I want to own my own company, and I want to build my own house.
So I'm 26 and I think the time is right to start at least thinking about these things, if not actually plotting them out. So here's the problem: I know next to nothing about saving and investing money. Also, I feel downright silly to consider talking to a professional about my measly $1,000. Who would take me seriously?
So, in lieu of actual professional advice, I'd like to consult you, Killoggs! What have you done to save money or invest money? Do you have a financial planner? How did you find yours? Do they really just hang out in banks, waiting to dispense free advice to simpletons like me, as my mom suggests? Did you just walk in to someplace off the street, or did you shop around somehow? How do you know which financial planner is better than the next? Is it really possible to play a measly $1,000 on the market, or should I stick with CDs?
john [email] said at 10:50 PM 09-09-2007: It's just like I keep telling Meredith. Invest that money in some pole dancing classes and skimmpy outfits and go get a job down at the Admiral Theatre. You'll be amazed at the return on that investment.
reggie [email] said at 10:46 AM 09-10-2007: That is completely sound and totally selfless advice. And I'm sure John will objectively and with no bias whatsoever help you decide on which aforementioned skimpy outfits will best benefit the return on investment.
myriam [email] said at 8:10 PM 09-10-2007: What I didn't mention is that I need the savings for the augmentation that's really gonna help my career take off.
art [email] said at 9:34 AM 09-10-2007: It took me a long time to dig out of the credit card hole I was in - I think I was 32 before I had any cash left over at the end of the month for the first time.
I went to a local bank and put $2000 in a CD which would let me make as many deposits during the life of the CD as I wanted to. I used this as my savings account. I suggest this route to build up some cash first.
Once I got to a certain level, I pulled $3000 and played in the stock market to satisfy the gambling part of my persona. I did well, then lost most of it in the Big Internet Crash. I've built it up again, finally.
I still have some sort of this balance going on. I keep most in Fidelity Cash Reserves (pays about 5.5%) and about 3-4 grand in the stock market. I like this mix because I balance my risk-taking side with the stable side and don't feel guilty about taking chances because I have the safe 'anchor' to fall back on.
Good luck. Start saving and just watch it grow. Once it gets big enough you will have more options and plenty of time to research in the meantime
john [email] said at 9:52 AM 09-10-2007: Man that sounds so similar to my situation. I'm 33 (well, 34 in a few days) and have only been going about a year now with actual money left over to spend after the bills are paid each month. I piled up some pretty good credit card and loan debt in my 20s and I'm slowly chipping away at it. I figure I'll have a clean slate in just a few years and then I'll start playing the market with the money that I had been sending to credit card companys and loans. I'm going to stop paying rent and buy in the near future as well. But for now, I've got a small savings nest building up in a credit union savings account. At the end of the year I'm going to look for a cd with a decent return and let it sit for about a year or so and then take it and see what I can do with it from there. My 401k was doing really well but lately it's been losing money. I've got to study up on it and make a few changes to stop the bleeding there.
woody [email] said at 3:03 PM 09-10-2007: I piled up some pretty good credit card and loan debt in my 20s and I'm slowly chipping away at it.
But for now, I've got a small savings nest building up in a credit union savings account.
I don't know your specifics, but this seems like a losing proposition to me. It may feel nice to have bucks in the savings account, but you should be far better off putting every extra penny against your short term credit. I would even just skip the savings account altogether. Immediately apply your pay to your cc (except enough to pay things that don't accept plastic, like rent) then use your cc to pay your bills, groceries, whatever. That way you never have money sitting around at 2-4% when it could be "earning" 10-20% by reducing your debt.
myriam [email] said at 7:32 PM 09-10-2007: The credit cards are closed, managed accounts and are no longer accruing interest. Adding money to the management end actually doesn't help as much as saving/investing the same money in John's case.
john [email] said at 8:01 PM 09-10-2007: Yeah, my credit cards are all closed accounts and consolidated with a non-profit group that's got me on a plan to pay them completely off in 5 years. They made some deal with my card companies to lower my interest, etc and they take money from my account and pay the card companies for me. I've got two years under my belt, so 3 years left and I'll have them paid off. But I think the cards are still taking interest so it might be worth it to just send more money to the credit cards since I do still have the option to send money to the cards in addition to what the consolidation place sends them. Thanks for the advice!
myriam [email] said at 7:34 PM 09-10-2007: How did you research this route? How does one get started on researching stocks, for example? I'm completely at a loss.
I wonder if there's some kind of "Guide to Investment for the 20something Creative-Type Non-Business-Oriented Close-to-Broke Saver in Your Family" or some such...
art [email] said at 9:50 AM 09-11-2007: I've heard time and again to invest in an industry you know something about. I try to follow that.
I am sure there are cool companies you think about all the time - like when you see a new material come on the market or a new line of innovative fixtures or furniture or whatever. If you think someone is onto a hot idea, check that company out by googling it and reading all you can about it. Or just take a gamble on it ;)
kara [email] said at 10:11 AM 09-10-2007: If you get a bunch of free cash advance 1 year no apr credit card offers you can take that cash and deposit it into an account, then pay the original amount off before you have to pay interest on it, keeping the interest you made from the bank deposit.
so thats like 5 free dollars for only a few hours of hassle
loren [email] said at 12:54 PM 09-10-2007: The easiest option IMHO is to go to an Edward Jones or Merril Lynch office and talk to one of their reps. You pay them nothing and get good advice on where to put your money. They'll mostly put you in safe stuff, but if you want they'll play your money on riskier higher earning investments. The nice thing is they don't care how much money you bring to the table as they aren't paid on commission based on the clients they bring in. I pay something like $40/year for Ed Jones to manage my ROTH, IRA, and side investments and I can call my guy up anytime I want and ask any stupid question and he's happy to answer and explain how everything works. The guy I'm with now I found while in SF and his office was in the Marina... so he's dealing with multi million dollar clients every day, but when I brought my small chunk of change in he treated me no different.
Even if it's just a stepping stone to playing in the market, it's an easy way to get your money out there in a relatively risk free environment and the best way I've found to have it all explained to you like you are a 2 year old with a sawbuck in your piggy bank. IT'S FREE just to go in and say "i've got a grand... what do you suggest".
loren [email] said at 2:32 PM 09-10-2007: PS.. I've been earning 15-18% for the past couple of years.
And for your regular bank accounts... get ING or something similar that has at least 4.5% on the savings. This allows you to keep money accessible and earning at least something on it. Link it to a checking account at the same co and it's easy to move money from one to the other for easy access... ING even has 4% on it's checking account.
myriam [email] said at 7:38 PM 09-10-2007: Yeah--great idea. I've had an ING account for a year now and have done nothing with it. It barely earns anything. I think I'll use that to roll into a CD w/ ING, similar to Art's easy-payback plan above, and let that at least sit while I work on going to talk to someone about actual investments.
myriam [email] said at 7:35 PM 09-10-2007: Aha, so they really *do* talk to you for free!
This sounds like a great idea for me. I really need some gray-haired type to patiently explain things to me and not laugh at my cash. Do you have any experience with Charles Schwab? They've been putting out ads lately that seem to be reaching for the low-income savers out there, like me.
Bob said at 12:28 PM 09-11-2007: They talk to you for free because you're a potential customer. Why charge somebody to give them a sales pitch? If you end up investing in what they recommend, they'll make more money off it than anything they'd charge for consultation. And I use Charles Schwab; I think they're great. Their web tools for portfolio planning and management make it pretty easy (once you've figured out the site navigation, which is a little less than intuitive) to set something up according to an effective moneymakin' model. And once a year or so I get a call from my 'personal consultant' with advice on other stuff I could be doing to get a better return.
myriam [email] said at 7:37 PM 09-10-2007: Also, and this sounds pretty dumb, but how did you know which *guy* was *the guy for you*? Like, I guess I'm kind of afraid I'll go in there not knowing anything and wind up with some crazy guy who talks me into crazy stuff, or something. I don't know. How did you know that you wanted to go with the guy you've got?
cory said at 1:32 PM 09-10-2007: For saving, it's best to make it automatic. Open up a high-yield savings account at a bank like emigrantdirect.com, and have a set amount of your paycheck deposited directly into it. Then just forget about it.
I don't really do any investing other than my retirement plan, but I've heard it's good to choose something that interests you. If you're interested in stocks, do that. If you're interested in real estate, do that.
myriam [email] said at 7:39 PM 09-10-2007: Fantastic, thanks for the recommendation!!!!! I browsed Barnes and Noble a few months ago for a financial book but was completed overwhelmed. Having a concrete recommendation is a huge help.
cory said at 9:11 PM 09-10-2007: Hi, the one I read was actually "Smart Couples Finish Rich." This author has a series, and I figure all the content is the same among his books but for adjustments for audience.
I liked this book because it was beginner-friendly, the advice was solid, and it was motivational. Covered a lot of territory and explained things for layman, but not terribly dumbed-down.
ed [email] said at 2:53 PM 09-10-2007: Dudess, I have completely depleted my 401(k) by working for an entity who could not pay me market value in an environment where "market value" *might* pay the bills. What they paid me most certainly did not.
Yeah, I've "borrowed" against my retirement fund until it's gone.
But, what the fock.
I ain't gonna live long enough to retire, so it's all good.
I hope you get both your own company and your own dream house.
Hell, one of us oughta get what they were aiming for.
myriam [email] said at 7:45 PM 09-10-2007: Also, here's lookin' at you, Josh, Bibbly, Mary, Marcy--I'd love to hear your strategies--I know two of you own homes and I think you've all mentioned investing at some point before!
josh [email] said at 10:47 AM 09-11-2007: the best way to make money is to not spend it in the first place. be thrifty, dont buy stuff you dont need, spend money on things that make you money, buy used stuff, get free stuff, sell stuff you own if you dont use it, have hobbies where you can probably sell the stuff later for what you paid or more, or involve you learning a skill that can make you money.
as far as investing goes, i just have mutual funds and index funds mostly. but i agree if you know alot about an industry then invest in that because you are increasing your odds. all of my investments are basically banking on the stock market continuing to go up in the long run (which it has so far historically), but then again i dont really have free time to follow the stock market.
brianbibbly [email] said at 1:43 PM 09-11-2007: Honestly, Myriam, I'm a pretty piss poor money manager. I would agree with Josh on the above things. I basically get by on the fact that I have a high yearly income job. Otherwise I would be poor as dirt with the way I piss away money. So my strategy is: Make more money than you can spend.
josh [email] said at 2:11 PM 09-11-2007: another big way to save money is to have money saved... which is sort of a catch 22 i guess, but if you have a paycheck or two at least in your checking, then when you see a huge bargain or have an emergency, you have the money to take advantage of the bargain or deal with the emergency, instead of losing out on the bargain or having to use credit cards.
i tend to buy lots of stuff i use alot when i see it on very good sale... ill buy jackets and winter stuff in the spring and juct sit on it til winter, vice versa for summer stuff. if i see detergent or something i know i will eventually use for a good price, ill buy a lot of it, etc. this only works if you have the room in your place for it, but if you know you will use it and you have the money for it, you can stretch your $$$ alot doing jawns like this.
my main issue with money these days is the same as ever - i eat out too much. but cooking for 1 can be a bama!
woody [email] said at 10:52 AM 09-11-2007: If you can handle a little bit of risk, one thing I'd recommend is ETF's, or Exchange Traded Funds. It's like a mutual fund, but it's basically a market index so the expenses are low. And as the name implies it is bought and sold on the exchange, not through a broker (who earns commissions from the fund company, btw). If you believe in the statement "China has a strong economic future" you can buy a fund from iShares that trades under the symbol FXI (25 top companies on the Chinese exchange). My last two big investments were that and a similar ETF based on Brazil. Each one has averaged more than 50% per year returns.
I missed a lot of the dotcom boom and I will not be missing the biggest invesment opportunities for the next 10 years (hint: you won't find many in US stocks)
dave [email] said at 1:27 PM 09-11-2007: Best advice I ever heard regarding finances was, "Never take advice from someone who's net worth is not at least four times yours"
anotherben [email] said at 12:14 AM 09-12-2007: check out www.thesimpledollar.com. kind of hokey at times, but there is a lot of good info as well.
the turning point for me was when i made a budget and sort of stuck to it. i was amazed at how much money i really made once i stopped throwing it all away.
msmary said at 9:28 PM 09-14-2007: For just $1,000 I wouldn't go anywhere near the market. That's barely enough to constitute an emergency fund. Start with that.
Most of my money is in retirement accounts, and to a lessor degree, tax-advantaged college savings accounts for the kiddos in my life. We also own a rental house, in addition to the residence we just purchased. The plan is to fix this place up and convert it to a rental too in about 5 years.
Do you have access to a retirement account through work? If not, you should set up an IRA and make regular contributions. I recommend Vanguard over all other mutual fund companies. The others have outrageous fees, IMO.
Tax-advantaged accounts are the secret to happiness. Oh, and hanging on to your car until you are on a first name basis with the local tow truck driver.
