Coming into money, considering investing, any advice?

[Andarvi]

BG, your one stop for advice on medical ailments, relationship problems, life quandaries, and now the stock market.

Basically, I'm coming into roughly 15k from an annuity that I want to make money off of. My mom has money in a mutual fund and she has lost tons over the years, and considering it is a low risk, long term situation, I definitely do not want to go that route. I was thinking about investing in a medium-high risk market with several thousand dollars in a few different stocks. My girlfriend's father has made a killing in the stock market, its ridiculous. He suggested I put it in overseas markets, either China or India (of course he says China, he's born and raised in HK and is pro-China all the way).

Anybody have any input? Maybe stock of their own? Where do you invest and is it a waste of time to invest in the shit economy or is it a potential opportunity?

[Elvis]

I want to say one word to you. Just one word.

Plastics.

[Kyreth]

Stocks, by their nature are a gamble. It depends- how much return vs. risk do you want?

Given, a simple CD is something like 3 percent interest these days. But near zero risk. You could make a helluva lot more in stocks...but on the other end, you're an amateur in a pro's market. Since you've got family that's doing well at it, invest with a relative expert and keep at least some of it in savings.

Most critical "investment"- kill your debts. Effectively, that IS making you money that otherwise gets sucked into interest payments.

[Shuemue]

Most critical "investment"- kill your debts. Effectively, that IS making you money that otherwise gets sucked into interest payments.

This, totally. In almost every case you'll be paying more interest than you can earn comparatively.

[Andarvi]

Stocks, by their nature are a gamble. It depends- how much return vs. risk do you want?

Given, a simple CD is something like 3 percent interest these days. But near zero risk. You could make a helluva lot more in stocks...but on the other end, you're an amateur in a pro's market. Since you've got family that's doing well at it, invest with a relative expert and keep at least some of it in savings.

Most critical "investment"- kill your debts. Effectively, that IS making you money that otherwise gets sucked into interest payments.

What debts do you mean, like credit card debt and loans and what not? Or debt I would incur while investing?

[Shalyn]

Stocks, by their nature are a gamble. It depends- how much return vs. risk do you want?

Given, a simple CD is something like 3 percent interest these days. But near zero risk. You could make a helluva lot more in stocks...but on the other end, you're an amateur in a pro's market. Since you've got family that's doing well at it, invest with a relative expert and keep at least some of it in savings.

Most critical "investment"- kill your debts. Effectively, that IS making you money that otherwise gets sucked into interest payments.

Going to have to agree here, best to be debt-free, and if you are, invest with one of your girlfriend's family member, they obviously know what they're doing ^_^

[Elesirdur]

Stay the hell away from day trading and currency trading. Both of those are very high risk activities that require a lot of knowledge and experience to properly capitalize on. Hell, even professionals take big risks in these fields.

Day and currency trading schemes are often sold through those bullshit 'get rich quick' seminars at your airport Holiday Inn. It's true that it is possible to make some pretty extraordinary profit from these forms of trading, but it is very, very risky.

With only 15k I'm not sure how much help you can get from an investment professional. Stock brokers often levy heavy transaction and portfolio management fees for small investors, larger clients get "discounts" because of the trading volume a more sizable capital investment, say over $100k, can give them. However, it is really worth speaking to your bank about investment options. Major banks will likely have in-house investment firms that you can work with, and with a good banking history you may get preferential rates or other services quicker that may otherwise require a larger investment.

I definitely agree with the suggestion to pay off your debts asap. Depending on your situation from student debt, car loans, mortgages, etc. you may not be left with much. If you only have a few thousand left I would suggest putting it into a RRSP or 401k, or perhaps starting a RESP for your current or future child/children.

Also to clarify, is this $15 from the annuity a one-time payment or is this a sum you will be receiving on an annual basis for x number of years to come?

[shihei]

Start a house dedicated to cooking and selling crack cocaine. Just ask Freeway Ricky Ross how much phat loot he was making everyday and everyweek.

[Andarvi]

It's a one time payment that I get next week or so. Also, I have no debt that needs to be payed off. The 18k I've got in student loans will be paid for with the money I've got in mutual funds.

[Kyreth]

What debts do you mean, like credit card debt and loans and what not? Or debt I would incur while investing?

Paying off any debts you have now represent the lowest-risk investment you can make- in yourself. Let's put it this way.

Every car loan, credit card, etc. you pay off in advance means you're going to keep the interest payments you'd have had to make on them. Whatever income you make after that, however you do so- you're going to keep.

If it means you're making a larger chunk of a down payment on a home, car, whatever long-term property it be- it's that much smaller a loan needed, and hence that much less interest you're paying essentially for the bank to sit on it ass and collect dollars for doing nothing.

The protection having a decent amount of savings provides cannot be understated. You invest once you have something beyond a good chunk of debt protection, rather than simply tossing money into the market and hoping more of it floats back. Using it to kill interest payments often results in a better "return" in the long run anyway.

[netz]

BG, your one stop for advice on medical ailments, relationship problems, life quandaries, and now the stock market.

Basically, I'm coming into roughly 15k from an annuity that I want to make money off of. My mom has money in a mutual fund and she has lost tons over the years, and considering it is a low risk, long term situation

This of course depends on the fund, but most investment firms have mutual funds designed to be low risk and stable over long periods of time -- economic turmoil/full-on depression aside; those are considered balanced funds. There are also funds designed for maximum growth, and thus maximum risk, and then there's usually something in between, called growth and income. Over what period of time has your mom lost tons of money? With which funds managed by which investment firms? Perhaps someone has steered her incorrectly?

Talk with an investment adviser. Tell her what you want to do with the money. Work with her to understand what sort of risk is acceptable/unacceptable, and then you can safely reach a conclusion as to where your money should be placed. I can almost guarantee she will suggest placing the money in several funds, so that you balance the risk but allow yourself some ability to profit from your investment.

It is a potential opportunity to invest now, because inevitably, it will bounce back up (unless we're truly fucked).

What are you doing for your retirement savings?

[Katlan]

It's a one time payment that I get next week or so. Also, I have no debt that needs to be payed off. The 18k I've got in student loans will be paid for with the money I've got in mutual funds.

I worked as a paralegal for a debt collection firm for a few months (hated it and left)... but listen to em... pay off those student loans and don't leave it up to chance or plan to pay it off over the next 10, ect... years. If your planning to pay off that 18k "over time" then just know your going to pay a shit load of interest on it that might end up having you pay off 30k+ in the long run.

Most amusing thing about the debt collection firm... was I did the lega lwork for a lot of ppl who got sucked into debt via student loans. Some of these ppl only had like $200 left to pay... never paid it (or missed a few months in the long run)... and guess how much they had to pay by the time it got to me (lol)? over 2k+ (from just 200~). At the firm we all had a good laugh about those ppl who originally owed 10k+ and what they owed now

Oh yeah... by paying off even part of that 18k as fast as you can.. you are investing in your long term credit (easy as hell to destroy but hard as hell to rebuild)

[Andarvi]

This of course depends on the fund, but most investment firms have mutual funds designed to be low risk and stable over long periods of time -- economic turmoil/full-on depression aside; those are considered balanced funds. There are also funds designed for maximum growth, and thus maximum risk, and then there's usually something in between, called growth and income. Over what period of time has your mom lost tons of money? With which funds managed by which investment firms? Perhaps someone has steered her incorrectly?

Talk with an investment adviser. Tell her what you want to do with the money. Work with her to understand what sort of risk is acceptable/unacceptable, and then you can safely reach a conclusion as to where your money should be placed. I can almost guarantee she will suggest placing the money in several funds, so that you balance the risk but allow yourself some ability to profit from your investment.

It is a potential opportunity to invest now, because inevitably, it will bounce back up (unless we're truly fucked).

What are you doing for your retirement savings?

She once had 65k in the fund, it went down to like 30k in a matter of two years, went back to 50k in two years, went to 25k, went to 45k two years later, and now its at 43k. Up and down, up and down, and her adviser just told her to keep it there and wait for the market to rebound.

I have no idea what I am thinking as far as retirement is concerned, I'm 22 and applying to dental school so I don't even know for sure what the deal is the next couple years lol.

[netz]

I have no idea what I am thinking as far as retirement is concerned, I'm 22 and applying to dental school so I don't even know for sure what the deal is the next couple years lol.

Hang onto the money and pay off debt. It sounds like you're about to get into a shit-ton of it.

[Elesirdur]

Oh wow, if you're applying for dental school (I presume to get your DDS), then save that money to use toward your tuition. Maybe even reserve 5k in a high-yield savings account as a down payment on a loan when you want to start your first practise in 10 or 15 years.

At least here in Canada dental schools are incredibly expensive, even more so than standard medical schools. Being able to come out with a DDS and be $15k less in debt than you classmates will be a big financial advantage. As I mentioned having some money put away, or being more able to save money because of reduced debt, can help you establish your own practise sooner than your contemporaries who may have to work as junior partners for a few more years before they can get a loan to start up on their own.

[Jones]

As others said, nuke any debts ASAP and then you can start investing.

I'm no pro, but I'm doing quite well with my investments. I'd recommend...

10k in a nice foreign based mutual fund. I recommend Franklin Templeton Foreign Funds. They have quite a few, but you can pick one that is based mostly in China or India if you prefer. The one I'm in has actually lost money this year, but over the last 3 years averaged a 18% Rate of Return. If you are young like me it's not a problem to play it aggressive. You may lose money on any given month/year, but the long term return has much more potential. As you grow older, you can shift your strategy toward a more conservative approach.

4k to start working on either a 401k or an IRA--Individual Retirement Account. Google up on those two options and pick one or both to get started. If you choose an IRA it's important to put in money every year and the early years are MUCH more important than the latter years.

1k in liquid cash (ie. Savings account) for some crisis that might force you to have to borrow money. You never know when you'll need some extra cash, so having part of your annuity accessible is critical.

Also, basic investment aids aren't that expensive. I use Edward Jones and it's working well for me. Getting a rep that understands your risk tolerance and life situation (as in if you'll ever need quick cash in sizable quantities) is the most important feature for young investors. I don't think it's totally necessary, but I've learned a lot from the services they give me.

[Pirian]

Based on how you phrased your initial post it seems like you're the type of person who wants to just hand his money off to someone and let them deal with it; which considering some people's schedules I can't really blame them. I hate to break this to you though, but even putting your money in a mutual fund or index fund, you're going to need to do some work to make sure they are creditable, don't have a bad track record, make sure the fund manager is constant (Pretty important, even on mutual funds that say the decisions are made by a board panel the main fund manager is going to have a lot more push and if they are doing well and then you jump on board then he leaves you're in for some bad results), whether it is a passively or actively managed fund, micro/small/mid/large cap, and what kind of fees you can expect.

Passively managed funds are going to have lower fees and less risk, but if the market is going down you can expect your account balance to go with it. Actively managed funds are going to have a lot higher fees, have inherently higher risk, but depending on the fund, you are protected a little from a falling market (can even have massive gains).

I don't really want to draw this out that far because if you seriously are looking to invest your money in the stock market then you need to do a lot of the research yourself. The best thing would be to get a good financial adviser and have him/her help you out. That will save you a lot of headache =P

[Tyche]

No relatives that will invest in some real estate with you. market is low, good time to buy, however, you may be hanging onto it a while. It's a risk, but in this market, a good potential on return.

[guartz]

ugh, you want to speculate and not invest. I just wanna make that clear so YOU understand the difference.

If you want long term, aka until your 59, then throw it back into a annuity and forget about it.

If you wanna touch that money at any time, do stocks or money market or just buy shit really cheap and sell it somewhere else for more. Be mindful that profits are taxable.

[Acturus]

1. Get out of any debt that you may be in. If it's credit cards, pay them off, and keep no more than 2 open. If it's car loans or student loans, preserve/establish your credit by having your bank help you set up an account that automatically sends a payment each period so that it's off your mind, but not forgotten.

2. If you are young (30 or under) and you can positively afford to throw this money away, consult a financial advisor and have he or she help you build a diversified portfolio. Diversified means a breakdown of low, medium, and high risk investing. If this analyst knows of any classes you can take to learn more, take them. The dumbest thing you can do is to look to an online forum for all of your investment answers.

3. "Sure" investments tend to be real estate, utilities, and government bonds. Not surprisingly, these investments also take a long time to gain a good return, but they are stable (recent US housing crunch notwithstanding).

4. Risky investments include pharmacudicals, technology, and other cutting edge-type fields.

5. Do not be afraid of mutual funds. They are usually a good idea. If anyone loses money on a mutual fund for a long period of time, that person is not taking enough control over their investments.

6. Stay away from day trading. It's stupid unless you're a professional, and even then it's not supposed to be the bulk of your profits.

7. If you are in a career-oriented profession, see what investment opportunities your job offers. Some companies like Publix will only sell stock to members, and that stock almost never decreases. Other companies (like mine) have their own retirement and financial planning assistance, and I am able to invest as I want with almost no cost in terms of advice or consulting.