Investments (1 Viewer)

[speakers_86]

Hi all! You've all helped so much before, I was wondering if you could help with a completely different topic. I am looking to make an investment, but I don't know where to start. I am 25, have a small lump sum of cash, and want something long-term, not too risky. I will be able to make contributions regularly, at least as far as I can see! I was thinking of opening an IRA. Where should I go? Are mutual funds invested through IRAs?

edit- I suppose I should also say that I am in the US military. Service Members have an option available to us called the thrift savings plan. I was considering going to that, but I don't know if I'll stay in the army for a full 20 years. When I leave the army, I don't want to get hit with some big fees on my investments.

 

[scott-atkinson]

Give the money to me, I'll invest it in my debts....

 

[Thales750]

The Good thing about the TSP (Thrift Savings Plan) is that it comes out of your check automatically. Beyond that a diversified portfolio is almost always advised.

The main thing is to get started and be consistent over the long hall. More than that will require much research and soul searching on your part. One rule is that you can have a higher percentage of greater risk at a younger age.

But equally as important as saving and investing, is learning to put serious limits on borrowing. In most peoples’ lives, the borrowing negates their investments.

 

[saintsman]

If you can afford it, lock it away in a pension fund so that when you retire, you will have something that will help maintain the standard of living you enjoyed before you retired.
In the UK, there are lots of people who make no pension plans at all and think that the State will look after them. Well the State will, but you won't have much of a life as all you will get is enough to keep you alive.
People are a long time retired. Do whatever you can to enjoy it.

 

[speakers_86]

Recommendations for brokers?

 

[Fifty2One]

Check if you can get US registered IRA through an international company like ING so you would have the convenience of operating offices in the country where you are currently stationed (and perhaps future deployment) which will clean up a lot of messing around.
I would suggest avoiding automatic deduction plans as they seem to be able to weep out extra charges and fees from individuals. Learning some financial self discipline is also an asset (which would have helped out a lot of people, companies, corporations and countries if anyone had a slight bit of forethought).
25 years old is a good place to start to invest for a possible early retirement - if you stay in a military career for the full 20 you would be in excellent financial position to at least do what you want for another 20 year second career, and then decide of you want to do nothing else for the next 40!

 

[Steve R.]

Yes, open an IRA. The next question, what should you put in your IRA? I would recommend the "uninteresting" stocks such as Procter and Gamble, Heinz, General Mills, etc. Do NOT buy "hot" stocks for an IRA.

Of course I need to add that we own the stocks mentioned above. Furthermore, do NOT buy any these stocks without doing your own research.

As for mutual funds, avoid them. Nevertheless, should you wish to invest in them, select an index fund that is based on the overall market.

For an IRA, I would recommend only stocks that pay a dividend. That is why the stocks listed above were mentioned. Your return on a stock is a combination of the dividend and the change in the stock price. A "bench mark" rate of return is considered 12% per year. So if a stock has a dividend of 3%, the price appreciation would be expected to be 9%.

Why select dividend paying stocks? The price of stocks move up and down in response to a lot of factors. Stocks that pay a dividend give you some cash while waiting for it to appreciate. Furthermore, the dividends received in an IRA are tax free. Buying a stock that pays no dividend and stagnates, will not contribute to growing your net worth. Also you might buy a stock only to find it drop! Just because a stock drops, does not mean that you should bail-out.

One thing to be very careful of at this time is that interest rates for investors is near 0%. With that in mind, if you buy an asset, such as a bond, you could lose big-time when interest rates go back-up. Again you need to do your own research since computing your return on a bond or a treasury is complicated and my statement is quite simplistic.

I would recommend that you visit your local public library and read Value Line there. Most public libraries carry this investment guide as a free service.

You may also want to check-out webpages such as Market Watch and CNBC.

Investing can be fun. I wish you the best!

PS: Just noticed that you are currently in South Korea. So it may be a bit difficult to get access to Value Line. Does the US military offer library services? If they do, would the librarian be willing to order?

 

[speakers_86]

PS: Just noticed that you are currently in South Korea. So it may be a bit difficult to get access to Value Line. Does the US military offer library services? If they do, would the librarian be willing to order?

I have never asked. I'm on a mission for the week, so I won't be able to find out. Thanks for your response!