Investing and investments

[Mazmaz]

So, I have about 10-15k sitting around in a shitty savings bank account and it really bothers me that I'm not doing anything useful with the money. I've been wanting to get into investments, but don't know anything about that world or what to look into.

Does BG have any suggestions/tips/etc. on what to do? Should I go to my bank with this stuff? If I do what do I ask and what do I look out for? Is it something I can do on my own? Any resources you would recommend?

I'm in Canada if it makes any difference.

[Ragns]

You should have no problems creating an account with your bank online. I suggest you start with a Tax-Free Savings Account (TFSA) since you're in Canada.

Oh yeah and read a lot. Investopedia is a good site to get started and you could have fun with these investment simulators to start with.

[Thoronas]

If you're Canadian you should be using one of those Tax Free Savings Accounts. The purpose of the account isn't to give you a shitty interest rate but to allow you to invest all the money in the account and have all the income generated by your investments be tax free.

Read the second half of this post to get some good guidelines to starting your investments. http://www.greaterfool.ca/2011/11/11/no-fail/

[Kuya]

Is solanis still banned?

[Mazmaz]

I should probably mention that I'm not really working or anything (at least not for another 1.5 years till I finish school), so this isn't like one of those "make payments into an account every month" kinda things. I just have like 15k that I wanna do something with to make more money. Is that too shortsighted lol

Is solanis still banned?

lol that was the first thing that crossed my mind too.

[guartz]

http://www.ingdirect.ca/en/save-inve...gic/index.html

[Elesirdur]

Any investment that you will see a "quick" return on will be inherently risky. Long-term investments that make regular payments (dividend stocks, coupon bonds, etc.) are much less risky, but probably aren't the 'bang for your buck' you are looking for. All the big 5 Canadian banks have investment houses you can get started with, but try out whatever investment house is attached to your regular bank. They should have client reps that give you an idea of what services they offer, and how they can manage your funds (for a fee of course).

If you want my advice, put 5k into a TFSA and jam the rest into a RRSP. If you haven't already purchased a home, you can get the one-time free withdrawl from your RRSP account to make a down payment. Saving for your retirement now sounds pretty lame, but the earlier you start the less money you'll have to put in during your prime earning years (or the more money you can put in, if you want to look at it that way). Now, since you're a student you probably don't need the extra tax credits from RRSP contributions, but it's still a good option. I'm nearly 30 and don't have a nickel in any retirement or saving funds (been in school, crappy jobs, school again now for something useful [Economics]) and it kills me to think about how much money I'll have to be putting into retirement savings once I'm in my earning years. Getting a head start on that is always a good idea, but it won't put you in a fancy house or send you to Europe right now, only after you're done working

Another idea would be to take some cash and put it in a monthly- or semi-annually compounded GIC/CD that would come to maturity around when you finish school. Should get better rates than a savings account, and hopefully you would come ahead on earnings vs. fees. Again, nothing amazing, but you'll get closer to not losing on annual core inflation lol. And if you're carrying student loans or a line of credit, use that GIC to pay off the loans once they start coming due.

[vagus]

How big is your student loan or is someone paying for it? If it's covered, then def. put into a TFSA and build interest. If you're really keen on investing in something, buy a property in the US (Orlando, Las Vegas, Detroit) for 20-30K US and rent it out. Slum Lord ftw.

[RKenshin]

As far as stocks go:

Unless you really know what you're doing, or can invest it on a longer-term scale (at least a year, ideally 2-5+), I wouldn't recommend going into anything stock-market related.

Otherwise, if you do end up going through a fair amount of reading/research and feel comfortable in giving it a shot (and you have the time), here's some of the basics/stereotypical investing advice:

1. Develop a set of rules to follow on buying/selling. Emotional/hunch/random buying and selling are easy mistakes to make and often will lose you money. For those just starting with investments, you should have some basic rules before you start, and of course you can add upon/amend them as you gain more knowledge/experience over time. Or, you can simply research the rules other people follow and copy/paste, but typically I think you're best with making your own.
   
2. Follow those rules, strictly.
   
3. Don't invest any money that would devastate you if you lost it all; at the very least not initially. If you invest smart/conservatively, you very rarely will ever be at realistic risk of losing everything you have but you can certainly lose a large amount if not most of it.
   
4. Diversify; having all your investments in one company, one industry, and often even in one market is always more risky than investing across different ones.
   
5. Mind the commission charges. While investing $100 at a time may make you feel safer, in most cases you're just throwing away money. A typical commission charge is $8 for each transaction, meaning that you'd have to make at least 16% interest on that $100 [i]just to break even[i]. Which, of course, is not very common/easy to do.
   
6. Don't 'invest it and forget it.' By investing you should be taking a sort of personal oath to yourself to (until you cash out) keep up to date on stock market news and particularly anything involving the industries and companies you hold investments with.
   
7. Avoid penny stocks. Short of having a lot of knowledge/experience, in large part you should either stay completely away from penny stocks or never invest any significant amounts of money (and in this case, definitely be prepared to potentially lose everything you invest).

If it matters, I personally invest through Fidelity. I went to a business college that required finance/account/business courses so I know a decent amount on this topic to start, but I also have been involved in the stock market for a little over a year and currently have ~20k invested as well.

[miokomioko]

A friend invested a while back in Hertz because it was down some absurd amount and there's was no reason to believe such a large car rental company was going to go anywhere, so he dumped a lot of money into it. He made a few million and now spends most of his time flying this around. Fucker.

It's all about investing in low-risk.

[Mazmaz]

How big is your student loan or is someone paying for it?

Oh man lol. At this rate it's gonna be like 50k when I graduate, so I was gonna use this money to make a lump sum payment after I graduated and my interest free period finished so that I end up paying less money overall, but I don't know what the opportunity cost of doing that would be. I figured I can't (or at least shouldn't) rely on my parents to cover like $400+ payments each month.

[RKenshin]

Oh man lol. At this rate it's gonna be like 50k when I graduate, so I was gonna use this money to make a lump sum payment after I graduated and my interest free period finished so that I end up paying less money overall, but I don't know what the opportunity cost of doing that would be. I figured I can't (or at least shouldn't) rely on my parents to cover like $400+ payments each month.

In that case, I'd recommend just paying off the loans as you go.

Unless you can average returns on your investments that are higher than your student loan interest rates, you're simply losing money. Especially if your loan debt is much higher than your investment capital.

No typical CD, savings account, bond, or any other kind of unmanaged investment will guarantee returns higher than (or even close to) your borrower interest rates. So short of consistently earning a great interest on personal stock investments (which is not easy/guaranteed), you're just losing money by not applying that money towards your debt.

[Mazmaz]

Ok, so that gives me 2-2.5 years of investment with this money. What's the best options for a 2 year investment?

[guartz]

If you are good with electronics, I recommend using your money to buy broken computers and refurbishing them. I know quite a few people who payed through college doing that.

[Elesirdur]

Oh yeah, something else I wanted to mention since RKenshin talked about business/finance courses.

If you meet with fund managers or whoever at a bank, try and find out what kind of certifications they have. If they're older and only have a CSC (Canadian Securities Course) certificate that's fine, as their field experience and additional banking/market certifications probably have them well covered. If, however, they are young - as in less than 30 or 35 - see if they have their CFA (Certified Financial Accountant) designation. I've got some classmates who are doing their CFA Level I at the end of their Economics undergrad, and it's really considered the gold standard in finance and banking certifications these days. Of course, part of investing is just being lucky but personally I would much rather see an investor who is well educated and has good certifications if they're still relatively young.

[Elesirdur]

Ok, so that gives me 2-2.5 years of investment with this money. What's the best options for a 2 year investment?

Probably a CD or GIC that will maximize your interest rates. As RKenshin said, since you're investment capital is less than the principal owing on your student loans/lines of credit, and it's unlikely you'll get a rate better than your loan interest, something to make a little money on your savings now with the plan to pay off your debts after graduation seems like a good plan to me. Instead of making a lump sum you could set aside those funds for the monthly payments to give yourself some breathing room before while you (hopefully) find stable work with a predictable income. Then a lump-sum payment would be good to reduce the future value cost of interest down the line.

One last thing, if your student loans are government backed, do not turn them into a consolidated loan - especially if you think you'll be doing further schooling. Once those loans are taken on by someone else, you really get much less ability to negotiate and take advantage of loan deferment programs and the like. Also, many of the provincial governments (and the feds too I believe) have programs where they pay off your student loans if you work for them after graduation - but only government student debt, not private lines of credit or any other form of loan.

[Skyylya]

Invest in me, i'll give you 10% over 30 months.

[aurik]

^ what Ruke said. If you're working on interest free for the moment, I'd say put that in a TFSA and either just buy the TSX index, or just get a GIC with the money if you are extremely risk adverse and want to guarantee your capital. But once you are being charged interest on student loans, you'll want to pay off interest-accruing debts before investing.

[Richybear]

Bre-X
Enron

Live on a park bench

[Richybear]

Edit: doubled