well as automatic investing options. Their programs dont require a lot of money to get started. There is a lot to learn before you spend a dime. Good luck.

Answer 3

I would try to learn about the area you want to invest in. You might want to consider a mutual fund through ING or another company. If you go that route, someone else manages your portfolio. You may also want to consider put your money into CDs. They are safe, but don't provide high returns (around 5%). You need to decide how much risk you are willing to take with the amount of knowledge you have.
I would consider reading "Rich Dad Poor Dad" for an oversimplified view of how assets and liabilities work. It is very easy to understand, but not overly technical.

Answer 4

You can start by using a small internet broker, like sharebuilder and purchase some stocks every month. You would have to do some research into whatto invest in. Watch fox news channel on saturday morning 10:00 to 12:00 to get some good info.

Answer 5

Does your bank sell investment products??

If so, contact them for an interview and see what they reccommend as investment that is right for you, then have $500 per month transferred directly from your account to this investment every month...You could invest more if you want but you should have a reserve fund for unexpected bills.

If your bank can't handle this, find a financial planner to deal with.

Answer 6

if you want to invest by yourself you should look into the vangaurd total market index fund or exchange traded fund. if you dont want to go at it solo find a decent financial guy and start investing in a good mutual fund.

Answer 7

Hi,

Why don’t you start your own forex or shares trading? I could introduce you to one brokerage company in Austria that allows to trade from same account currency (forex), commodities, metals and cfd on shares. Total 500 instruments available, spread from 1 pip. If you open trading account under my referral I provide you for free with trading techniques that I successfully use for several years.

Currency (forex) trading is attractive because it is very high income and you could trade from any place in the world and at any time from Sunday night to Friday night. Yes, it is risky way but reward worth it.

As about books you should read those ones. It would be useful as for trader as for investor

Market Wizards by Jack D. Schwager;
Technical Analysis by Jack D. Schwager;

Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;

Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;

Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill M. Williams;
New Trading Dimensions by Bill M. Williams
Trading Chaos II by Bill Williams – Maximize Profits with Proven Technical Techniques by Justin Gregory-Williams and Bill M. Williams


Another way you could find trader who accepts private investments and invest with him/her. Then income would be less but risk would be less too.


And the last thing DON'T LISTEN SO CALLED EXPERTS. They makes mistakes too.

If you are interesting and/or have any question please don't hesitate and pm or e-mail me (press on my name)

Good luck!

Answer 8

stock pick STG THE STONE PATH GROUP its .22 cents it was .16 cents its gointg up at 2001 it was 35.oo dollars its a top pick of kramers mad money