what's the best investment strategy for a 20 yr old right now?

Question

I'm just getting my IRA set up and I want to invest. Since I'm young I'm more risk tolerant, however because I'm young I also only have a couple thousand to invest. Generally I'm told that if you have less, you can't be too risky, but if you're my age you can be very aggressive.

What exactly is "being aggressive" Buying and selling more often? Hanging on to a rising stocking in hopes of selling it at it's peak rather than taking profit? using stock option strategies?

I also heard something about buying LEAP call options and using them as a collateral to write off calls, but don't quite understand it, however I understand that ETFs seem to be more stable for using as option spreads.

If anyone has a good site that could explain most of this stuff, or if you could just share a quick point about one of them it would be greatly appreciated..
Thanks

also, I have been working and have no debt so I plan on adding 3000 per year towards my IRA (which I can't take out till i'm 60 anyways), so it won't kill me if I have troubles early on.

also, I have been working and have no debt so I plan on adding 3000 per year towards my IRA (which I can't take out till i'm 60 anyways), so it won't kill me if I have troubles early on.

Answer 1

You have $2000. You have the rest of your life for it to grow. Don't blow it. There are plenty of mutual funds that have initial investments of $2000. Pick one. There are also plenty of closed end funds with no minimum purchase required.

Need suggestions?

PENNX has a rather consistant if not almost stellar long term record. About 13% annual return.

SWZ is a closed end fund that invests in Swiss companies. Also a good choice which will also protect you from the falling dollar.

I hesitate to recommend any aggresive options. Too easy to see your funds evaporate with those.

At a conservative 10% annual return, that $2000 in 40 years will be $90,000. So slow and steady does it.

Answer 2

Take the advice of 2 of the most successful investors of all time, Peter Lynch and Warren Buffet -- Invest in what you know. Save options, LEAPs etc for people who completely understand it and can watch it full time. ...in hopes of selling it at it's peak...very few people can market time well enough to make a "market beating" profit Being aggressive for you should mean invest in equities, common stocks of good companies that have been around for awhile, and small cap companies rather than CDs, bonds, money market funds. If you are not working, not going to school and can watch the market full time, buying and selling individual stocks may be an aggressive strategy for you. But if you are at school/job all day, invest in mutual funds and let the professional managers pick the stocks. If you want index funds, Vanguard has Target Retirement 2050 (VFIFX) fund that invest in indexes from around the world, big and small companies. For managed funds, T. Rowe Price has Retirement funds (fund 2055's symbol is TRRNX) is also world wide diversified, big and small companies, both family's retirement funds will make a good "starter - core" holding for an IRA. Later, with education, more money, you can get into the "wild" non-diversified stuff.

Answer 3

First, let me say I am very impressed by your question. It shows a maturity I seldom see in this format. I am very sure that if you maintain your current thought process, you will be a millionaire by the time you are 40. Here is why....go to dowtheoryletters.com and click on popular articles and one called 'rich man, poor man" and shows the power of compounding interest over time and the importance of saving or investing as early as possible.

Second, if you want to open an IRA, there are many to choose from. All the online brokers have options for you or you can open an IRA with individual mutual funds companies as start. Suggest you look at Excellsior Value and Restructuring...symbol UMBIX as a start. I like these guys because they have a long term track record of outperforming the market and a fund manager who is considered an all star. You can fire up an IRA with as little as $500 and $50 a month for adds. You can look at historical info about this fund on morningstar.com or finance.yahoo.com.

Third, you mentioned LEAP call options. Don't know much about this except when you say call options, it tells me its a variation of the market and investments which new investors should stay clear. It's advanced investing and not for newbies.

Fourth, and most important, growth in your IRA will depend on regular deposits and investing in things that have a history of positive returns over time. Besides UMBIX, look at funds with symbols MXXIX, CAMOX, FBRVX, TAVFX, SSAIX. All stellar funds with all star managers. Good luck.

Answer 4

Honestly, ... try this.
Visit swisscash.net
I am an investor with them and have a US$50K portfolio there. I'm getting paid every month on time as promised and guaranteed. The average returns are 20% per MONTH!
You can recover your initial investment amount within 8 months and then it's profits on the run from there.
Read the details...it's easy to understand.
It's not an MLM...nothing to 'market'. You can just be an investor and reap ur returns which are guaranteed as stipulated.
You can visit my financial site provided by them at www.swisscash.net/sgamk1632202
There are alot of negative blogs and people tagging it as a scam.
I know what has happened. There were reports that SC investors scammed others...but I wonder why the corrected newspaper reports are not being circulated. It was never a SC involvement but some clowns scamming others by encouraging them to invest with some Swiss Union Bank. Anyway, hell with others. So far there has been no complaint from a single SC investor that he/she did not get paid as guaranteed.
By the way, I am in touch with some senior consultants of Swisscash and I must say, they are serious dynamic professionals and I'm confident they will be profitable for at least the next few years.
I started with $1K initially and then after my confidence with them, I have now increased to $50,000.

Being young...start with just $1K and keep doing re-investments. You'll see that within 7 years...the total cash value for ur invesment would have balloned to $1Mil...that's with their guaranteed return and re-investment illustrations.

Best regards...Kaz

Answer 5

You need to get smart because there's a million ways that people/brokers/funds/etc will try to rip you off, even for a mere $2000.
If you must invest right away, do it in the Vanguard S&P 500 Index mutual fund, symbol VFINX.

Then read these books and get educated. These books will explain "being agressive", options, stocks and bonds etc. You should wait to invest until you read these books first:
One Up on Wall Street by Peter Lynch & John Rothchild
The Intelligent Investor by Benjamin Graham & Jason Zweig
Courage to be Rich by Suze Orman

Don't mess with Options until you know what you are doing. Don't listen to Jim Cramer/Mad Money or follow hot tips until you know what you are doing. It will probably take you couple of years for you to barely start to feel like you know what you are doing.... thats ok because you will still be in your early twenties and way ahead of most people.

Also check out the Motley Fool website www.fool.com
www.investopedia.com is also decent.

Answer 6

A 22 year previous could likely favor to make investments aggressively. So, small caps, mid caps, etfs, perhaps checkout some ipos that sound interesting. An older man or woman could likely have began off aggressive yet slowed right down to stocks in large businesses which have reliable books. also large cap mutual funds. issues the position its threat-free. once you're 22, flow aggressive. you are able to get between 9-13 %. Thats an estimate. it will be larger, a lot larger. besides the undeniable fact that it may also be decrease. 9-12 % is a threat-free wager.

Answer 7

Congrats on getting started when you are young. Think long term. I think the biggest issue throughout your life is going to be global warming. The companies that have real solutions to this problem will be the best investment. I have been investing my money in wind energy. Here are the best wind energy stocks:

http://www.top10traders.com/ViewPost.aspx?postID=61

I think natural gas might also be good. My favorite in this area is Chesapeake CHK.

You might want to develop your investing skills by creating a portfolio at 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 read posts on investing from the best traders, as well as share your own investing ideas. There is a charting feature, so you can see how your portfolio performs compared to the S&P 500. Also, you can create your own "group" so that you can see how you are doing compared to your friends.

Here are this month's best traders:

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

Good luck.

Answer 8

Everyone is looking into Stock. Stock is great and I would advise that you do your homework on both stock and real estate. You must first understand what you are wanting to accomplish.

Here is a little something for you and others to think of.

Understand the 90/10 Rule of Money.
"Most people have heard the 80/20 rule that states, 80% of our success comes from 20% of our efforts". A Italian Economist Vilfredo Pareto in 1897 said this and it is known as the Principle of Least Effort. Now this pretains to success in all areas expect money.
Now in this book from Rich Dad Poor Dad, he states the 90/10.
10% percent of people had 90% of the money. Example: The world of movies, 10% of the actors made 90% of the money and the same with sports. The same 90/10 rule applies in the world of investing which is why my advice is to my investors is " Don't be Average".
An article in The Wall Street Journal recently validated this. It stated that 90% of all corporate shares of stock in America are owned by just 10% of the people.

Investing starts with your mind set. If you do it then do it. What is your mind set. How do you want to invest. Why are you investing? What are you going to do with your returns and how will you make your money work for you? If the economy were to fail how will you keep your money working for you? These are some of the questions I ask my investors or people that want to invest. Ask yourself this and answer it to yourself. Know your Mind Set.

You must know business. Your knowledge will enhance your mind set. You don't have to have degree but you must have an understanding. Here is why I say that, two reasons;
1. " Reason number one is because what we ultimately invest in is a business. If you invest in stocks, you are investing in a business. If you buy a piece of real estate, such as an apartment building, that is also a business. If you buy a bond, are also investing in a business. In order to be a good investor, you first need to be good at business."
2. " Reason number two is the best way to invest is to have your business buy your investment for you. "
The worst way to invest is investing as an individual. Here is why I say that. Most people are not rich because they invest as individuals and not as owners of businesses. Most of the 10% who own 90% of the stocks are owners of businesses and invest through their businessess and you can do the same.

The richest people in world do not buy investments, most of the 90/10 investors created their own investments.

Investing means different things to different people. What does it mean to you? " Most people are not investors. Most people are speculators or gamblers. Most investors line in hopes that the market stays up adn live in fear of the market crashing. A true investor makes money regardless if the market is going up or crashing down; they make money regardless if they are winning or losing, and they go both long and short. Th average investor does not know how to do that and that is why most investors are average investors who fall into the 90% that make only 10% of the money".

I'm 26 and I know and work with investors all the time. A lot are younger than myself. The best thing is mind set and knowledge. I hope that this will help you a little. If anything it should make you think and then once you know where your mind set is and what you want to accomplish. Once you know that then you'll come up with a strategy.
I do real estate and loans. I don't invest in stock because my returns are greater and I have Control. The 10 Investor Controls. That's how he makes 90%. Investing isn't risky but being out of control is.
Study and read and know what's out there. "if you want to be rich, just find out what everyone else is doing and do exactly the opposite."

If I can do anything for you it's to refer you to a book or few. The best advice is given from the one who is doing it. Becareful recieving adivce from adivesors. They get paid to advise and more than likely don't practice what they adives you on. Ask your broker or adviesor if they do what they are adivising you on. If they so no then move on. If they say yes ask them to show you their spread sheet or financial statement. They may be a little appauled but they then become more of a mentor. They'll teach you success. Success is a proven record. Learn from it. Don't give your money to someone to put in stock and loose it. They don't know because they don't do it. Give it to someone that does it or do it yourself.
Real Estate you control your money and future. Whatever you find yourself investing in, I wish you the best. Read Rich Dads Guide to Investing. What the rich invest in that the poor and middle class do not. By Robert Kiyosaki.

Answer 9

Ermmm..
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