Investing for dummies

amother

Mon, Sep 02 2019, 11:56 am

I want to start investing some of my money but have no idea how to go about it. I have tried to read some blogs and books but the more I read the more confused I get. Does anyone know anything about investing and what the best way to go about it? How do you choose between mutual funds, stocks, cd's, Roth, etc? What is the best mutual fund to put your money in? (I already have about 10k put in a savings account for emergency funds and now need help deciding how to invest other money.) Any help in the matter would be greatly appreciated.

amother

Mon, Sep 02 2019, 12:21 pm

baby12x wrote:

What are you trying to save for?
Long-term aka retirement
Shorter term?

Clark howard has a pretty basic investing guide you can check out. Clarkhoward.com

Thank you!
Ideally I would want to save for a house as well as do traveling and also save for retirement but I have student loans that I still have to pay back so my understanding is that if you invest some money then you can use the interest to pay back the loans. I am just not sure how to go about it. Do I buy a cd or Roth or a mutual fund (there are so many and I dont really understand the difference) or just invest in the stock market and hope for the best or a combination of a few? How do people figure these things out?

baby12x

Mon, Sep 02 2019, 12:32 pm

You have to decide which of those things you want to do.
If you save for retirement, then you can't touch the money or interest for many years.

Investing is a long process. Many years.
The least risky options are also the less profitable ex CD.
Mutual funds are slightly more risky but more profitable. These are a good, safe bet for beginners. Again, not quick money.

You should be paying down your debt aggressively besides for investing some money.

Really you should be doing all 3: paying debt, putting money into retirement such as 401k or IRA, and putting money in Mutual Funds

cuterpatooter

Mon, Sep 02 2019, 5:05 pm

I'm in similar situation as you. We invested some money in a longish-term CD. My father is involved in the stock market and advised us to invest in a certain stock. It can be a good idea to invest in something, even if it has not so much pay back, because the value of the currency goes down each year, so at least you can sort of protect your savings from that.

It's hard to invest in anything 'very' profitable when you know you'll need the money within five years or so, and you don't have a lot to play with. Elizabeth Arden said that the way to make money is to spend money. It's just hard to weigh risk vs reward sometimes!

This blog is great for frum people!
http://www.geltguide.com/

baby12x

Mon, Sep 02 2019, 5:13 pm

misrael wrote:

Its not a good idea to invest in a single or individual stocks.
The best and easiest way to start investing is with Mutual funds

baby12x

Tue, Sep 03 2019, 11:49 am

misrael wrote:

thank you, ill look into that
Why are individual stocks not a good idea?

You are concentrating all your money on 1 stock. You are putting all your money in one basket. Its very risky unless you have lots of money to lose or a great understanding of specific markets and companies (rare). Very few people are able to do that. And certainly not beginners. better to invest small amounts in many, many markets to balance it out. that is what mutual funds or managed retirement accounts do- they use algorithms etc. To invest in tons of companies and markets so of one fails it doesn't necessarily affect you. They follow the market as a whole so unless the whole market fails, which is less of a risk, then you'll more or less do ok.

Remember, for every person who invested in Amazon and Apple there was someone who invested in Myspace or Enron.

baby12x

Tue, Sep 03 2019, 1:36 pm

misrael wrote:

Thank you. Will think about this.
To the OP, we are thinking to go to a financial planner who can advise us about investments, long term goals and how we can achieve them. Might be a thought for you as well.

Pleasure. A fee based financial planner is a good idea. There are also new robo-advisors which are services online that use only math and algorithms to give you financial advice so if your situation is not too complicated, you can check that out as well.

This has some links that may give you some reading to do:

https://adimesaved.com/setting.....adder

Amarante

Tue, Sep 03 2019, 2:16 pm

Do you really not understand the basic principles of money?

Forget about the intricate issues involved but it is critical that you understand exactly what each form of investing is. Do you know what an IRA is versus a Roth type IRA? Do you understand what an index fund is? Do you understand what diversification is and how your age determines what allocations should be made? These are relatively easy things for even someone who is not a financial expert to understand. Unless you understand these basic things, it is not possible to evaluate the advice of a financial planner.

And if you go to a financial planner, it is critical that it be one that is certified by the Financial Planning industry and is fee based? Again do you understand the difference between a fee based financial planner and one who earns money through commissions? Do you understand why one is better than the other for some things. For starters, there is a difference in both their incentives as well as their fiduciary duty. There is nothing wrong with a stockbroker at all but a stockbroker is not the person who will necessarily provide you with true unbiased financial planning.

I would suggest that you get a very simple book - maybe even Investing For Dummies and learn the very basic stuff involved in personal finances. Then you will know enough to have an intelligent talk with an investment advisor as you can ask questions and truly evaluate his or her advice. You can search for a good investment advisor while you learn the basics of personal finance. It's not even necessary that you meet in person as with the internet and the telephone, you can very easily do everything without face to face meetings. I haven't seen my guy in 20 years in person as the telephone and the internet are way more convenient.

Last edited by Amarante on Tue, Sep 03 2019, 3:11 pm; edited 2 times in total

baby12x

Tue, Sep 03 2019, 2:30 pm

Amarante wrote:

Can you really not understand the basic principles of money?

Forget about the intricate issues involved but it is critical that you understand exactly what each form of investing is. Do you know what an IRA is versus a Roth type IRA? Do you understand what an index fund is? Do you understand what diversification is and how your age determines what allocations should be made? These are relatively easy things for even someone who is not a financial expert to understand. Unless you understand these basic things, it is not possible to evaluate the advice of a financial planner.

And if you go to a financial planner, it is critical that it be one that is certified by the Financial Planning industry and is fee based? Again do you understand the difference between a fee based financial planner and one who earns money through commissions? Do you understand why one is better than the other for some things. For starters, there is a difference in both their incentives as well as their fiduciary duty. There is nothing wrong with a stockbroker at all but a stockbroker is not the person who will necessarily provide you with true unbiased financial planning.

I would suggest that you get a very simple book - maybe even Investing For Dummies and learn the very basic stuff involved in personal finances. Then you will know enough to have an intelligent talk with an investment advisor as you can ask questions and truly evaluate his or her advice. You can search for a good investment banker while you learn the basics of personal finance. It's not even necessary that you meet in person as with the internet and the telephone, you can very easily do everything without face to face meetings. I haven't seen my guy in 20 years in person as the telephone and the internet are way more convenient.

You may not realize it but you're coming across as attacking.

There are many pitfalls to hiring a financial planner but also a lot of pros to hiring a reputable, fee-based planner to help you if you don't understand these things on your own.

It is a good idea to read about what questions to ask a planner, what red flags to look for etc and definitely choose someone with references.

As I mentioned before, there are also robo-advisors to help you if you choose to go that route.

If you do want to educate yourself, there are many, many books, blogs, articles etc that can help you. If I have time I can try to post some links later

Amarante

Tue, Sep 03 2019, 2:35 pm

baby12x wrote:

How am I attacking? I am offering advice based on my own experience.

I always believe that one needs to educate oneself to some degree so one can evaluate professional advice. I do that whenever I hire anyone - doctor, lawyer, financial planner. I don't think it is necessary to be an expert but if one is totally lacking any knowledge, then one is gong on blind faith which at least to me is not a good way to go through life.

It's no different than a doctor. I try to be educated in terms of general stuff and if a doctor tells me I have a specific condition, I would try to learn about the condition so that I could evaluate the advice and ask intelligent questions.

I went through a major financial crossroads a few years ago and did hire a certified financial planner who was fee based. I offered my experience in terms of researching and attempting to find such a person.

Are you attacking the content of my advice - e.g. the advice or are you attacking the style in which I offered my advice?

baby12x

Tue, Sep 03 2019, 2:44 pm

Amarante wrote:

The style. The content was spot on.

This particular sentence: "Can you really not understand the basic principles of money? "

I think that when there is such a lack of financial literacy, especially in the frum world, when it comes across as mocking or condescending to people who may in fact not understand basic concepts, then it turns them away from asking questions- especially the simplest ones. I try, personally, to be very mindful of making sure that people feel comfortable to ask even the most basic questions and about the most simple concepts.

I do think that in a lot of cases a financial planner is a good idea (yes, fee based) as opposed to either doing nothing, investing on a neighbor's recommendation, or many other mistakes that people make.