With about $5,000 to invest, should I go with stocks, real estate, or foreign currency.And how do I start?

Answer 1

You should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too risky. Most folks have a dificult time buying a properly balanced portfoilio of stocks on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. However, you currently don't have enough to make a down payment on a house.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

Sources:

http://www.vanguard.com/VGApp/hnw/planningeducation
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetallocation.htm
http://www.diehards.org/readsites.htm
http://finance.yahoo.com/education/begin_investing
http://finance.yahoo.com/funds/basics

Asset Allocation Calculators
(Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval
http://www.ifa.com/SurveyNET/index.aspx

Web forum: http://www.diehards.org/
(Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)


529 plans: http://www.savingforcollege.com

Answer 2

First answer is good. Land is more than you have, and buying on credit defeat the purpose unless you want to wait 10-20 years.
Stocks may be your safer approach at first and invest in well known companies. Buy low sell high!!! But, you need to learn!
Forex is good too, but, you really, really need to learn. This like day trading, many people may buy and 5 minutes later sell. It can eat you lunch if you not know what you doing!!! But, it is fun and if you not get greedy you can pick up some money everyday. Forex is world wide. So, the market is open 24/6 I say 6, because it start about Sunday @ 5 p.m. and go to Friday at 5 p.m. It's time, not ours. Depending on how a person do this. I am awake @ 1-2 a.m. ready for Europe to start trading (Depends on what happen as far as news) and stay until about 10 a.m. after America started it's trading.
If you can not make Stocks or Forex work, then the CD mentioned may be your best investment or may try a Mutual Fund.

I have this. Remember to start with stocks. Forex can kill you. The link is Oanda and you can play the Game. They give you play money to learn. BUT!!!! Do what I say! First just buy and sell to lose the large balance and get the Game account down to what you will really start with in real money. $300-500 is all you need until you learn. If, you can not get your money up with the Game then you will not do it in real.
http://fxgame.oanda.com/

Answer 3

Your best option is to go with stocks. Learn about stocks and the stock market first. When you have gained egough knowledge, open a brokerage account. Find one good company that you like that pays a good dividend. Every time you get the dividendd use them to buy more of the companies stock. Also, you will need to add as much money as you can each month to your brokerage account and use that money to purchase stock. Over the long term this strategy will serve you well.

Answer 4

I would first get educated on the the risks and rewards of each type of investment.the big brokerage houses have classes just call the and ask when. If it was me a small about like 5000.00 is probably better invested in the stock market,(and since you know nothing right know about investing) Invest in a mutual fund.

Answer 5

that's not much money at all these days. as mentioned above not enough to think about real estate. the other two have a high risk factor. go to bank and buy a CD. keep adding more any chance you have. then look at tax-free municipals when you get a bit more. then look at real estate. good luck.

Answer 6

I would contact an investment broker to learn the basics. Then I would invest in a mutual fund. Why? Instant diversification, professional management, low cost too.

Answer 7

Amount says you are young. Put it in a growth mutual fund run by a reputable company and forget about it. I put $1000 in a real loser of a fund with Fidelity for my son when he was born, they admitted it was bad, closed the fund and transferred the money to another growth fund in their stable. My son is 23 and he now has over $20K, thank to realistic Fidelity fund management. I now have my IRA with them. Like Peter Lynch says, "Just give me good growth stocks..."

Answer 8

What kind of real state can you buy for $5000?
In UK it would not be enough for a garden shed in a council allotment.

Answer 9

if this is your only one
do a cd or tax free bonds for now.
let it grow before you take any risk

Answer 10

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