What ways would you suggest a young family invest their money- read more!?

Question

We are a young family (mid 20's) who own our home and have two young children. My husband is getting a large promotion- bringing in about 25K more a year in salary and about another 25-35K a year in bonuses. We have a bad rap sheet of blowing extra money when we get it. With two kids now, and planing a third one we want to be more responsible with the way we spend/save/invest. What ways would you suggest we invest this extra income that we will have? We really know NOTHING about investing money. I'm interested in anything from the best ways to save for our kids' college to our retirement and any other smart investments. What are the safest ways to invest? I'm not so concerned with earning money back quickly, but about the safest way to go. If I invest 30K in to something tomorrow I want to know that in 5 yr we can get that back plus some, or worst case scenario, break even!

Also, we do not have any payments except our mortgage. All credit cards and vehicles are paid in full.

Answer 1

Need to go talk to a financial adviser. Such as Edward Jones Investments. They do not charge anything for initial consultation. You can have a certain amount deducted from your husbands check each month, or automatically transferred from your checking account and deposited into an IRA account, $2000 taken out of your check before taxes and it is also a tax write off. Plus mutual funds and 401Ks, so many choices, that is why you need to speak with a professional

Answer 2

First of all if you're investing that kind of money and only hoping to break even you're nuts. At your young age you have many many years to save and invest and weather the markets ups and downs in a safe way. For college look into 529 plans. Alot of the rest should be going into a 401k or Roth 401k for your retirement. The tax savings alone will give you an instant return on investment. At your age breakeven is not the way to go. You can be conservative but you want your money to work for you. Put aside a little extra to invest on your own or through a broker. But the best advice I have for you, is find yourself a good financial planner who will tell you similiar things.

Answer 3

The 401k is the number one option IF there's a company match on your contributions. If so, contribute at least enough to the 401k to take full advantage of the match.

If there's no company match on the 401k, the Roth is the number one option. Main reason is that gains are TAX-FREE in a Roth, and over time, you should have plenty of gains. If you still have money left over to invest, put the excess in your 401k, whether it matches or not.

After taking care of your own retirement, and if you still have money left to invest, THEN look at 529 plans. Often it's a good idea to invest in your own state's plan because you may get a break on state taxes. For a list of the best plans and to find out whether investing in your state's plan is a good idea, go to www.savingforcollege.com.

Finally, if you do talk to a planner, use a FEE-ONLY planner. Anyone else will likely stick you into investments burdened by heavy commissions, loads and fees. With a fee-only planner, you pay a flat fee and you can be confident that he/she has no ulterior motives other than to give you good advice.

Answer 4

Tell your husband to max out his retirement account at work. You get more money into it, tax deferred. Then if you are eligible, open Roth Iras and put the max in it that you can. SAve when you are young for when you are old. Keep a conservative lifestyle, make a game out of it. DO this for one year. After one year, you will feel so great about seeing all the money you have saved, it will be safe to use some of the excess to do other things. But get the retiremetn going. congratulations and good luck.

Answer 5

I am not sure if every state has this but look into a 529 account (for your children's college fund) at your local bank...

Have you thought of getting a financial advisers?? I think it would be a great idea.

I also heard of a neat idea the other day.....if you get a raise at your job....continue to live at the income that you made before the raise, then take the extra money and invest or put it into different accounts.....ex:; emergency fund, vacation $, 'fun' $, college, ....

Hope this gives you some ideas....

Best of luck and congrats!

Answer 6

That is fabulous, good for you all. I would think about buying an income property, maybe a duplex or apartment complex. Also there is a savings bond, I can't remember the name that you can buy pre-tax I believe for the kids for college, it can be cashed in later, you might want to ask the bank about that. I would stay away from Stock's unless you feel comfortable with it. Also the baby boomers are looking to retire, so maybe buying a house near a resort would be good, like a lake, ocean etc. Good luck, I don't know a lot but this sounds like something smart to me.

Answer 7

OK, does 300% return in 15 months excite you? I am talking from my personal experience here. I have started with USD12K in 30.8.2006 and from that time, they never miss to provide me with the monthly return as promised. They used the scale of 10%x3months + 15%x3months + 20%x3months + 25%x3months + 30%x3months.

The best part of it, they have started a new product called EMF that had a value of USD1 in December 2006 and now valued at USD2.11 per unit and expected to reach USD4 in April 2007.

See for yourself and experience this exciting investement. Mind you, this is not a HYIP but real investment in offshore financial market.

You can register free for 14 days but need an introducer to start. Use mine: mygha1605101 to register yourself.

Answer 8

Saving is the key number 1.
If you have a 401k savings program at work is probably the best place to put as much as you can. Just make sure you spread those funds around in the 401K between stocks and bonds. Maybe 60% in Stocks because you are young. (that actually is a conservative %)
Put as much as you can in a ROTH IRA. As your money accumulates in this you do not have to pay any taxes when you remove your money. (you pay taxes just once up front prior to putting it into the Roth account)

Answer 9

I've been investing for 20 years. I think the best way to get started is to understand the big picture. Understanding where we are as an economy helps understand where to put your money --in general--

I can boil down the big picture in four words. "Who's buying your stuff?" Since World War II, we have seen two major booms in the US economy. Both we're driven by that question.

Boom #1:

Immediately after WWII, many European and Asian nations devoured american goods as they rebuilt after that war. That fueled an american economic expansion that lasted from the mid 40s to the mid 1960s. It was the major underpinning. Major companies enjoyed massive profit growth. Unemployment dropped from great Depression levels. It made investing in the market easy.

By the mid 1960s, these nations had largely rebuilt. Now their economies were expanding as global powers, and taking market share from the US. That main driver for economic growth was no longer there. "Who's buying your stuff?" Less and less people around the world. So from the mid 60s to the mid 80s, the US economy suffered. We had recessions and inflation as policymakers tried to to come up with gimmicks to get around the fact that people weren't buying american stuff. That made investing hard. The stock market went flat. America still had great fundamentals: an educated workforce, strong infrastructure, natural resources, but no one was buying.

Boom #2

That changed in the mid 1980s. I said there were two major booms. This was the second one. We had a fundamental shift in the world. The Soviet Union, a massive block of several nations held together by Russia, had long kept its doors shut from american investment. But with pressure from Reagan, Gorbachev opened the doors under the Glasnost and Perestroika movements. The news headlines were "A McDonald's has opened in Moscow!" "They are drinking coca-cola in the USSR!" which at the time was amazing. if you looked at many blue chip companies, like these and textile and manufacturing companies, a lot of them suddenly had HUGE business opoortunities in the USSR. And after the USSR collapsed, this trend continued. From the mid 80s to mid 90s, you could see any number of blue chip US companies enjoying double-digit profit growth thanks to Soviet and former-Soviet investments. This fueled the massive expansion of that period. Investing was easy.

Who's buying your stuff?

This ended in the mid 1990s, as the region became saturated with US goods. The stock market didn't notice for a few years and went into a mania stage, but since then it has corrected of course.

Currently we are now back in that mid 1960s-mid 1980s type of situation. No-one is buying american goods. The fundamental isn't there. The market from 2000-2007 has been basically flat. Unless someone starts devouring american goods again, it will hard to consistently make money in the US stock market and the american economy will struggle.

Outside of those two events, where there was a clear buyer devouring american goods, the american stock market, economy, and investing opportunities have all been terrible in the post-WWII world.

Armed with that basic understanding of the "big picture", one should be able to be smarter with their money.

Answer 10

Aim to put some into your mortgage because you need to reduce debt as quick as possible
You may want to put some into your Superannuation or start an investment portfolio for your kids and allow them to only withdraw it at a certain age ie: 25 - 30 (whenever you feel that would be mature enough to handle money)
You may want to also put some in long term investments ie: 7yrs is average to make returns on your money