investment help

College Majors Business Major
1

<p>I am not a wealthy person, but I have been saving my money literally since kindergarten and I have $8,000 that I want to invest online. Any suggestions as to what site I should use? Most importantly, what stocks will most likely prove to be BIG earners for me, such that I will benefit more from investing in them than from putting the money in a 5 year CD (by the way, I plan on keeping my money on the market for about 5 years if that means anything). Thank you very much for any help, because I plan on using this money to pay off college debt lol.</p>

<p>P.S. this is also in the high school thread, so sorry if you read it twice</p>

2

<p>i want to do almost the same thing- invest a large chunk of my money during my college years- any ideas</p>

3

<p>
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Most importantly, what stocks will most likely prove to be BIG earners for me, such that I will benefit more from investing in them than from putting the money in a 5 year CD

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</p>

<p>Keep in mind that there is NOBODY who can accurately predict the market, let alone a single security for any length of time.</p>

4

<p>I know, but some people may have an idea as to a certain company that will "hit it big", and I am willing to take a risk because I need a lot of money or I will be getting loans anyway.</p>

5

<p>This website ranks various brokers you can look into:</p>

<p><a href="http://www.smartmoney.com/brokers/index.cfm?story=2004-intro%5B/url%5D"&gt;http://www.smartmoney.com/brokers/index.cfm?story=2004-intro&lt;/a&gt;&lt;/p>

<p>You'd probably be more interested in the online discount or premium discount brokers.</p>

<p>However, I would recommend you read some books on investing before you jump right in. You might regret taking the advice of random people on a college discussion forum. </p>

<p>Book recommendations:</p>

<p>A Random Walk Down Wall Street - Burton Malkiel
The Intelligent Investor - Benjamin Graham</p>

<p>Both books are kind of long but being informed before investing your money is probably worth the time.</p>

6

<p>Audiophile is right. No one can really predict the stock market. But of course you want a certain idea of what stocks are good. I will not tell you my personal recommendations because I honestly know nothing about the stock market. But I have a recent Fortune issue that lists 40 stocks that might do well. It's no guarantee, but I'll list them anyway. They're by category. They said they did some extensive analysis, but still, take these like a grain of salt.</p>

<p>Good for growth and income (blue chips): Abbot Labs (ABT), Altria Group (MO), Coca-Cola (KO), Colgate-Palmolive (CL), General Mills (GIS), Pfizer (PFE), Procter & Gamble (PG), Wyeth (WYE)</p>

<p>Good for bargain growth (growth at a reasonable price): Accenture (ACN), Boston Scientific (BSX), Dover Corp. (DOV), Furniture Brands (FBN), Harley-Davidson (HDI), Home Depot (HD), Progressive (PGR), Stanley Works (SWK)</p>

<p>Good for deep value (I think this means long term): Banta (BN), Burlington Resources (BR), Kellwood (KWD), Liz Claiborne (LIZ), Loews (LTR), Lubrizol (LZ), Pulte Homes (PHM), Thor Industries (THO)</p>

<p>Good for small wonders (earning a little at a time): Amer. Woodmark (AMWD), Arkansas Best (ABFS), Briggs & Stratton (BGG), Dycom Industries (DY), Ethan Allen (ETH), Helen of Troy (HELE), Lincoln Electric (LECO), Winnebago (WGO)</p>

<p>Good foreign stocks: AstraZeneca (AZN), Matsu****a Elec. (MC), Petroleo Brasileiro (PBR), Sanofi-Aventis (SNY), Telefonos de Mexico (TMX), Total (TOT), Unilever NV (UN), Vodafone Group (VOD)</p>

<p>If anyone would like to comment on these stocks, that would be great. I don't invest, so this doesn't apply to me. Remember, this is only what Fortune mag says are the best stocks for the time. It's a guideline, not a rulebook. (It's from the July 11, 2005 issue.)</p>

7

<p>If you do not know a lot about stocks, I would not make large investing decisions independently. If you're going to invenst in the stock market at all, put it in a fund where well-trained individuals will make your investing decisions for you. I recommend putting it somewhere safer--bonds, CDs, etc.. You're return won't be much, but you know it'll be there.</p>

<p>As mentioned, there's no way for us to tell you what will be a "big earner" for you--if we knew, then we would all invest in it which would inflate the price until it your big earner's rate of return was 0%.</p>

<p>If you are going to invest in stocks, look into blue chips. I think you should be as riskless as possible.</p>

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<p>Watch Mad Money on CNBC</p>

9

<p>although ryanbis mentioned investing in something "safer" like bonds, CDs,etc. for someone your age there is no need for an extremely conservative portfolio. Don't mess around with individual securities if you don't know what you're doing...aka asking advice from a bunch of strangers on the internet. Instead go out and create a nice aggressive/moderately aggressive portfolio with a nice mix of equity (both small and large and domestic and foreign), and fixed income a well designed aggressive portfolio can give you excellent returns 30%+ with much less risk than investing all your money in a few individual stocks, which might be a hit or miss (although if they are a hit the return will probably be higher). With the aggressive portfolio you also reduce some of the risk because you are diversifying your investments so even if the funds you chose don't do well you will not lose as much as with individual securities (you will lose much much less).</p>

10

<p>"With the aggressive portfolio you also reduce some of the risk because you are diversifying your investments so even if the funds you chose don't do well you will not lose as much as with individual securities (you will lose much much less)."</p>

<p>Just to clarify this comment, ANY diversified portfolio will eliminate (or effectively eliminate) diversifiable risk, irregardless of risk. From the way the comment was worded, it seems as if only an aggressive portfolio eliminates diversifiable risk.</p>

<p>In addition, keep in mind the there are undiversifiable risks and the types on investments bern700 is speaking of carry large risks (especially those with an expected 30% return). If this is the money you need to go to college with (or to live on during or after college) and you're, as you mentioned, not very wealhy, I would NOT invest my life savings in something so risky. I might consider investing a portion, but in your case I would go with something low risk or riskless (i.e. T-bills)</p>

11

<p>
[Quote]
Instead go out and create a nice aggressive/moderately aggressive portfolio with a nice mix of equity (both small and large and domestic and foreign), and fixed income a well designed aggressive portfolio can give you excellent returns 30%+

[/Quote]
</p>

<p>Wow, sounds like you can teach Warren Buffett and Peter Lynch a thing or two. ;)</p>

12

<p>sorry if that was worded as if only an aggressive portfolio could reduce risk...as ryanbis said all diversified portfolios will reduce risk.</p>

<p>ryanbis: the type of portfolio i'm suggesting does have risks...on avg one of these portfolio's will go down at worst 25%...with top returns being 40% or so. A nice healthy aggressive mix of fixed income - <15% (t-bills, bonds, munis, etc.) and growth,value, and blend equity (small/mid/large, domestic/foreign) will provide someone like lion with the possibility of good returns with much less risk than investing is say 5 stocks, based off others' opinions.</p>

<p>An aggressive asset allocation is essentially for people who:
-want to invest for the long term
-are focused on getting maximum capital growth from their investment
-are comfortable with staying invested in fluctuating markets for the purpose of long-term capital growth
-don’t need the investment to provide regular income payments
-place a higher value on long-term capital growth than simple security of the initial deposit.</p>

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<p>an aggresive allocation (80-100% equities, 0-20%fixed income) is used for the purposes of wealthy accumulation while a conservative allocation (80% fixed income, 20% equities) is used for wealth preservation...essentially for older people who want a steady stream of money for their retirement/montly payments/etc.</p>

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<p>bern700:</p>

<p>To me, the question isn't which strategy would best suit him (obviously, he would like to accumulate at this point in his life)--but rather whether or not the strategy would be appropriate per his personal risk acceptance level.</p>

<p>Based upon the information provided in his original post, this isn't money he can just throw around and he probably doesn't want to risk losing 25%. Unless you're investing money you don't need, I would recommend being a lot more risk adversive. </p>

<p>Either way, I agree that investing in individual stocks is a bad idea.</p>

15

<p>ok I agree with you...i guess lion would be better off with a moderate allocation if that's his/her level of risk. But yeah individual stocks are a bad idea for an novice investor...</p>

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<p>Whoever told to watch mad money>That just cracked me up. Its on my TV now when Cramer hyped up GOOG. Well GOOG is down. He dodges that questions and begin talking about security stocks. He says that everyone should own it as it didnt go up today based upon the news. Well he just contradicted the ideas of great traders like Michael Marcus. When a sector doesnt go up in positive news its more likely saying there is something wrong then saying there is something right. In other words dont watch the show. Its good for the entertainment appeal but its not worth anything.</p>

<p>As for investing>I would stick to ETFs, mutual funds, or bonds. Dont pick stocks and dont over trade. If you want to do that then dump the money in a savings account and begin learning the ropes before jumping in.</p>

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<p>i would invest in AET if i had some money. </p>

<p>But thats a biased opinion simply b/c i worked there for a few years so i have seen all their stock trends and i know how well their stock does and how quickly it goes up........ plus i know the overall business plan and when they roll things out...</p>

18

<p>so moving back to the original post:</p>

<p>open up a roth ira. it is a retirement account (yes, retirement) that will allow you to make up to $4000 a year in contributions, and you can pull out up to 100% of your contributions at any time. however, you must wait until you reach the IRA withdrawal requirements, which are that you are 59 1/2, or you are putting some down for a new house, or there is an extreme medical expense to be paid. the HUGE UPSIDE to a roth IRA though is that your earnings are 100% tax free. so, by the rule of compounding, if you were to put 4000 in this year, and match that each year with 4000 for the next 40 years (early retirement), at an annual growth rate of 5% (modest to the annual s&p of 11%), there is a full 535,519.01 for you. tax free. </p>

<p>so, put the money in, and look at some "lifestyle" or "target retirement" funds that will allocate your money for you. you simply look for the fund with the retirement year closest to you (probably 2040 or 2045). they have aggressive portfolios now, but as time goes on the fund managers will reallocate their portfolio and make it more conservative. so you go from wealth appreciation to preservation, and you don't have to sweat a thing. you pay commission on only one transaction since it is only one fund, and then you just make sure you get money into that roth each year. you dont' have to worry about stocks being up adn down day to day and whether your investment is a buy and sell. with this type of time frame, any time is a good time to invest.</p>

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<p>could you tell me more about the roth ira? My dad mentioned I put my summer earnings into a roth ira as well, although at first i thought it was a goofy,ridiculous idea. can i do this through a student bank account?</p>

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<p>no, you need to open an account with an ira certified broker dealer i.e. ameritrade. you'd have to wire your funds from your bank accont into an account with them. or send a check, or whatever way is easiest. </p>

<p>a lot of people dismiss the roth ira because they think retirement is too far into the future and they're too young to worry about it now. well, the truth is, it doesn't take much to solidify the rest of your financial future. in fact, the earlier you start, the easier it is for the rest of your life. once you have your contributions to your roth and subsequent retirement accounts set you can burn more of that extra cash with less worry :]</p>

<p><a href="http://www.moneychimp.com/calculator/compound_interest_calculator.htm%5B/url%5D"&gt;http://www.moneychimp.com/calculator/compound_interest_calculator.htm&lt;/a&gt;&lt;/p>

<p>try that website and screw around with some values. keep in mind that max annual contribution to the roth ira is $4000 (going up each year i think?), and average returns on the s&p index is 11%/year. it will show you how true the time=money statement is.</p>