18, Looking for Advice

[zetta]

I would recommend that you don't start with investing in individual stocks. Starting with only $4000, you could make a few poor choices and lose it all. Instead, I would recommend either a no-load balanced fund or a stock market index fund. I don't have a specific fund to recommend, but others here might.

[jasonl417]

Roth IRA would be good. If you have been reading about them you may have found out that you can take the funds you put in, called your principal, anytime. You can not pull out interest until the account has been set up for 5 years and you are at least 59 1/2.

So you can put in mutual funds that are made up of stocks inside you're Roth. Right now the values are down so it is a perfect time. If you are dealing with $2,500, alot of fund companies have minimums that are $500, so find maybe three domestic large cap funds(butual funds that invest primarily in large companies located in the US) it is believed that these are little safer because we the strongest country in the world, then maybe take the other two $500 and find a couple of international funds that are down. The good thing about mutual funds is that each fund probably has 50-100 stocks, so this helps to off set individual security risk.

You probably do want to accumulate 3-6 months income in a money market for cash reserves. No penalties, it is stable, and you can write checks.

Thanks,

Jason

[disneysteve]

alot of fund companies have minimums that are $500, so find maybe three domestic large cap funds(butual funds that invest primarily in large companies located in the US) it is believed that these are little safer because we the strongest country in the world, then maybe take the other two $500 and find a couple of international funds that are down.

Jason, I have to disagree with some of what you suggested.

1. While some fund companies do offer low minimum investments, they also may impose account maintenance fees on funds with balances below a certain amount, so by spreading the money over 5 funds, you may find yourself paying 5 annual fees. Until the balance is higher, it may make more sense to stick to just 1 or 2 funds.

2. There is no point in selecting 3 funds in the same asset category: domestic large cap. All that would give you is duplication, not diversification. Diversification means investing in different asset classes: large cap growth, large cap value, small cap growth, international, etc. Same goes for picking 2 international funds.

I'd rather see you do just 1 or 2 funds to start. The simplest route with maximum diversification would be a target date retirement fund. That would expose you to a broad range of investments for a small amount of money and minimal fees.

[unstop]

it take time to get rich, dont be crazy think u can get rich fast. make sure ur investment good in return and reduce the risk. too much risk is no good.

[ScrimpAndSave]

Open an ING direct account!

I heart my orange savings.