Investment advice

This is probably not the best place to seek such advice...but it is important to be aware of the possibilities of investment, even at your age (the earlier you begin the better).

You should talk to a competent financial advisor.

 

Investing part time as a source of income is a complete myth.

People who make a living off day trading do so at great risk, and with the same time and attention a full time job requires. And usually for every 1 success story there's 100 poor bastards who didn't do so well.

0 risk investments usually top out at a return rate of about 2-3% per year.
Low risk investments at about 3-5% per year.

So by the time you get to making trades with potential yields high enough to serve as a paycheque, you're talking about extremely risky investments that require exhaustive research, and still carry great risk even after spending hours researching a single trade.

Because if it was really actually possible, with any level of consistency to take a fixed income, such as that of a college student, and with a part time commitment turn it into a reliable income source in the stock market the streets would be empty at rush hour because everybody would be retired at the age of 18. It only happens in movies.

 

Well, it's good that he's thinking about this sort of thing, while he does need a competent adviser, which he should get from clients who have had good experiences with that adviser.

First, you don't invest unless you have a surplus to invest. You have to cover your basic living expenses and some savings. If you plan on investing that chunk of your money, that would be akin to gambling. Don't do it.

Let's face it. The days of CDs which payed respectable interest are gone, at least for a while. Right now, there are no safe(r) ways to invest and get a good return. I could go on, but I won't. Read my first 2 paragraphs and read the above 2 posts.

 

The best investment you can really make is buying a house and paying it down as quickly as possible.

Only once you are debt free, and can put a roof over your head without rent or mortgage should you even consider investing.

---------- Post added 7th Aug 2013 at 12:08 PM ----------

Here's some fun math for you:

Quarter million dollar house.

Now let's say the housing inflation in your area is 5%.

You're 22 years old, so ideally you're going to retire in about 43 years.

So in 43 years, that house will cost 1.05^43*250,000=$2,037,416.73

That is assuming the inflation on housing never changes. But by the time you retire the world population is going to be about 10 billion people.

And the high housing inflation is driven by low mortgage rates. So any move the government would do to fix inflation on housing would involve making houses more expensive through higher mortgage rates.

So it makes more sense to secure long term assets early on, before inflation renders your money worthless.

When you retire, 1 million dollars will be a joke.

---------- Post added 7th Aug 2013 at 12:19 PM ----------

My advice would be always look for the money you don't see. People usually forget to add that money into the equation, but if I were to have had 10,000 dollars, back in 1913, and put it under a rock until today, when I lift up that rock, it would have the equivalent buying power to 389 dollars in 1913. (the 100 year average inflation rate is 3.3%). I might as well have just spent 389 dollars back in 1913, it would have thrown a hell of a party, and then burned the other 9611 dollars.

At least I would have enjoyed it.

In 1913, it would have bought me a dozen brand new Ford Model Ts. Now it would get me a 5 year old Ford Focus.

 

Yes, for the last two years I've been investing all of my savings in a mutual fund. Half of it is sitting in a regular account that gets taxed on the interest and can be withdrawn at any time. The other half is in a Roth IRA which is much more long-term.

Basically a Roth IRA it's a retirement account that has a huge perk - you don't pay any taxes on the interest you earn from it (so long as you do not withdraw the money until retirement). Everyone can contribute up to $5500 a year to their Roth IRA (unless they make too much money, like more than $100k a year). One other requirement for the Roth is that the money you put in it must be earned income from that year.

In two years I've turned that original $2800 into $3800 investing in Fidelity Contrafund (FCNTX). That's a huge mutual fund that invests in large companies like Google, Apple, Berkshire Hathaway, etc. It was suggested to me by my mom's uncle who has been managing people's retirement accounts for the last couple decades. He said he highly recommends it for any young person who can put some money away that they won't need to touch anytime soon.

---------- Post added 7th Aug 2013 at 05:23 PM ----------

I seem to have exceeded the time limit for editing a post, but I just wanted to point out one more thing. I highly doubt the market will make the same kind of gains in the near future. That fund is near its all-time high right now, as is the Dow Jones and all the major indexes. So I think you should be really cautious and you should talk to a financial expert before making any decisions on this.