Investing a Small Amount

Off Topic
21

[quote]Aleksandr wrote:
joburnet is (half) right, the return you would get on a couple of thousand right now is meaningless when compared to future employment earnings. If by some miracle, you can get a 5% return, we’re talking about a $250 return in a year from a 5k investment.

But the question is, why do you need the money within the next year? If you can find a way to do without it, invest it in the stock market! Everyone is retardedly scared of the market right now, and every other day, some really top-notch stocks are trading at ridiculously low prices. On any one of these, you could easily expect earnings increases of 15-20% for the foreseeable future. At 15% a year, the same $5,000 gives is worth over $20,000 in 10 years, and over $40,000 in 15 years.

By the time you are 65, at an average compounding rate of 15%/year, it would be worth 3.5 million. You are potentially sitting on your retirement, right now. So I ask again, do you REALLY need the money within the next year, or can you do without it?[/quote]

You sound like a broker.

You also could lose a lot. That’s something to think about when investing in stocks.

Think about an IRA, or a Mutual Fund.

22

[quote]mtjmtj wrote:
If you need the money soon as you say, in the next 6-12 months, you will make almost nothing unless you choose an investment that has very high risk. You�??re on the right track though, getting started at 18 is awesome, and I wish I had started then instead of at 26, had some money when I was 20 and bought a big truck instead, I got lots of enjoyment out of that truck but now it�??s gone and well you know.

I would recommend the stock market for the long term and Ben Grahams Intelligent Investor as a must read for any beginner. Start there and keep learning everyday, also once you do put some money in the market, you can open a Scottrade account for $500, you�??ll pay attention to what your $ is doing and try to figure out why it�??s going up or down and that is the best education you can get.
[/quote]

again, wtf?

Investments go up and down because people are irrational. A large part of irrationality is unpredictable, and you aren’t going to find a pattern. You suggested he read “The Intelligent Investor”, but then you suggest he do the opposite of “intelligent investing”.

“Common Stocks, Uncommon Profits” is also a good read.

23

[quote]Aleksandr wrote:
Corporate earnings are also affected by inflation, leaving behind a fairly constant real return. On the other hand, bonds, CDs and GICs are not adjusted for inflation, and can result in negative real returns. If you are concerned with inflation, NOT buying stocks is retarded.[/quote]

I was joking.

24

[quote]Gkhan wrote:
Aleksandr wrote:
joburnet is (half) right, the return you would get on a couple of thousand right now is meaningless when compared to future employment earnings. If by some miracle, you can get a 5% return, we’re talking about a $250 return in a year from a 5k investment.

But the question is, why do you need the money within the next year? If you can find a way to do without it, invest it in the stock market! Everyone is retardedly scared of the market right now, and every other day, some really top-notch stocks are trading at ridiculously low prices. On any one of these, you could easily expect earnings increases of 15-20% for the foreseeable future. At 15% a year, the same $5,000 gives is worth over $20,000 in 10 years, and over $40,000 in 15 years.

By the time you are 65, at an average compounding rate of 15%/year, it would be worth 3.5 million. You are potentially sitting on your retirement, right now. So I ask again, do you REALLY need the money within the next year, or can you do without it?

You sound like a broker.

You also could lose a lot. That’s something to think about when investing in stocks.

Think about an IRA, or a Mutual Fund.
[/quote]

When have you ever heard a broker suggest that someone should make an investment and then walk away from it for a few decades?

And he can lose a lot of money? Let’s see…

Upside: $3.5 million. Downside: $5000. Tough call.

There is no reason why an intelligent person would ever invest in the average mutual fund. It just doesn’t make sense, any way you slice it. Hint: there’s a conflict of interest for fund managers. Their pay is based on the size of the fund, but finding attractive investments becomes much harder as the amount of capital you have to invest increases.

25

[quote]Aleksandr wrote:
joburnet is (half) right, the return you would get on a couple of thousand right now is meaningless when compared to future employment earnings. If by some miracle, you can get a 5% return, we’re talking about a $250 return in a year from a 5k investment.

But the question is, why do you need the money within the next year? If you can find a way to do without it, invest it in the stock market! Everyone is retardedly scared of the market right now, and every other day, some really top-notch stocks are trading at ridiculously low prices. On any one of these, you could easily expect earnings increases of 15-20% for the foreseeable future. At 15% a year, the same $5,000 gives is worth over $20,000 in 10 years, and over $40,000 in 15 years.

By the time you are 65, at an average compounding rate of 15%/year, it would be worth 3.5 million. You are potentially sitting on your retirement, right now. So I ask again, do you REALLY need the money within the next year, or can you do without it?[/quote]

Yeah, if you’re in for the long-term (more than 10 years), then buy a mutual fund or ETF that focuses on the top U.S. companies. The market may go down another 10% tomorrow - or it may go up. But if you’re in it for the long haul, it will go up a lot, and the valuations on blue chips are attractive. If you’re really a long-haul guy, put it in a Roth IRA (for retirement).

26

[quote]joburnet wrote:
A money clip maybe? A couple grand isn’t gonna mean anything to you when you get older and start making more money so you may as well spend it now on having fun. I’m not saying blow it ALL on alcohol and drugs, just some. And spend the rest on something you like such as an older Jeep, dirt bike, boat, ect…[/quote]

Best advice, by far.

Get into biking, or something fun like that. Fuck investing at 18… it’s essentially worthless because you need a lot more than a couple grand to make any real money.

And oh yeh, if you put it in a 5% CD, you will actually still be losing value, as inflation nowadays is likely above that 5%.

Dude, spend it. Have fun. No one ever regrets having fun. Remember that.

27

[quote]lixy wrote:
I’m impressed. The mere fact that you’re thinking about it makes you wiser than 99% of the population. Although the market’s currently so bad that it’s hardly worth trying given the amount of money and time you have. Again, kudos to you mate![/quote]

How do you define “wise”?

Just don’t give up having fun so you can be “wise”.

Being a millionaire at 60 years old means jack shit when you regret not enjoying yourself at 20.

28

[quote]KiloSprinter wrote:
joburnet wrote:
A money clip maybe? A couple grand isn’t gonna mean anything to you when you get older and start making more money so you may as well spend it now on having fun. I’m not saying blow it ALL on alcohol and drugs, just some. And spend the rest on something you like such as an older Jeep, dirt bike, boat, ect…

Best advice, by far.

Get into biking, or something fun like that. Fuck investing at 18… it’s essentially worthless because you need a lot more than a couple grand to make any real money.

And oh yeh, if you put it in a 5% CD, you will actually still be losing value, as inflation nowadays is likely above that 5%.

Dude, spend it. Have fun. No one ever regrets having fun. Remember that.[/quote]

Retarded advice. $5000 invested at 15% CAGR is 3.5 million in 47 years (you invest it at 18 and leave it until 65), but only 1.3 million in 40 years (you invest at 25 and leave it until 65).

The thing to remember is that this future value is based on NO FURTHER CONTRIBUTIONS.

And how do you figure that inflation is above 5% these days? I buy concerns about future inflation, but at the moment? I’d like to know where you’re getting your numbers.

29

[quote]Aleksandr wrote:
lixy wrote:
I’m impressed. The mere fact that you’re thinking about it makes you wiser than 99% of the population. Although the market’s currently so bad that it’s hardly worth trying given the amount of money and time you have. Again, kudos to you mate!

How in the name if all that is wholesome does what you just said make any sense?

The market being “bad” is what makes it an attractive time to invest. There are companies that have had good double-digit earnings growth every year for the last 15 years trading at P/Es well below their yearly average for any one of those years. If he spends a few weeks learning, makes some good choices, and walks away, he may be set.[/quote]

This is some sage advice. A down market is a great opportunity for an intelligent investor. In short, the prices are low, so you can get more shares for your money. The market will eventually go back up - it always does - and the price of your shares will go up with it.

30

[quote]Aleksandr wrote:
KiloSprinter wrote:
joburnet wrote:
A money clip maybe? A couple grand isn’t gonna mean anything to you when you get older and start making more money so you may as well spend it now on having fun. I’m not saying blow it ALL on alcohol and drugs, just some. And spend the rest on something you like such as an older Jeep, dirt bike, boat, ect…

Best advice, by far.

Get into biking, or something fun like that. Fuck investing at 18… it’s essentially worthless because you need a lot more than a couple grand to make any real money.

And oh yeh, if you put it in a 5% CD, you will actually still be losing value, as inflation nowadays is likely above that 5%.

Dude, spend it. Have fun. No one ever regrets having fun. Remember that.

Retarded advice. $5000 invested at 15% CAGR is 3.5 million in 47 years (you invest it at 18 and leave it until 65), but only 1.3 million in 40 years (you invest at 25 and leave it until 65).

The thing to remember is that this future value is based on NO FURTHER CONTRIBUTIONS.

And how do you figure that inflation is above 5% these days? I buy concerns about future inflation, but at the moment? I’d like to know where you’re getting your numbers.
[/quote]

Even better advice. If you can afford to put the money in an IRA and leave it for the next 50 years, odds are very good that you will have a big fat stack o’ cash. I know that I wish I would have taken investing in my retirement more seriously when I was younger. Time is your friend here. Take advantage of it and it will pay off in spades in the end.

31

To the OP, an IRA is a type of account. Within the IRA, you can invest in different sorts of things. I’m making the argument that stocks in particular are the way to go.

32

I want to know where you are getting 15%.

33

You might not make much investing it, but I would save it until you have extra money to add to it - it’ll make a nice deposit when you have an initial amount to invest.

You really don’t need to spend it.

And yeah, 15%? You can perhaps find up to 10%, maybe 1% more if you do some diversifying, but 15%?

34

Yeah, I’m really not about to start giving “hot stock tips” on the internet. Not for free, anyway :stuck_out_tongue:

35

[quote]rsg wrote:
You might not make much investing it, but I would save it until you have extra money to add to it - it’ll make a nice deposit when you have an initial amount to invest.

You really don’t need to spend it.

And yeah, 15%? You can perhaps find up to 10%, maybe 1% more if you do some diversifying, but 15%?[/quote]

How in the world is diversifying going to increase your return by 1%?

Diversifying reduces risk. It does NOT increase returns. 15% is a low-end estimate. I can get an extremely low-risk 15%. If Berkshire Hathaway can get over 20% on around $75 Billion worth of common stock (not to mention all the private acquisitions), what makes you think that 15% CAGR is even a challenge when managing less than $100,000 (or $1 million, for that matter?).

36

[quote]Aleksandr wrote:
rsg wrote:
You might not make much investing it, but I would save it until you have extra money to add to it - it’ll make a nice deposit when you have an initial amount to invest.

You really don’t need to spend it.

And yeah, 15%? You can perhaps find up to 10%, maybe 1% more if you do some diversifying, but 15%?

How in the world is diversifying going to increase your return by 1%?

Diversifying reduces risk. It does NOT increase returns. 15% is a low-end estimate. I can get an extremely low-risk 15%. If Berkshire Hathaway can get over 20% on around $75 Billion worth of common stock (not to mention all the private acquisitions), what makes you think that 15% CAGR is even a challenge when managing less than $100,000 (or $1 million, for that matter?).[/quote]

Ignore the way I’ve phrased that.

I’m most likely no where near your level of knowledge when it comes to stocks, so I’m not going to get into this, but I was just trying to say that I could probably get around 10%.

37

pork bellies…

Personally I’d throw it all into oil companies. I have friends that could buy a hummer and fill it up every week for the next 20 years just on their exxon profits from the last 2 years

38

educate yourself a ridiculous ammount, then paper trade with fake currency for 6 months before even THINKING of investing.

This isn’t a bad time to get into the market as many securities are trading at or near lows. I remember around this time last year the market was in another swoon and I septupled my net worth in the space of a week.

39

[quote]AccipiterQ wrote:
pork bellies…

Personally I’d throw it all into oil companies. I have friends that could buy a hummer and fill it up every week for the next 20 years just on their exxon profits from the last 2 years[/quote]

That would be a great idea if you had a time machine. In general, I would avoid chasing after “hot sectors”.

The oil party may continue indefinitely, or prices may stabilize. Both opinions are just speculation. In any case, I might consider oil a hedge investment if I were invested in industries that were strongly influenced by fuel prices. I’m not, though, and I’d prefer to take a less speculative approach. Plus, the next US administration may be less “oil friendly”, and that adds risk.

40

[quote]AccipiterQ wrote:
educate yourself a ridiculous ammount, then paper trade with fake currency for 6 months before even THINKING of investing.

This isn’t a bad time to get into the market as many securities are trading at or near lows. I remember around this time last year the market was in another swoon and I septupled my net worth in the space of a week. [/quote]

For the long-term investor, that would be the least productive and most boring 6 moths ever.