I'm a young professional wanting to know what to invest in?

Question

I'm 24, an engineer for a large semiconductor corporation. I earn about 70k a year, I own a house, and a car (both of which I am still paying). I am interested in real estate and was thinking of purchasing another property and leasing it out to supplement my income.

Another possibility is that I should invest in stocks. I am already involved through the company I work for, but I hardly manage it. Like I have corporate stock and a 401k, but i heard from my friend that I should get into Roth iras and other accounts like that.

Should I got to a financial advisor? Are these questions that a financial advisor would know? Like I understand that it's my money and that I shouldn't let anyone sway me to put my money where i don't want to put it and it's ultimately up to me how and where my money gets spent, but I would like to know the feasibility and the risk analysis of these ideas.

Ultimately, my goal is get supplemental income at the end of the money. Can someone help me out?

Answer 1

I think you should talk to a financial adviser because you may want to get a diverse portfolio. You need a mutual fund and stocks are good but very risky. Xom mobile is mine and also want to ask companies about the dividend reinvestment plan for long term goals.

Answer 2

If you have a 401k, you cannot put money in a Roth or Traditional IRA.

You can speak to a financial advisor but educate yourself first.

How you invest depends on your long term goals and on your risk tolerance. As a small investor, you should not be investing in individual stocks. Put money in a ETF (exchange traded fund) or a mutual fund. You get more diversification and usually better returns with less risk.

Real estate can be a fine investment, but generally takes more time than people expect. It also is very illiquid. It can take months/years to sell. Also, the fees are quite high to buy and sell.

If you have extra money, increase your contribution to your 401k.

It sounds like you are ahead of the game, if you are 24 and saving.

Answer 3

You should definitely talk to a financial planner. Since you already have a 401(k), appropriateness of Roth IRA may be questionable. But ultimately it will depend on numbers, so go see a financial planner (be sure to pick a fee-only planner).

This said, here's a few ideas to consider:

1. Reduce your exposure to your employer's stock. Your income depends on your employer, so don't make your dependence on your employer worse by making your retirement savings depend on it as well.

2. Forget real estate for the time being. Given the current levels of prices, rents, and interest rates, you can do better with bonds.

3. Diversify. Given your age, it is appropriate to not only have a substantial allocation to stocks, but invest a large part of this allocation outside the U.S.

Answer 4

I'll give you an answer that no one else will. As an employee of the company, you have a certain amount of control over what happens. Perhaps not a great deal now, but as you grow in your career, your impact on the company will also grow. As that happens, I'd suggest pushing money into the stock of your company, especially as you attain a clearer outlook as to the company's future.

My reason for this is that when you invest in a mutual fund, stock, bonds, etc... you are putting your money at the mercy of the company's management. You have no control over that. As you move up and do well, you will (hopefully) gain greater control over what the company does and where it is going. Why not invest in something you have some control over? It is this entrepreneurial mindset that pushes many people to become small-business owners. Own a piece of your own destiny!

Answer 5

Investments come in different forms. About real estate, think it over first if your income would fit the property you'll be acquiring. If the return of investment would satisfy you. Of course the location and the type of structure it has will be a major factor (that goes along with the target market to whom you'll be leasing the said property.)

As of stocks, if you are worried of managing them, try mutual funds. It is a hit in the market right now. It offers more returns than putting your money at the bank though more risk is involved of course. Read more about them in the internet to guide you through.

Answer 6

A financial planner would be beneficial to you, however, do not sign up for their financial products because they are paid to push those products on customers that visit them, so they can get commissions.

If you want to invest for income a positively geared real estate investment property would be great, also income stocks or stocks of well established companies with high dividend yields.

I would suggest and recommend that self education would be the best way for you to determine your best possible investment strategies. I'd recommend that you start by reading the following books, that have also helped me in the past:

1) Rich Dad, Poor dad
2) Rich dad's guide to investing by Robert Kiyosaki
3) Intelligent Investor by Benjamin Graham

Answer 7

an ira has tax benefits and you should always diversify to lower your overall risk. remeber that there is a trade off between risk and return. when you take on more risk you expect a higher return. index funds that mimic indexes like the s&p 500 are a great way to make a return that is equal to the market return. check out sharebuilder.com. a financial adviser would be able to help you but they cost money which takes away from your overall return.