Your Questions About Investing Money

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Charles asks…

How can I effectively invest money and make a profit of it?

how can I effectively invest money and make a profit of it?thank you very much for your comments and suggestions.

Justin answers:

There is no safe way to invest money and make a large profit. Investing comes down to weighing your tolerance for risk — the more risk you can take, the better chance you have of making more money. So it basically comes down to how much money you have, how much you can afford to lose if things go wrong, and how long you have to invest it. Another thing to consider is if you have any other money invested; if so, you probably want to diversify and pick something unrelated. If you already own stocks, for instance, you should buy different types of stocks, or real estate, or bonds, or commodities…

I’m going to guess that you have a relatively small amount of money to invest, say $10,000, that you would be upset if you lost more than, say, $2,000 in a given year, but that you’re not going to need to get at the money quickly. If these sound roughly like your circumstances, I’d suggest putting $4,000 in an FDIC-insured 1-year CD and using the remaining $6,000 to buy a mutual fund or ETF that tracks the S&P 500 index. (Be careful when picking mutual funds — look at the percentage fees they take out to manage the funds, and any brokerage charges you pay to buy them. These can seriously eat into your profits and deepen your losses.)

For most investments — anything riskier than a bank account — you are going to have to work with a brokerage firm, and your transactions will be handled by someone who, by law, is licensed to advise you about various aspects of investing. Talk to your stockbroker and don’t be afraid to ask him lots of questions if you don’t understand something. (But don’t think of him as your friend — he works for his employer, not you, and sometimes your incentives don’t match. Don’t make any decisions that you don’t fully understand just because he said they’d be a good idea.)

If you earned the money you’re investing (as opposed to e.g. Receiving it as a present), and you want to invest for college or for your retirement, there are special types of accounts you can use for those purposes which give you a break on taxes. Taxes are an important consideration — if you make a 7% return and pay 33% in taxes, you’re really making less than 5%. At 7%, your money doubles in 10 years. At 5%, it takes 15 years. Perhaps these numbers don’t sound so big, so make sure to stop and think about how long 5 years is.

James asks…

How can I learn how to invest money in stocks?

I am turning 18 pretty soon and would not only like to be able to know how to invest money in stocks, but to also learn how to invest my money in general. Are there any good websites, books, CDs, ect that anyone could recommend for myself to get a leg up?

Any advice would be helpful also

Thanks!

Justin answers:

I just wish I had asked this question when I was 18! You hit the nail on the head when you ask “how to invest my money in general”. When you have an informed view on that you’ll know whether to invest in stocks and if so, how.

I wholeheartedly recommend a book by Tim Hale, “Smarter Investing”. When you have read it and applied the principles to your own situation, you will feel much more confident about what to do with your money, and how to preserve and grow its value over time (there are no surefire quick wins). You will also know how to save many times its cost – the financial services industry is a machine for transferring investors’ money into the pockets of advisers, brokers and managers, and you need to know how they do it.

By the way, this is not a disguised advert – I have no connection with any vendor or the author of the book. Don’t take my word for it – read the reviews.

Mark asks…

Trying to figure out how to invest money for my sons future?

I am trying to figure out the best way to invest money for my sons future. He is ten month old right now. I don’t know much about investing money so any information could help.

Justin answers:

I can suggest following things from my experience.

1) 529 good option for college education
2) UGMA or UTMA

You can obtain tons of information by searching on above fields. They have tax advantages depending upon your financial condition. Please remember, during financial aid calculation, kids name money taken into consideration. It is 35%.

Paul asks…

What is the best way for me to invest money for short term profits?

I have a 403b but I would like a somewhat safe way to invest money and get a return before retirement.Should I do stocks, bonds, CD’s? Where is the best place to obtain these?

Justin answers:

If you don’t have the time or inclination to monitor your stocks carefully, go with mutual funds and the rest. It’s important to diversify, especially in this economy. I’d recommend that you keep a significant percentage in cash (Schwab for example will give you ~4% on cash). Kiplinger is a trusted source and often has issues that pertain to specific kinds of investment, such as safe investing before retirement.

Steven asks…

What is the best way to invest money- 100k$, long terms from 5-7 years?

What is the best way to invest money– from 100k$ to 250k$, long terms from 5-7 years
And what’s the proximately profit yearly
thank you
I need to invest with the best investment fund
I have my own businesses, I don’t have time to bay & sell shears I looking for best fund to invest my money long term

Justin answers:

Identify yourself as what type of investor are you. If you fall under aggressive category, you want to invest 80% in stocks and 20$ in bonds/CD/money market funds.
Invest in index funds 1/3 starting from Dow30, S&P500 Index, Russell 2000 and International (Morgan Stanley) Index funds. You will cover the entire stock market and won’t regret it. If someone tells you to buy Google or Apple, think twice. They are good stocks but also have very high Price to Earning ratio. You should expect somewhere in the range of 5-10% return per year.

Joseph asks…

Is there anything on the internet where you can invest money?

Im looking for something when you invest money and you get something like %20 of what you invested each month?

Justin answers:

There’s no tooth fairy, no santa claus & no 20% a month. Anyone who promises you 20% a month is planning to run off with your money.

George asks…

How can I learn how to invest money in stocks?

I am turning 18 pretty soon and would not only like to be able to know how to invest money in stocks, but to also learn how to invest my money in general. Are there any good websites, books, CDs, ect that anyone could recommend for myself to get a leg up?

Any advice would be helpful also

Thanks!

Justin answers:

I would suggest “The Intelligent Investor” by Benjamin Graham. This is used as a college text book in courses on security analysis. He also wrote another text book on the same subject with a different approach with a man whose name was Dodd. I would also suggest that you read the weekly newspaper, Barrons or the daily Wall Street Journal. They are available at the public library for free. You might also wish to study Value Line Services in the reference section of your public library. This is updated weekly. Oh, by the way, I believe that according to Federal law, you will not be able to trade until you are 21.

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