investments

[highteknology]

this thread is about money and how to invest it.

when i was at the gym last night i saw an ad for a bank here advertising their rates for CD's. i recently decided that i want to start investing some of my money. i figured the way the economy is going and everything else in the world today it would not be bad to start setting some aside for when i have kids or incase something arises. i'm not trying to make a boat load all at once and i know that is hard to do. i was thinking about getting some stock in some companies but have no clue where to begin. i've also been told i should look into what kind of 401k accounts my employer offers and such.

if anyone has any information on investing, general tips or some good sites that will introduce me to the world of investing i would greatly appreciate it.

[fredjacksonsan]

Should be in the Politics, Investments and Current Affairs. Since you'll probably get a bit more play here, will leave it for a day or so then move it over.
----

In investing, the earlier you start the more you will have, due to the power of compounding your interest.

Always put at least enough in your employer's plan to get the matching funds - it's free money and can be as much as an instant 100% interest.

A great site for advice and perspective on investing is: www.fool.com It's a misleading name, but comes from "The Motley Fool" a radio show dealing with investments. Here's the location of one of their better articles on compounding interest; it's a bit long to post here but is excellent. (you may have to join up to read it) http://www.fool.com/teens/teens01.htm

Good choice to start investing early!!

[fredjacksonsan]

After a reading of the article, I thought it too good to NOT post; even though it's long, it's a great read.

--edit-- the tables didn't come out too well on the cut and paste, but you can make out their message./edit

Want to Be a Millionaire? You Can!

By Selena Maranjian (TMF Selena)


The world is full of empty promises. Advertisements tell us to buy an amazing cream because it will make us beautiful, or to buy that weird-looking contraption because it will tone our muscles and make us popular.
And here comes the Fool, with another promise. Invest money now and we'll help make you a millionaire, or at least comfortably well-off in your adulthood. Gee, that sounds even less believable than the beauty cream, doesn't it? But it's true. You can print this out and take it to your math teacher, and she can verify it.
If you leave your money to grow for a long time, $100 can turn into a million dollars. No, seriously. How? Through compounding.
The Magic of Compounding
If you're not the type who enjoys math class, who delights in solving for X and figuring out how long it will take a plane to get from Los Angeles to New York if it's going 650 miles per hour, you might expect this section to be boring. It's all about numbers, after all. Give it a chance, though -- these numbers will show you how money grows and how millionaires are made.
Just how magical compounding can be depends on three factors:

1. How much money you invest
2. How much time it spends growing
3. Its rate of growth

Let's look at some examples, to see how it can work.
Compounding is when something grows over time, and the amount by which it grows is also growing. It's much easier to understand when you consider some examples. (Math alert! Math alert! Keep reading, though -- it's just multiplication, and it's very important stuff.) Let's start with a simple example. We'll use 10% as our annual growth rate and start small, with $100. Let's call this Year 0, when we start with $100. One year later, in Year 1, our $100 has grown by 10%. Since 10% of 100 equals $10, we add that to our money and end the year with $110. Got that? (Note: Remember, to find out what 10% of anything equals, just multiply the number by 0.10. To find 5%, multiply by 0.05. For 25%, by 0.25.)
In Year 2, we add another 10%. But this time you don't end up with $10. Ten percent of $110 is $11. So we end Year 2 with $121 ($110 plus $11 equals $121). In Year 3, we add 10% again, or $12.10. Our new total is $133.10. Here's a table that will make it clearer:
Year Start with Add 10%
0 $100 $10
1 $110 $11
2 $121 $12.10
3 $133.10 $13.31
4 $146.41 $14.64
5 $161.05 $16.11
6 $177.16 $17.72
7 $194.88 $19.49
8 $214.37
Do you see what's happening? Your initial bundle of $100 is growing, and the amount by which it's growing is also growing. That's compounding in action. In just eight years, you doubled your money. If you had just added 10% of $100 each time, that would have been $10 every year, and you'd have ended up with $180. But since your money was compounding, it grew faster.
If this doesn't seem magical enough for you, here's a continuation of the earlier table, showing certain years that are farther out:
Year Start with Add 10%
8 $214.37 $21.44
10 $259.37 $25.94
15 $417.72 $41.77
20 $672.75 $67.28
25 $1,083.47 $108.35
30 $1,744.94 $174.49
35 $2,810.24 $281.02
40 $4,525.93 $452.59
45 $7,289.05 $728.90
50 $11,739.09 $1,173.91
Now that's magical, isn't it? Here are a few key things to notice:

• You started with just one single investment of $100. In Year 25, your wealth grew by $108! In that single year, you made more than your entire initial investment. And the following year, you made even more than that.
• Notice how large the total gets. You started with $100, but in 50 years, that's become almost $12,000. (A stickler might point out that thanks to inflation you won't be able to buy as much stuff in 50 years with that $12,000 as you could buy with $12,000 today. But then, today you just have that $100. You're still coming out way ahead.)
• Notice that the longer you let your money compound, the more massive each year's growth becomes. In the first years, you just added $10 or $20 or $30 per year. But after 25 years, you're adding hundreds each year. Compounding gets more powerful the longer it's left to work.

The Growth Rate
If you're not yet finding this fascinating, then perhaps the next few tables will do it for you. Remember that we used a growth rate of 10% in our example above. The growth rate -- how fast your money grows, on average, from year to year -- is very important. Let's start over, using $100 again, but compounding at three other rates of growth: 5%, 11%, and 15%. Five percent is what you might earn in interest in a bank account in some years, or on a CD (certificate of deposit) or on some bonds. Eleven percent is the historical average growth rate per year of the stock market for most of the last century. Fifteen percent is how fast your money might grow if it were invested in a bunch of top-notch companies that you selected on your own.
If you start with $100, and it grows at 5%, 11%, and 15%, here's how much you'll have after various periods of time. (The pennies have been rounded off to the nearest dollar.)
Year 5% 11% 15%
5 $128 $169 $201
10 163 284 405
15 208 478 814
20 265 806 1,637
25 339 1,359 3,292
30 432 2,289 6,621
35 552 3,857 13,318
40 704 6,500 26,786
45 899 10,953 53,877
50 1,147 18,456 108,366
Pretty impressive, eh? Here are some things you should notice or be aware of:

• Again, see how the amount by which the sum grows is increasing as the years go by. For example, growing at 11%, your total increases by around $200 between years 10 and 15. But in a later five-year period, between years 40 and 45, your total grows by more than $4,000!
• Don't let these long time frames put you off. If you're 15 years old now, you probably can't imagine being 55 or 65. That's reasonable. Soon we'll discuss how you can move things along more quickly. Just let these tables show you how compounding works and how it gets more and more powerful as the years go by.
• Finally, notice what a huge difference the growth rate makes. If your money is growing at 15% instead of 5%, you'll end up with about four times more money after 15 years. Even though 11% and 15% might not seem so far apart, over 20 years, you'll end up with twice as much money. Stretch that out over 50 years, and you'll have nearly six times more money at 15% instead of 11%.
• Notice that, growing at 15% per year, a single $100 investment can turn into more than $100,000 over 50 years.

Interest vs. Stock Market Returns
Keep in mind that not all growth rates are the same. If your bank is paying 3% interest on your savings, that's pretty much guaranteed money. If a savings bond is paying you 5% interest, that's also darn close to a sure thing. (Interest rates change over time, though, so your bank might be paying you 1% in some years and 6% in others.)
The stock market, however, is not a sure thing, and neither are some bonds issued by companies. Stock market returns fluctuate. There are good years, great years, so-so years, and years we'd much rather forget. Over long periods of time, though, the stock market tends to go up. Over many decades, it has averaged an annual 11% return.
Similarly, with companies, many remain strong for decades or a century. Others fail. If you select and invest in solid, growing companies, you can hope to earn as much as 15%, on average, per year. If you select one or more companies that turn out to be remarkable growers, such as Microsoft, the average growth rate for your investments might be higher than 15%.
In general, the more certain the growth rate, the lower it will be. The more iffy it is, the higher it will be. We'll cover these topics in more detail later. For now, just understand that most growth rates are not sure things. (That's okay, though. You can still make a lot of money by investing.)
The Amount of Money You Invest
You should now have a sense of how money can grow over time, and how much growth rates matter. Now let's turbocharge our results by upping how much money we start with. Instead of starting with an initial investment of just $100, let's see what happens with $1,000.
By the way, if $1,000 seems like an awful lot to you, realize that it's really only $20 per week. Accumulating $20 per week to save isn't as difficult as you may think. In another article we offer you a bunch of good ideas.
If you start with $1000, and it grows at 5%, 11%, and 15%, here's how much you'll have after various periods of time:
Year 5% 11% 15%
5 1,276 1,685 2,011
10 1,629 2,839 4,046
15 2,079 4,785 8,137
20 2,653 8,062 16,367
25 3,386 13,585 32,919
30 4,322 22,892 66,212
35 5,516 38,575 133,176
40 7,040 65,001 267,864
45 8,985 109,530 538,769
50 11,467 184,565 1,083,657
Lookie there -- in 50 years, $1,000 becomes $1 million! (If only your grandparents had invested $1,000 for you 50 years ago, eh?) The point of this table is just to show you: the more you invest, the more money you're likely to end up with.
Is Your Head Hurting?
Is all this math stressing you out? We're almost done. This is extremely important stuff -- stuff that could change your life. Don't think of it as just math -- think about what the tables represent. They show you how small sums of your money can grow into large sums. You can start with enough money to buy a CD player, and end up with enough to buy a car or a house or a trip around the world.
Many adults find that these tables make their heads hurt, too, but for a different reason. It's because when they realize what these tables are saying, they start banging their heads against a wall, wishing they'd known about this stuff when they were younger.
Investing Money Regularly
Let's tweak these tables one last way, to make them more realistic. After all, how likely is it that you'd invest just $100 or $1,000 in one shot at your age, then add nothing else for the rest of your life? Here's what happens when you invest money regularly.
Investing $100 Each Year
If you start with an initial investment of $100 and add $100 every year, and your little bundle of wealth grows at 11% per year, here's how much you'll have after various periods of time.
Year Amount
5 $639
10 1,700
15 3,488
20 6,500
25 11,576
30 20,129
35 34,541
40 58,827
45 99,749
50 168,706 Notice in the table above how much you put in, versus how much you have. For example, by Year 5, you invested a total of $500, but you have $639. By Year 15, you invested a total of $1,500, and you have more than twice that. By Year 35, you invested a total of $3,500, and you have almost 10 times that much!
Compare this table with the earlier table showing you how a single $100 grows over time at 11%, and you'll see some interesting things. One number that pops out is $6,500. That's how much you'll have after 40 years, if you invest just one $100 bill. But if you're plunking down $100 each year, you'll reach $6,500 in just 20 years -- half as long! See the power of investing regularly? Even with these very small amounts, it makes a huge difference.
As you might guess, if you want to know how this would work if you invested $1,000 each year instead of $100, just multiply the numbers in the table above by 10.
The Keys to Compounding
To summarize, remember that the power of compounding depends on:

• How much you invest (and how regularly)
• Your growth rate
• How long you let your money grow

It's likely that none of the examples above reflect how you will actually do. You might start investing sooner or later. You might invest $300 each year in your first two years, $3,000 per year in later years, and more as you're able to. You might earn an average return of 10% over many decades, or perhaps your return will be 7% or 15%. You can't control every variable, but to a great degree, you can control how much you invest, how you invest, and how long you let your money grow.
One of the most important factors here is time. It's one thing that you, as a teenager, have much more of than any adult. It can be a huge advantage. You don't have to start investing today, or even this year. (And in fact, you shouldn't begin investing until you've got more knowledge under your belt.) But if you learn a few things now and get started soon, you can set yourself up to enjoy comfort and security for most of your life.
Remember also that you can still enjoy your life while you're saving and investing. You can amass great wealth by regularly investing a portion of your income -- not all of it.
You Can Do It!
If you ever begin to doubt whether all this investing stuff is for you, remember these things:

• You need a brain to do this -- and you have a brain.
• You need time to do this, and you have time, too. (Teens have way more time than most people.)
• You won't have to sacrifice fun.
• You won't have to save and invest every penny.
• You won't have to spend hours and hours on investing every day, week or month.
• You can take a small amount of money and make it a bigger amount in just a few years.

Try experimenting with compounding. You can do it the old-fashioned way, with paper and pencil, or the less old-fashioned way, with a calculator. Or fire up the Fool's snazzy online calculators (use the Retirement/Saving one). You just plug in some numbers and it'll show you how much money you'll end up with. Try changing the numbers you enter and see what happens.
Happy compounding!


(article credit: The Motley Fool)

[brady_381need72c10]

investments uh! i will tell u two words where u can make some real money since i am just getting in to it, its called REAL ESTATE you always make money this way start out by buying a rentel property without using any of your own money <its called creative financing> and when u do you will need to do a cash flow anaylisis to make sure you will have a positive cash flow and if you do then you will need to find a tenent that will pay what your monthly rent is! now to get into it you will need to take a real estate course such as CARLETON SHEETS- NO DOWN PAYMENT<which i took!> now dont get the john beck tax sale course cause all you are doing is just paying $80 dollars just to get some phone numbers which u can get for free from your local county court house!

[drunken monkey]

property is one of the only constants where money is concerned.
it's not without risks but depending on how and where you do things, you are pretty much guarenteed good returns.
only real big problem is where to find the initial capital to buy your first two or three houses.

seeing as how you are a kid looking to invest money, i'm going to assume that you don't have £180,000 or the equivilant to buy a flat/small house with...

in terms of savings accounts, I'm not sure if you have them over where you are but here in the UK we have lots of different limited access accounts where you have to give notice if you want to withdraw money. Sounds like a pain but if it's a pure saving account, you won't touch the money anyway. The upside is that you often get much better itnerest rates. Look into any special accounts they might have. We also have some accounts here that give you a % bonus at the end of the year if you don't touch the money so have a look for that sort of thing.

stock is.... complicated.
while in general if you just buy into pretty much secure companies you're more or less going to make money on the shares over a long period of time but you're never going to be sure if that increse in share price is going to beat interest rates...
on the other hand, short term stock playing requires a lot of time and effort (and inside knowledge) unless you get a broker to do the work for you but even then, that's not guaranteed and potentially dangerous.

[highteknology]

yeah. the whole "playing the stock market" thing is a risky one, i know that. as far as real estate goes. i know is has a lot of money there, two of my dad's friends are real estate agents and they bank it. too bad i don't have enough money to buy a place to start out with.

the savings account idea is a good one. i'll have to ask my bank about that when i go over there today. i do have a regular savings account that my paychecks are deposited to. but i can touch it whenever i want. it would be nice to have an account that, in theory, i couldn't touch for at least like 10 years. hopefully it would gain some return on it in those 10 years.

Originally Posted by fredjacksonsan

Should be in the Politics, Investments and Current Affairs. Since you'll probably get a bit more play here, will leave it for a day or so then move it over.

my bad, seeing how i wasn't fully awake when i posted this i totally missed out on the second word of the sub forum poilitics, INVESTMENTS... you can move it whenever you like. thanks

[sameintheend01]

Look at paypal's money market acct...money market accts give typically a higher return than a cd, but have a little more risk (MUCH less than stocks). Since paypal is online, they have a larger market to serve and lower operating costs so they can offer you even a higher rate/more options than a traditional money market acct. check it out, i have one.

['97ventureowner]

I was recently going through some old papers, and financial records from my deceased father before I disposed of them and I came across some clippings from a newspaper, it was dated in the early '80s. He had cut out some ads for the local banks that were offering CDs with an interest rate of 16%! I remember he used to invest in CDs quite a bit back then, and would probably be surprised at the current rate our banks are offering on CDs, around 5%. Oh to have the money I have now, back then, and invest it at those rates.

[knorwj]

Real estate is a great investment and you don't even need alot of money to buy into it. Its dividend yield is averaging much higher than stocks and usually always will.

The only money out of pocket initially is a down payment and closing costs. If its a fixer-upper you'll need more obviously.

With the loans available today you can find mortgages that require much lower than the old 20% downpayment. You just have to buy smart. I suggest reading up on it and looking for good deals. DO NOT buy into those stupid infomercial scams. There are "no money down" deals out there but usually they go hand in hand with unfavorable terms for an investor. To make money you need money.

The first thing you should do is get a credit report and figure out where you you can improve your credit (if needed). Try Myfico.com you can get a good credit monitoring package there for a good price.

[fredjacksonsan]

OK, moving to Investment.

[brady_381need72c10]

actually for the no down payment part you could borrow the brokers fees and offer to give the broker a certain percentage back after the resale.

[crayzayjay]

I could give you loads of tips. But i'm not allowed

[RSturbo]

I have no idea which bank is going to give you 5% 10% or 15% on a $100;
that was just a waste of time to read. anyway the stock market can be a good way to make money but it can be risky; I tripled my money. My stock went from $.30 to about $2. I would have made sooo much money if i had more money to start out with. Its not too risky if you know what your doing.

I had my mom open up a account becasue im not 18. My mom went to bank of america to buy stock and talked to the finacial advisor. She told my mom they dont sell stock. She told her to go to scottrade and told her to listen to me when it comes to investing; because i sounded like a smart kid.

She went to scottrade and and they told her that to open up an account she had to buy aleast $500 in stock. My mom told him ''im not going to do that this is for my son''. So he ask about me and my mom explained to him all about me. He went to his boss and he told him about me. Then he told my mom that when i turn 18 i could become an intern..... sorry about all that but it makes me proud.

I would say realestate investing would be a good idea. only because thats what im going to do when i grow up...im only 17. Buying and selling rehabs, rentals, and foreclosures. I have been into realestate investing since i was about 14. I have read soo many books on it and went to many seminars.

I have read carlton sheets at least two times and have to say you can learn most of it on the internet. Also most that no money down that carlton preaches doesnt work unless you have good credit, equity, or a partner.
Not saying it isnt good to read; just saying i have read more informational books.

My favorite books are the richdad series of books; those have been real insperational to me...got first book at 14. There are some good websites like creonline.com that can help you learn more.

I know you have seen those tv programs that say that they will make you a millionare working in your spare time, but most are a scam. most only teaching theorys ;but have not even made a million. Dont ever buy anything that promises you that they will teach you how to make a millionare in only two months or part time. Or any books that give you a amount of money and a time peroid.

No one can teach you how to be rich only ways to obtain the informaiton for you to find out on your own. Also it is never to late to start.

cd, mutal funds, and savings; are only good if you have a lot of money to put in and a lot of time to wait. IF you want a good low risk longterm investment but silver or copper.

[C2Z06]

Originally Posted by brady_381need72c10

investments uh! i will tell u two words where u can make some real money since i am just getting in to it, its called REAL ESTATE you always make money this way start out by buying a rentel property without using any of your own money <its called creative financing> and when u do you will need to do a cash flow anaylisis to make sure you will have a positive cash flow and if you do then you will need to find a tenent that will pay what your monthly rent is! now to get into it you will need to take a real estate course such as CARLETON SHEETS- NO DOWN PAYMENT<which i took!> now dont get the john beck tax sale course cause all you are doing is just paying $80 dollars just to get some phone numbers which u can get for free from your local county court house!

No offense...but you completely and utterly missed the OP's needs! Too many people do this and wind up screwed. Real Estate has cause more over the last 5-yrs and in America's history, bankruptcy's than ANY other investment. Period. Statistical fact. Real Estate, like stocks, it is NOT a gauruntee!

I've been working with investments and financial planning for years and I have to say this. Each of you missed what is best for this guy. The OP is on the right track for financial freedom. Ignore these yahoo's about investing. You are right in wanting an emergency fund.

Rule #1 in maximizing your financial savings/investing potential
-Always, Always, ALWAYS have an emergency fund and NEVER invest that money!!! If you want to set money aside incase some happens use a savings account or money market. Stay the hell out of real estate or stock with your emergency money. It's like buying a Civic and you want to haul a boat over the mountains...makes no sense to risk loosing your emergency money!

Rule #2 Write down your goals. Below is a general list of where to put money depending upon how far away your goal is.
Emergency Fund - Savings/Money Markets
1-2yr goals - CD's/Money Markets
3-6yr goal - Bonds-Bond Funds
7-10 yr goals - combination of stock and bonds or just a balanced fund
10+ yr goals - stocks

Rule#3 Diversify, Diversify, Diversify
When you have your emergency fund established, diversify your investments. Have stocks, bonds, various mutual funds, classic cars, rare baseball cards, jewelry, real estate. Never favor one over the other but be into as many different things as you can.

[C2Z06]

Originally Posted by crayzayjay

I could give you loads of tips. But i'm not allowed

Types of NASD registration, employer restrictions or both?