Investing Advice for a Noob
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Investing Advice for a Noob
Posted by foreverLSU on 2/1 at 9:51 am
Hello wise friends of the Money Talk Board-

I have about $8k in mutual funds right now and it's being managed by Citi. I've decided to open an account with Fidelity and take a more proactive role in my investments.

I have my 401K through work, but I was thinking about putting $2500 of my $8k into a Traditional IRA and investing the rest in stocks. Ideally I'd like to use a chunk of the funds for a down payment on a car in the next 2 years. Any elementary investing advice from the experts out there? Trends in specific stocks worth looking into? Pros/Cons of traditional vs. roth IRA? Thanks yall



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Posted by CoolHand on 2/1 at 9:57 am to foreverLSU
We really need a FAQ for this board.

I highly recommend that you keep the money where it is until you've read a good book on the basics of investing. Preferably one that sways you away from investing in individual stocks. At that point, people here can help with specific questions you may have.



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Posted by OnTheBrink on 2/1 at 10:00 am to foreverLSU
quote:

but I was thinking about putting $2500 of my $8k into a Traditional IRA and investing the rest in stocks. Ideally I'd like to use a chunk of the funds for a down payment on a car in the next 2 years.


So, you would open an IRA only to withdraw 2 years later? And for a car of all things. I would just leave it alone.



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Posted by Fat Bastard on 2/1 at 10:01 am to foreverLSU
quote:

've decided to open an account with Fidelity and take a more proactive role in my investments.


Fabulous!


are those 8k in MF's in a TAXABLE account?

Why not put it all in the IRA? At least over time? Would you not be able to save enough from your job for a down payment on a vehicle? Do you have an emergency fund set up? if so, how much is in it? 1 years worth? 6 months?

individual stocks? for a beginner? i say no,not now, but it is your choice. If you want dividend paying stocks you may be best served starting out putting it in a high dividend mutual fund based on a basket of dividend paying stocks.



LINK



This post was edited on 2/1 at 10:11 am

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Posted by foreverLSU on 2/1 at 10:29 am to OnTheBrink
quote:

So, you would open an IRA only to withdraw 2 years later? And for a car of all things. I would just leave it alone.


Sorry I should have been more specific. I would put the $2500 in an IRA and leave it alone. The other $5500 is what I'd like to invest to put towards a down payment on a car.


ETA: I also won my history class stock market project in high school, so I'm basically a wizard, right?


This post was edited on 2/1 at 10:35 am

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Posted by OnTheBrink on 2/1 at 10:48 am to foreverLSU
Yeah, I kind of agree with Fat Bastard. Save for a down payment for the next two years and leave what you have in there.

As far as getting into the market, best of luck. Not saying that money cannot be made, because it can, but money can also be lost.

One question, why not use the money for the purchase of a vehicle now? That $5,500 you invest could become $4,500 by the time you buy.



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Posted by foreverLSU on 2/1 at 11:04 am to OnTheBrink
quote:

One question, why not use the money for the purchase of a vehicle now? That $5,500 you invest could become $4,500 by the time you buy


I feel like I can get another 2 years out of my car. I have a 2003 Honda and its treated me well. Also, I'm getting married at the end of this year and with that comes saving for a wedding, honeymoon (Europe), etc. I'm trying to space out my major purchases. I have no debt to my name and I want to keep it that way.

So I have this $5500 and ideally that's the amount I'd like to put as a downpayment on a car + the trade in value I get for my Honda (will prob get a car valued around $20K). But I'd like to build on my current $5500 so that when I take out the money for a down payment I still have money to invest.


This post was edited on 2/1 at 11:05 am

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Posted by OnTheBrink on 2/1 at 11:14 am to foreverLSU
I see. And I understand, I still drive a 2001 Honda Accord.

What kind of rate of return are you getting out of your Citi account? If you are anywhere around 10% I would just keep it there.



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Posted by Teddy Ruxpin on 2/1 at 11:50 am to OnTheBrink
quote:

I see. And I understand, I still drive a 2001 Honda Accord.


I drive a 1996 Honda Civic. I've had since 2002, my senior year of high school.

My brother is wondering if I want to upgrade and buy his 2001 Civic.

Ya, I'm fancy.



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Posted by OnTheBrink on 2/1 at 11:55 am to Teddy Ruxpin


You sound like me. I am going to drive that bitch til the wheels fall off. I got mine in 2005 and have had it paid off for 4 years.



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Posted by LSUTOM07 on 2/1 at 12:23 pm to CoolHand
quote:

Preferably one that sways you away from investing in individual stocks.


Why do you say that?



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Posted by Vols&Shaft83 on 2/1 at 1:25 pm to LSUTOM07
Individual stocks can cost you big time if you don't know what you're doing. Investing in funds is less risky and isthe best place for bbeginners. Before investing in single stocks, take some time to learn about balance sheets, valuations, moving averages, P/E ratios, etc. Trust me, you'll be glad you did.


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Posted by LSUTOM07 on 2/1 at 2:03 pm to Vols&Shaft83
quote:

Before investing in single stocks, take some time to learn about balance sheets, valuations, moving averages, P/E ratios, etc.


That's what I was thinking, but I wasn't sure if he was suggesting that the OP not even consider reading up on the fundamentals and to steer clear of stocks.



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Posted by acgeaux129 on 2/1 at 2:12 pm to foreverLSU
Stay away from conventional mutual funds IMO. Research ETFs and index funds for lower expense ratios... fund managers statistically don't beat the market in the long run when accounting for expenses. If you are starting an IRA, look into Roth if you are young, then move to Traditional later due to tax diversification. I wouldn't make an IRA with the intent to withdraw in a couple years. As far as asset allocation goes, general rule of thumb is to do 100-your age for the percentage you should have in equity as opposed to bonds. 120 instead of 100 if you want to be aggressive.

Also, if you haven't opened with Fidelity yet, definitely consider Vanguard because they seem to be cheapest and have best reputation.



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Posted by Janky on 2/1 at 2:19 pm to acgeaux129
quote:

fund managers statistically don't beat the market in the long run


What is considered the long run?



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Posted by acgeaux129 on 2/1 at 2:23 pm to foreverLSU
quote:

Trends in specific stocks worth looking into?


For long-term horizon such as retirement, I'm personally focusing on exposure to large-cap stocks in energy, agriculture, and healthcare.

XOM, CVX, DD, AGU, HCA

I'm not a professional and this is not professional advice, etc. etc.



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Posted by Teddy Ruxpin on 2/1 at 3:15 pm to Janky
quote:

What is considered the long run?


I think most of the numbers went as far back as the 60s but I'm not sure if the 2007 to now time frame has been included yet.



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Posted by Janky on 2/1 at 3:18 pm to Teddy Ruxpin
quote:

I think most of the numbers went as far back as the 60s but I'm not sure if the 2007 to now time frame has been included yet.


What I am want to know is what do you guys consider long-term? 5 years, 10, 20....? I hear people say that the indexes win over the long haul but never define how long is a "long haul"?



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Posted by Teddy Ruxpin on 2/1 at 3:23 pm to Janky
quote:

What I am want to know is what do you guys consider long-term? 5 years, 10, 20....? I hear people say that the indexes win over the long haul but never define how long is a "long haul"?


Fair enough. I've seen where if you took all the mutual funds for a year, they don't as a group beat an index after costs.

I've also seen them take the "big winner" mutual funds, and compare their performance year to year. These funds usually come back to earth or lose out the very next year or years.

There have only been a handful of funds that consistently kept beating the indexes and were run by the type of guys who write books.

Basically, the idea is, you could beat the index, but its pot luck since there are so many funds and their management changes, "luck" changes, etc.

So to answer your question, according to the books, they've sliced it up on almost every time scale and came up with the same thing.

The average investor just doesn't have the knowledge to beat the market. Not enough time to invest in the skills and knowledge required.


This post was edited on 2/1 at 3:25 pm

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Posted by Janky on 2/1 at 3:28 pm to Teddy Ruxpin
So, what you are saying is the term "long haul" doesn't really exist as a measure of time? That makes it difficult to believe that indexes win over the "long haul" if no one can define it. Oh well, carry on.....


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