Polarity Posted January 18, 2009 Share Posted January 18, 2009 Quick background, I did I.T. work for a number of years. At most I was making $19/hr and felt it was a decent living. I lucked into a job doing Land and Mineral title work for oil companies. I've been doing it steady for 5 years and even managed to get my wife hired and now we travel together and do it. We just purchased our first home and are going to keep going with our savings. We are both 25 and feel like it's time we got smart about what to do long term with our money. I've considered talking to financial advisors to learn about investment options, but I really wonder if they would tell you the right things, or will they just make off with your money. My wife is pretty set on CDs and things like that, but I have a hard time believing that is the best way to invest (lock of $5k of money for 6 months to make $50). I'm interested in things that are fairly low risk but I do want the money at the end to be worth it. Any tips you guys could give me on things I should look into would be appreciated. I don't mind giving more details about income or savings if it helps with the ideas. -William R (polarity) Quote Link to comment Share on other sites More sharing options...
palosfv3 Posted January 18, 2009 Share Posted January 18, 2009 Who needs financial advise the most ? A guy that has figured out how to make a ?? million or the average guy ? The guy that figured out how to make a couple of million really understands and knows how to use and leverage his money and even if he losses a little he still has the knowledge of how he made the millions. Most of his losses may have minimal affect on his overall being. The average guy who doesn't have the resources that the millionaire has most be very careful about how he invests and manages his monies . A small loss can be catostrophic to him and he may not have resources available to recover. Finding the right financial adviser is critical to either persons long term interests. You are correct . Finding a great financial adviser is difficult . They are out there. Ask the wealthiest people you know who they use and how well they did for them in this trying economic time. Quote Link to comment Share on other sites More sharing options...
psdenno Posted January 18, 2009 Share Posted January 18, 2009 The stock market is still unstable and will be likely to go lower, much lower, before it goes back to levels we've seen in recent years. My advice would be to diversify the money you have by putting it into a variety of investments. CDs can be part of your portfolio. Also consider mutual funds managed by strong established investment firms. After you get a "nest egg" built up and get a little comfortable with the stock market, look at individual stocks in solid companies. Stocks that pay dividends are always nice to hold. With CDs your base investment is relatively secure and you'll end up with more that you started with. Shop around in local banks and on-line for highest rates. With the stock market, don't invest money that you're not willing to lose. If you start with mutual funds, don't plunk all your money in at once to buy shares. Dollar cost average by investing an amount every month - sometimes you'll buy cheap and sometimes high, but in the long run, you'll be ahead of the game as opposed to investing a large sum all at once. Pick up a copy of Money magazine and start to plan and learn about investing. There are tons of good books for beginning investors. Don't forget to work on a college fund if you plan on having kids. I bought my Z in 1971 and started investing in the market in 1972. As they say, "Life is a journey, enjoy the ride". Dennis Quote Link to comment Share on other sites More sharing options...
ZZZeee Posted January 18, 2009 Share Posted January 18, 2009 CD's suck as do gov't bonds. These are only good for those who already have more than they need at or near retirement and don't want or need to invest in high-risk/high-yield markets. I have everything in my 401K going into high-risk investments. Low-risk investments generally don't have the yields necesarry to surpass inflation to promote capital growth. It's been a wild ride for my funds lately but the market will eventually recover. My behind hurts today though... and YMMV. EDIT: My 401K is in the form of a gov't Thrift Savings Plan and I have my investments split evenly between the C (Common stock), S (Small cap), and I (International stock) funds. So yeah... I'm not in full control of my investments but that's probably a good thing these days. Quote Link to comment Share on other sites More sharing options...
mikeatrpi Posted January 18, 2009 Share Posted January 18, 2009 As they said, diversify. If your company has a 401k plan, contribute! Max it out to the government limit - if you can swing it. Quote Link to comment Share on other sites More sharing options...
Polarity Posted January 18, 2009 Author Share Posted January 18, 2009 I am classified as self employed, I pay my own taxes, insurence, etc so unfortunatly no matched 401k or anything like that. Right now we've been putting back between, 4 and 6k per month into savings. Keep in mind my taxes still come out of that at the end of the year, so it's not all my money. It sits in savings and I know we get some type of % but it's so small it's not worth thinking of, if the money is there I would like it to be working for me. I'm more worried about putting my trust in someone and getting scammed than I am about losing the money. I understand anything I invest in could end up costing me. I'll look for some beginner investment books, any that you would suggest would be appreciated, otherwise I'll just see what Amazon has to offer. Thanks again -William R Quote Link to comment Share on other sites More sharing options...
ZZZeee Posted January 18, 2009 Share Posted January 18, 2009 Cramer Quote Link to comment Share on other sites More sharing options...
Michael Posted January 18, 2009 Share Posted January 18, 2009 ZZZeee-my TSP is also split evenly across C/S/I funds, and the losses since October 2007 are knocking on 50%. I'm approaching the midpoint of my career, and should have been more conservative with my investments. It would definitely have been wiser to stay in CDs or the equivalent of CDs. If you're just starting out, your portfolio will grow much more from additional savings than from return on your investment. Consider: if you have saved $5K starting last year, and earn 10% return, you'll make $500 this year. But you will have saved an additional $5K this year. Now suppose that you've been doing this for 20 years. If you save that same $5K this year, that's great, but it is a relatively small contribution, compared to that mythical 10% rate of return on what you've already saved from prior years. So the paradox is that when you are younger and can most afford to take risks, the benefit of a high return isn't that much. But when you are older and can afford less risk taking, the opportunity cost of not taking risks is higher! Quote Link to comment Share on other sites More sharing options...
JMortensen Posted January 18, 2009 Share Posted January 18, 2009 As for books, I'd suggest "The Four Pillars of Investing" by Bernstein. Read it and you'll see that bubbles are not a new phenomenon, Money magazine is not the place to get your investing info, a 401k is not necessarily the best place to put your money, and now is the time to buy. Quote Link to comment Share on other sites More sharing options...
GeeZ Posted January 19, 2009 Share Posted January 19, 2009 Depends on your tax bracket. If you self-employed and get a 1099 at the end of yr instead of a W-2. You can have a 401K but why? (You can't do a personal 401K) The cost is high and the 5500 form at the end of yr is quite frankly a bitch not to mention also expensive.(Few people can do this form themselves) Check with some one like Vanguard and find the best option for you. There Simplified IRA and others that allow you and your wife to put away alot of money. Last time I ck'ed I think the max was like 15K for each of you. Or, you and the wife form a company (probably an LLC) and as long as it is just you and the wife you can really do a great retirement. I envy you because you have a great situation as long as it last. ie: The Obama folks would like everyone to be dependent on the government because they are smarter than you and therefore know better. Also, Forbes sells a book about investing and again people like Vanguard also have informative broshures. Also, do not wait until the end of the yr to pay your taxes. You'll hate yourself when you are hit with penalty and interest. 1040ES is the form you need to fill out with an estimate. Make sure that you are a contractor and not an employee. It will make all the difference. I am the administrator for the company 401K. Quote Link to comment Share on other sites More sharing options...
Dragonfly Posted January 19, 2009 Share Posted January 19, 2009 I am classified as self employed, I pay my own taxes, insurence, etc so unfortunatly no matched 401k or anything like that. Right now we've been putting back between, 4 and 6k per month into savings. Keep in mind my taxes still come out of that at the end of the year, so it's not all my money. It sits in savings and I know we get some type of % but it's so small it's not worth thinking of, if the money is there I would like it to be working for me. I'm more worried about putting my trust in someone and getting scammed than I am about losing the money. I understand anything I invest in could end up costing me. I'll look for some beginner investment books, any that you would suggest would be appreciated, otherwise I'll just see what Amazon has to offer. Thanks again -William R 100% personal opinion here but if I were in the situation you have described and my wife was insistent on CD's here is what I would do: Since you know when you are going to have to pay taxes and you can estimate to a reasonable amount how much you will pay in taxes I would take that estimated amount of money for taxes from what is currently in your low interest savings account and put it into the highest yield CD I could find that will come available two to four weeks prior to tax time. When the CD is cashed out use the money to pay your taxes keep the interest earned from the CD and do it all over again. With the money you earn and put into savings on a monthly basis you can take that and divide it into an amount your wife is happy with and invest amount 'A' into stocks, bonds etc. (whatever your risk tolerance and studying allows) and amount 'B' into a CD laddering system. As a side note I usually recommend to people who are able to do so to try and keep at least the equivalent of one months expenses in their checking account and three months expenses in their savings account, the remainder should be put to work earning you more money even if it is only $50. Dragonfly Quote Link to comment Share on other sites More sharing options...
Polarity Posted January 19, 2009 Author Share Posted January 19, 2009 We fall into the 33% bracket unfortunatly and also I do get a 1099 every year. I was unaware that I could setup a personal 401k but from what you're saying it doesn't sound worth it. Also I do pay estimated taxes but thought this year I would try the savings route and pay closer to tax time to see if it made me any money, from the sound of it the penalties and interest are going to completely destroy what little interest I made on it. And also yes, I am definately a contractor. I'll look for the book and thanks for the information. If you come up with any more info please let me know, until then I'll be reading over the books everyone suggested. -William R Depends on your tax bracket. If you self-employed and get a 1099 at the end of yr instead of a W-2. You can have a 401K but why? (You can't do a personal 401K) The cost is high and the 5500 form at the end of yr is quite frankly a bitch not to mention also expensive.(Few people can do this form themselves) Check with some one like Vanguard and find the best option for you. There Simplified IRA and others that allow you and your wife to put away alot of money. Last time I ck'ed I think the max was like 15K for each of you. Or, you and the wife form a company (probably an LLC) and as long as it is just you and the wife you can really do a great retirement. I envy you because you have a great situation as long as it last. ie: The Obama folks would like everyone to be dependent on the government because they are smarter than you and therefore know better. Also, Forbes sells a book about investing and again people like Vanguard also have informative broshures. Also, do not wait until the end of the yr to pay your taxes. You'll hate yourself when you are hit with penalty and interest. 1040ES is the form you need to fill out with an estimate. Make sure that you are a contractor and not an employee. It will make all the difference. I am the administrator for the company 401K. Quote Link to comment Share on other sites More sharing options...
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