Looking for advice, where to put money into
12-13-2006, 03:11 PM
#1
Thread Starter
Join Date: Nov 2003
Location: Cleveland
Posts: 4,985
Likes: 0
Received 0 Likes
on
0 Posts
Looking for advice, where to put money into
Hey all.
Im looking for advice about where to put the rest of my college fund after college is done, I will be graduating in Dec 07. Instead of blowing it on a car & other frivilous things right now I am looking to invest it somewhere. Im looking for other peoples opinions / experiences. The cash is currently in a mutual fund. What would you reccomend for my situation, leave it in the mutual fund, put it in an IRA? 401k? What would you do if you were in my situation? If you could go back rethink your investments what advice would you have?
P.S I'm trying to be on the conservative side with the investment.
-Mark
Im looking for advice about where to put the rest of my college fund after college is done, I will be graduating in Dec 07. Instead of blowing it on a car & other frivilous things right now I am looking to invest it somewhere. Im looking for other peoples opinions / experiences. The cash is currently in a mutual fund. What would you reccomend for my situation, leave it in the mutual fund, put it in an IRA? 401k? What would you do if you were in my situation? If you could go back rethink your investments what advice would you have?
P.S I'm trying to be on the conservative side with the investment.
-Mark
12-13-2006, 04:15 PM
#2
Join Date: Aug 2005
Location: Northern Virginia
Posts: 167,324
Likes: 0
Received 0 Likes
on
0 Posts
Depending on how the mutual fund is invested, you could always leave it there. I would look at how the fund has been performing while its been in there and diversify into other funds suited to your goals.
Do you have any college loans to pay off? I assume that since you have remaining funds in a college fund, tuition debt wouldn't be an issue.
Do you have any college loans to pay off? I assume that since you have remaining funds in a college fund, tuition debt wouldn't be an issue.
12-13-2006, 04:42 PM
#4
Administrator
$50,000 is a HUGE amount of money! Do you know how long it takes to save $50K after taxes out of your pay check? You've got a 10 year head start, don't bemoan your investment cash, you're got more than most twice your age.
You should learn how to invest it and invest it in high growth stocks. That's what I'd do if I was in my early twenties with 50K to invest. You are at your highest risk tolerance level. As you get older your tolerance for risk will reduce. Face it. If you invested the money and lost it all by the time you retire you'd hardly feel it. You have lots of time to make it back.
You won't lose it all if you learn about the market first. I've lost 10s of thousands by being stupid in the early years. Learn now how to manage and invest the money and it will pay for itself throughout your lifetime and you'll retire filthy rich and have some nice toys along the way.
One thing to try is to take 10% of it ($5000) and invest it in stocks and learn how to make money. After about a year you will know how to beat the market through practice and you can take the rest 0and put it to work. I wouldn't risk it all on a learning experience and I wouldn't hand it to someone else to manage instead of learning how to make money yourself. You can double your money every three years without taking extreme risks. Make 25-30% a year and you've taken your $50,000 and turned it into $1,500,000 before your 40th birthday, more than 10 million by 50.
That is a big deal!
You should learn how to invest it and invest it in high growth stocks. That's what I'd do if I was in my early twenties with 50K to invest. You are at your highest risk tolerance level. As you get older your tolerance for risk will reduce. Face it. If you invested the money and lost it all by the time you retire you'd hardly feel it. You have lots of time to make it back.
You won't lose it all if you learn about the market first. I've lost 10s of thousands by being stupid in the early years. Learn now how to manage and invest the money and it will pay for itself throughout your lifetime and you'll retire filthy rich and have some nice toys along the way.
One thing to try is to take 10% of it ($5000) and invest it in stocks and learn how to make money. After about a year you will know how to beat the market through practice and you can take the rest 0and put it to work. I wouldn't risk it all on a learning experience and I wouldn't hand it to someone else to manage instead of learning how to make money yourself. You can double your money every three years without taking extreme risks. Make 25-30% a year and you've taken your $50,000 and turned it into $1,500,000 before your 40th birthday, more than 10 million by 50.
That is a big deal!
12-13-2006, 07:45 PM
#6
I hope you parents have a financial planner that has a proven record to help you. Mutual funds are a great start. Stock market I have never done so I don't know about that.
I just got off the phone with one of my sisters and we were having this same conversation. If your work has a 401K available, CONTRIBUTE! If they have any match, even if it's small, contribute at minimum that percent. Company match is FREE MONEY, providing your choice of funds do not loose money.
Remeber the Rule of 72. At 12% interest money will double every 6 years. 72 divided by the interest rate earned equals the number of years required to double in value. So an investment making 8% will double every 9 years.
Start saving while you are young no matter how small the $ amount. I should have started 10 years sooner than I did.
I tried to post this in the other similar thread but they locked it in the middle of my reply. I guess we should not give financial advice here. So, here is my financial advice: NEVER TAKE FINANCIAL ADVICE FROM BROKE PEOPLE!! Famous words from Dave Ramsey.
I just got off the phone with one of my sisters and we were having this same conversation. If your work has a 401K available, CONTRIBUTE! If they have any match, even if it's small, contribute at minimum that percent. Company match is FREE MONEY, providing your choice of funds do not loose money.
Remeber the Rule of 72. At 12% interest money will double every 6 years. 72 divided by the interest rate earned equals the number of years required to double in value. So an investment making 8% will double every 9 years.
Start saving while you are young no matter how small the $ amount. I should have started 10 years sooner than I did.
I tried to post this in the other similar thread but they locked it in the middle of my reply. I guess we should not give financial advice here. So, here is my financial advice: NEVER TAKE FINANCIAL ADVICE FROM BROKE PEOPLE!! Famous words from Dave Ramsey.
12-13-2006, 08:22 PM
#7
Moderator
Join Date: Jul 2001
Location: Yorba Linda, CA
Posts: 6,592
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by PGA95355,Dec 13 2006, 08:44 PM
What mutual fund is it in? And all $50,000? if so you might want to get it a little more diversified.
Still awaiting a ticker symbol.
Trending Topics
12-14-2006, 06:39 AM
#8
Administrator
Mutual funds are portfolios of stocks, bonds and other assets and each has different goals (read the prospectus!!). Some are fully diversified in themselves so it's not that crazy to put all of your money in one of them so long as the fund represents the sort of diversified portfolio you might build for yourself.
Buying multiple funds can be tricky because they can have significant overlap in the sectors and companies they hold. For example a tech heavy fund may own a position in IBM and a diversified fund may also have a significant position in IBM. These funds will trade up or down together based on the fortunes of IBM and therefore is a poor choice for your portfolio.
You need to be careful to understand what the funds invest in and what their holdings are at any one time to make sure you don't end up in a place you don't want to be or even know you are.
IMO you are better off to find a single fund which meets your financial goals than to try and juggle multiple funds. magician has a tool which evaluates funds and looks for this sort of overlap and if you plan to hold multiple funds you might want to consider using it or something similar.
Buying multiple funds can be tricky because they can have significant overlap in the sectors and companies they hold. For example a tech heavy fund may own a position in IBM and a diversified fund may also have a significant position in IBM. These funds will trade up or down together based on the fortunes of IBM and therefore is a poor choice for your portfolio.
You need to be careful to understand what the funds invest in and what their holdings are at any one time to make sure you don't end up in a place you don't want to be or even know you are.
IMO you are better off to find a single fund which meets your financial goals than to try and juggle multiple funds. magician has a tool which evaluates funds and looks for this sort of overlap and if you plan to hold multiple funds you might want to consider using it or something similar.
12-14-2006, 08:30 AM
#9
Registered User
Join Date: Sep 2004
Posts: 90
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by cthree,Dec 14 2006, 07:39 AM
Buying multiple funds can be tricky because they can have significant overlap in the sectors and companies they hold.
12-14-2006, 08:53 AM
#10
Moderator
Join Date: Jul 2001
Location: Yorba Linda, CA
Posts: 6,592
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by cmflex84,Dec 14 2006, 09:30 AM
What about 2 mutual funds that are negatively correlated? Would this be a smart investment even if some investments in the portfolio overlap a little bit?
Correlation's a tough idea for many people to understand. If the correlation of returns between two funds is negative, it doesn't mean that one is down when the other is up; they can both be up (always) together. To take an extreme example, if the monthly returns of two funds both alternate between +1% and +2% but are out-of-phase (A is up 1% when B is up 2% and conversely), their correlation of returns will be -1. A 50% A, 50% B portfolio would be an incredible investment: 19.5% annual return with zero volatility.