Financial advice- investing

amother

Orange

Thu, Jul 19 2018, 8:00 pm

If I currently have $1000 in savings, and want to get the most for.my money, what are my best options?
( I want to start saving for long-term goals, weddings etc. In years from now)
Do mutual funds let you invest that little? Is a cd a better choice? Savings bond?
I know so little about saving/investing and my husband even less but I do know I can do better than the tiny percentage we have been earning till now ..
Thanks for any advice.

amother

Copper

Thu, Jul 19 2018, 9:11 pm

Amazon stock. Netflix used to be good, but they stopped getting as many new subscriptions as they used to. Apple used to be good, but now they are slowing down in growth. Google used to be good, but its growth is also slowing down.

Remember, when you buy a mutual fund, maybe three stocks are good and 100 are bad. By law, the fund manager has to invest in 100 stocks. If you would research every stock in a fund you would feel stupid for investing in it. So if you do your homework you can come out ahead with individual stocks as opposed to a fund.

Also, if google is doing well (it's not) then it doesn't mean that yahoo is doing well. It doesn't always pay to buy sector funds because only some will be good.

Every week from now on, take 5 minutes to type in "Amazon stock price" and "Amazon stock news" into google. Try to speak to people who see if any other stocks are doing well.

Netflix is expected to make headway into India. Right now its growth is slowing, but when it starts selling subscriptions in India then maybe we will buy it.

amother

Cerulean

Thu, Jul 19 2018, 9:13 pm

amother wrote:

There is risk in all investing.

You definitely can put it in mutual funds. EFTs are popular too - and have a lower fee structure.

https://www.wealthsimple.com/e...../etfs

Sending your here for a description of what ETFs are. I have no experience/connection with wealthsimple - though I'm thinking about putting some money with them

Amarante

Thu, Jul 19 2018, 10:25 pm

What you invest in really depends on what your total assets are.

If you only have $1000 in total assets, you don't want to put it in any kind of stock since you need to have liquid emergency funds. Stocks are a good investment for the medium or long term but since they can fluctuate, you don't want to be in a position where you are forced to sell a stock because you need the cash.

Once you have enough liquid assets for emergencies, you can begin investing. To park your cash short ter - then m, US Treasury Bonds, CD's don't offer great returns but you are not trying to grow that money quickly - you are parking it for emergency.

Once you have emergency savings, you can start investing in stuff that is not as liquid. Although mutual funds can be sold quickly, they fluctuate so again, they are great for the long term but not good for emergency savings. As others have posted, for small investors, you are best buying a mutual fund that is an Index Fund - that is, it generally follows the market. Studies show that almost no individual investor outperforms the market. Index funds also generally have lower management fees and are lower cost to buy in - these are hidden fees that actually impact the long term net return of a mutual fund.

With all due respect, buying individual stocks for most people is not a wise strategy. Maybe if you have a large portfolio and are investing a relatively small percentage of your assets. Or if you truly have knowledge of a certain industry - and not illegal insider information :-) then perhaps. But for the ordinary relatively unsophisticated investor, individual stocks make no sense.

amother

Copper

Fri, Jul 20 2018, 12:18 am

amother wrote:

Are you aware of the cost of 1 amazon share?

When you use Etrade (which I recommend), you pay $7 per trade. There is no rule that you have to buy any specific amount. If you want to buy half a share of a stock, you can.

For all those women who feel that individual stocks is too risky, I just want to tell you that we know three people personally who just invest in stocks and don't work. At all. One person sold his business and put all the money into google. When Google dropped from $600 to $300 a share, he didn't panic. He kept the money in Google until it went back up.

I know a second person who invested in only Home Depot only for 20 years. He is living off his investments now.

We have a neighbor who invests in just the "Big 3", Amazon, Google and Apple. (Interestingly enough, my dh's friends each have their own definition of the "Big 3", so you have to use your own judgment. He is a multi-millionaire.

Anyway, you can invest in just half a stock. Amazon is the only stock I would recommend right now. That could change.

amother

Slategray

Fri, Jul 20 2018, 3:02 am

amother wrote:

Mutual funds can be great. I agree with not investing in individual stocks Igbo you don’t know the market... real estate is always the best investment, though has to be done right. If you check out fundrise.com they promise 8-11% return. Again this is for long term investments... wishing you hatzlacha and financial success

Nobody can guarantee returns. Yes, over the long run stocks and real estate tend to appreciate, but there are no guarantees. Stay far far away from anyone who promises results.

amother

Ruby

Fri, Jul 20 2018, 5:59 am

amother wrote:

This isTERRIBLE advice
Do not invest in 1 stock if you only have $1000 to invest
Be WAY more conservative.

amother

Seafoam

Fri, Jul 20 2018, 10:55 am

We use a financial advisor. We don't pay him anything - but he gets a percentage of the fees when we invest.

For each child we put in a set amount in a conservative Mutual Fund each month using direct deposit. The idea for doing it monthly rather then once a year is that you buy sometimes when high and sometimes when low and hopefully will even out. Direct deposit is also nice because you don't have a choice it just happens. My 12 year old has a nice amount already - and we may stop soon for him becuase we have a few kids and it is getting harder to save for so many. But at this point hopefully when he is 20 it will be enough for a chasuna, yeshiva in Israel and some support.

401K - DH is self-employed so has setup his own account with direct deposit. I put aways my maximum at work and they match me 6% which is amazing free money. It grows slowly.

We try to save for emergencies or expenses in the future but I find that harder. We have bought a few investment properties - but honestly I would not recommend it to everyone - it ties up money - lots of unexpected expenses - vacancies - etc. Dh is able to manage them on his own because it is along his line of work - but I'm not sure the headache is worth it.

We live way below our salaries in order to save in this manner. Without doing this I don't see how we would be able to make it in a few years - our salaries aren't going to go up THAT much.

A word of warning regarding investing in a single stock - I inhered a large amount of Lucent stocks probably 20 years ago - worth over $60,000. They are probably worth $30 today. No one saw that one coming. And because of the way it was given to me I wasn't even really able to claim a loss on my taxes.

amother

Cerulean

Fri, Jul 20 2018, 11:00 am

amother wrote:

Etrade lets you purchase half a share of Amazon stock? Interesting. Are you sure?

amother

Chocolate

Sun, Aug 26 2018, 8:25 pm

amother wrote:

So nice. Just curious what amount u put away each month- we manage to put aside a few hundreds but not sure it’s worthwhile to invest yet. Our income will hopefully go up but would love to get started on some small investments.

amother

Cerulean

Sun, Aug 26 2018, 9:54 pm

amother wrote:

Why not ‘worthwhile’?

Same return on investment regardless of how much you invest.

It will either do better(yay!) or worse (no...) than sitting around earning you interest.

Unless there is some specific stock (like amazon) that you may want but don’t have enough to purchase 1 share.

amother

Blonde

Sun, Aug 26 2018, 9:54 pm

amother wrote:

1. You can't buy a half share of any stock.

2. It's incredibly shortsighted to pick a few stocks that have surged and talk about how people have made millions off them. What about the stocks that have collapsed in the last 10 years?
If someone has 100,000 to invest today, tell me which stocks will double in the next 2 years so they can double their money. Hindsight is 20/20. We all know Amazon and Google were great choices 10 years ago. That's irrelevant today. Please tell me a few stocks that will double in the next few years.

amother

Lavender

Mon, Aug 27 2018, 12:23 am

I don't know anything about investing or stocks but we put money into our life insurance that we will be able to pull out in a few years for way more. We also have plans for our kids that we put into monthly. I have it set up that hopefully if we can continue to make the payment all thru the years then by the time each of them are 20 they will have 30k. I can either use that or give to them that's up to me.

bassarah

Mon, Aug 27 2018, 12:41 am

amother wrote:

Good for you!! But it should be noted that many financial advisors say that from a purely investment perspective, (whole) life insurance is not the best investment product. As a combination of insurance/investment it can be a compelling option for some higher income people as a part of a diverse portfolio.
But for some one just starting out with a small investment and little to put away each month, it may be a better option to invest in low cost ETF’s and index funds.
One of the advantages of whole life insurance is that it ends up being a forced savings plan. While with the other options you need the resolve and discipline to take some of your monthly income and invest every single month. Even $50 a month on a consistent basis, can add up to a significant amount over the years when compounded with even conservative returns.
And OP as other have already said, DO NOT attempt to outsmart the market and invest in individual stocks. No matter how “hot” they seem or how many “tips” you got from well meaning people. Leave that stuff for the pros and for people that don’t mind losing money.

amother

Lilac

Fri, May 10 2019, 7:20 am

Please have an emergency fund of 6 months before starting to invest. Put this is something liquid and safe (saving account etc). Then, invest in a vanguard index fund. It has low fees so you won't be wasting money paying fees. Do not invest in a few stocks. You want to diversify which an index fund will do. https://www.cnbc.com/2018/01/0......html