I'm 24 and interested in investing. What is the best way to invest in your mid 20's?

Answer 1

First contribute as much as possible to your 401K. Between the tax benefits and the market strength right now, it is a win-win situation. I suggest 8-10% of your pay. You won't miss it too much and when you turn 65 you will probably have 500K waiting for you.

Second, try investing in the stock market on your own. Sign up with one of the on-line companies...scottrade, e-trade...etc. Do some homework on your own maybe on Yahoo finance, but look for stocks that have strong growth and sales numbers.
May I suggest 3 stocks-- Siliconware (SPIL) a microchip manufacturer over in Taiwan--up 35% YTD and still growing. Quantas services (PWR)--they build company infrastructures (computers, electronics and other technologies) up 40% YTD since last March.
Lastly, I came across a penny stock I picked up a week ago called Modern Energy (MODR.PK). This is a very small stock with lots of room to grow! They are up 100% from last week! They deal with bio-fuels and gasses which is the way of the future. Grab this one quickly.

Also, look for a bank that will give you great rates on checking and savings accounts. You should be making at least 2% on checking and 4% on savings. Check out citibank.com. They have a deal where you can get 4.65% on a savings account with no minimum balance and you get a $50 bonus after 90 days!

Keep a balanced portfolio. Don't put all your eggs in one basket. A little in 401K, a little in stocks and a little in CD's or just a savings account. 35 years from now, you will be sitting on over a million bucks, ready to retire and live the good life.
Good luck and happy investing!

Answer 2

If you have a retirement plan at work start there first. A 401k, 403b, Roth 401k, etc.... Especially, if they match. Fund your retirement account up to the match at least because that essentially doubles your money. You can't get that kind of return on any investment. Then max out a Roth IRA. If you still have income left over then finish funding the 401k. If you do this early in life you will learn ot live on the remainder and have millions when you retire with little effort. This is assuming that you have no credit card bills, car payments or other debts. You need to take care of those before investing anyway.
Now, if your retirement is taken care of I would invest in mutual funds with 5-10 year history of 10-12% gains. That's where I would put the bulk of my funds. I'm planning for retirement and have some individual stocks I like to play with. Note individual stocks hold the highest risk.

Answer 3

If I were you I would go to a company called Vanguard which has the lowest expenses on their mutual funds than the other institutions. (they are the only fund company that has no board of directors or local offices all over the usa ) so the profits go back to the people who invest which results in lower expenses for the investors. Put some of that money into mutual funds their and use the Roth IRA's -you can both put in $4,000 each in 2007. What ever you do place them in the Roth for the best tax situation upon withdrawal. ( all savings you make plus any interest is not taxed and you do not have to take any out at 70 years old like you do with regular IRA's. You do have to pay taxes on those deposits of $4,000 placing in the Roth IRA.

Answer 4

I started saving money at age 21 and bought CDs at the time until I was about 31...then I invested in aggressive growth mutual funds and dabbled in stocks. Now, at age 41 I am mostly invested in those same mutual funds and a lot more personal stock picks with some cash on the sidelines. Looking back 20 years, I wish I would have been aggressive from the get go.......At your age be aggressive but not careless. Good luck

Answer 5

Your 20s are fun because you're young enough to ride out market volatility and be adventurous. This is the time to show risk. If you don't follow the market closely enough to invest in individual stocks, invest in indexes, which are combined groups of stocks. For example, if you invest 25% each in small-cap (small business stocks), large cap (large business stocks), international, and real estates indexes, you will have a finger in virtually all segments of the market. (You'll probably want to play around with a formula - that's just an example.)

Also, if your employer matches funds, max out your 401k as much as they will match - it's free money. Don't invest only in retirement, because if you plan on retiring wealthy, you'll pay significant taxes on the money.

Pay off all your debt - no credit. Don't ever finance anything that loses value (like a car). Save up to invest in real estate.

READ, READ, READ. There are great resources out there. For a great starter book, try "Rich Dad, Poor Dad". And the number one lesson...don't listen to poor people who offer financial advice - they obviously don't know what they're talking about!

Answer 6

You can buy a mutual fund. These funds pool many people's money and then go out and buy a bunch of stocks, so all your eggs are not in one basket. Note that past performance is no guarantee of future results. There are thousands of mutual funds. Choose a fund with a good track record, one that seems to be well diversified (in other words, don't invest in mutual funds that invest only in one sector or geographic region). Choose a fund that has a reasonably low expense ratio (1.5% max) and no front-end load (a commission that comes right off the top: many funds don't have these). Companies to check out include Vanguard, Janus, American Century, and Fidelity.

You could also invest in stocks directly through Ameritrade or another discount broker, but you would need to know how to research stocks to buy.

If your company has a 401K plan, enroll in it and contribute as much as you can. 401K contributions are tax deductible, and many companies match up to a certain point (i.e., free money). Do the 401K thing before you invest in mutual funds outside of the 401K. Most 401K plans allow you to select from a menu of different mutual funds.

If you have outstanding credit card balances, and they are accruing 18% interest per year, pay these off before you invest. You are unlikely to make 18% returns in the market but you'll be saving 18% if you pay off your credit cards (the trick: don't run them back up again).

Answer 7

You have received a wide variety of answers. Allow me to add my 2 cents worth. Mutual funds and index funds offer the best way to obtain a broad diversity of investments with a small beginning amount. Equity mutual funds and index funds offer the best long term return potential for a person in their 20s. You can figure, based on historic returns, about 10% annually on average. Actually, your return will vary greatly based on the funds you pick. It is best to select various funds with different investment styles, for example large cap, small cap, mid cap, foreign stock funds, etc.

If you do you investing within a Roth IRA account, those returns are tax free.

You do need to do a little investment research before investing. Begin with "Investing for Dummies" It will give you a good general background that you can then build upon.

Answer 8

In your mid 20's you can afford to be a bit agressive, but you should look to buy 'value' investments, stocks which are trading at a discount compared to the companies value. If you need help identifying these, try economicinvest.com to obtain some great information that will grow your investments. That is how investors like Graham and Buffett made their money.

Answer 9

You are 24. I am also 24.

Don't buy CDs. You are so young that buying fixed income investments is, while not a bad idea, not going to provide anywhere close to the returns that you can gain from stocks. Start out with a decent Exchange Traded Fund (ETF) such as SPY which indexes itself to the S&P 500 or other ETFs that are focused in industries/markets taht you are interested in.

Once you have started to get more information, you can start to move into the purchase of individual stocks more easily.

Answer 10

BEFORE you start investing, do a lot of reading. There are a lot o f web sites, and some good books you can educate your self with. My first thought for any new investor is to consider a solid mutual fund as a base. Add a set amount to it every month, never touch it, and you will be so far ahead of the game it will make you laugh! You can go into 'risk' a little later, but please get that foundation started, you will never regret it.