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How can I start investing with a modest saving's account?

Discussion in 'Business, Careers & Education' started by GreenFrog, Mar 17, 2011.

  1. GreenFrog

    GreenFrog Well-Known Member

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    Probably fine. The point is you did something [​IMG] If it does well, you make out and if not, it is a learning experience and its doubtful it is going to lose that much.

    Thanks. I'm glad I put a good chunk of my savings into a roth. I was planning on buying a new (used) car after I graduate and sell my old one, but the rational part of me says I should just keep it until it dies on me.

    I still realllllly want a stick shift car though. I HATE automatics.
     
  2. xchen

    xchen Well-Known Member

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    Well the good news is a 5-speed will be a bit cheaper than an automatic. I've heard the average self-made millionaire drives a used car. Makes no sense to borrow money one something that will depreciate that quickly and then make payments on it with interest.
     
  3. otc

    otc Well-Known Member

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    I just put all my 2.5 k into that cambiar aggressive growth fund.
    One note, 'Growth' and 'Value' are well-defined terms describing the fund's investment strategy. While you invested in a fund with the hope that it would grow your finances quickly with an aggressive strategy, it is actually a 'Value' fund. Both are valid strategies. A simple summary would be that value funds look for stocks that are undervalued and thus get their returns from the market returning to the "proper" value over time (and paying dividends) while growth funds look for stocks that are going to increase in value through high earnings/expansion/whatever (with little or no dividends factored into the equation). Famous investors like Benjamin Graham or Warren Buffet are "value investors" although Buffet has said things along the lines of "growth and value investing are basically the same thing" since he values on intrinsic value which should include potential for growth. May not be important...but I know I got those confused when i was first looking at funds (of course I want growth!!! I don't want no stinking value funds from the discount store)
     
  4. Mesta

    Mesta Well-Known Member

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    A quick question:

    I just had my first permanent job after my bachelor and I still live at my parents (yea booh [​IMG]), at least untill the end of 2012.

    It means I have a ton of cash each month...
    My question is :

    Where in canada should I sign up if I want to invest in some stocks. I'm interested in NYSE, SSE and CAC40. My bank (HSBC) only seems to cover CAC40 and it asks for a shitload of money.
    I plan to put 5k that I won't touch untill the end of the year (DOTD) in the nyse at the beginning of 2011. I'll put the rest in savings (what's good in canada anyways?).
    Where should I do this?

    Thanks,
     
  5. xchen

    xchen Well-Known Member

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    ^ Talk to a professional in Canada.
     
  6. Saturdays

    Saturdays Well-Known Member

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    Well the good news is a 5-speed will be a bit cheaper than an automatic. I've heard the average self-made millionaire drives a used car. Makes no sense to borrow money one something that will depreciate that quickly and then make payments on it with interest.

    This is essential. I have in the past 5 years been driving a used high end luxury vehicle i purchased for 10,000. It has lasted me 5 years and only a total of $500 in repairs over 5 yrs., oil changes ever 7.5k mi are roughly 40 bucks.
    This vs. my friend who has gone through a VW R32 lease and a Mazda speed 6 lease, and has probably dished out 13k on each lease.
    And another friend who went through a BMW X5 lease which totals 36k after 3yrs.

    Even just buying a car used 1 yr ago is a steal vs new, just takes some dedication and research to save money. I'm planning on getting a Porsche Cayman used in the near future, hopefully keep the baby for at least 7 years.
     
  7. GreenFrog

    GreenFrog Well-Known Member

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    I still don't have a job lined up yet (sigh), but I'm thinking about transportation options. If I do get a job near a city where a car is useful, I'm thinking of selling my old car (2000 Audi A4 1.8TQ) and leasing a 2012 Jetta GLI in manual transmission. That, or I could just keep the audi. Thing is, my dashboard is starting to become a christmas tree with all the lights and it's cosmetically in pretty bad shape. If I were to sell it, I think the most I could get is around $2K. $3.5K if I'm lucky. $4k if I'm extremely lucky. In other news, my roth savings have increased by $50 in the past two days thanks to the mutual fund I invested in [​IMG]
     
  8. norcaltransplant

    norcaltransplant Well-Known Member

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    This is solid advice, but not usually realistic for someone fresh out of college. Let's say that he gets a job fight out of school that pays 48k. That's 4k/mo gross. After investing 15% pre-tax, he's working with 3400. After taxes/medical insurance, that's at best ~2250/mo take-home. Much less if that money is going in an IRA, as those contributions are pre-tax in the sense that they get deducted at tax time, but taxes will still be withheld by his employer's payroll. In anything aproaching a major city, that's not enough to live on, much less build 3-6 months of savings with.

    This is budget is very reasonable, even for a major city. If you exclude my student loan contributions, I live off 2.6k/month in NYC. My commuting costs are also damn expensive, and I pay the majority of the grocery bills for two people. And I still manage to save a few bucks. Cheap living is achievable by cooking most of your meals at home, taking lunch to work (even pre-packaged meals are cheaper than take-out), limiting or eliminating your alcohol consumption when going out, and saving all your non-salaried income (credit card rewards, rebate checks, tax returns, eBay sales, etc.).
     
  9. norcaltransplant

    norcaltransplant Well-Known Member

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    At the moment, I'm not sure I'd worry about "investing $5-10K." That's a bunch of months' expenses, and having liquid and safe savings is nice if you don't know exactly what your income will be.

    Having an emergency fund is incredibly important. At your age, I would keep around 5-7.5k (2-3 months) expenses in cash on hand before you start thinking about investing. A Roth IRA would be your first choice. Take advantage of tax advantaged accounts before you, hopefully, mature and make more $$$ in your choosen career.
     
  10. GreenFrog

    GreenFrog Well-Known Member

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    Having an emergency fund is incredibly important. At your age, I would keep around 5-7.5k (2-3 months) expenses in cash on hand before you start thinking about investing. A Roth IRA would be your first choice. Take advantage of tax advantaged accounts before you, hopefully, mature and make more $$$ in your choosen career.

    I already opened up a Roth IRA with $2.5K. And as it stands now, still have several thousand dollars in my checkings account. I'll be graduating with zero debt (thanks mom and dad!). I mentioned leasing a car above, but I thought about it and think it's a huge waste of money. I'll just keep my current car until it poops out on me.

    I'm aiming to save around $1-2K each month from my (currently hypothetical) paychecks.
     
  11. KPO89

    KPO89 Well-Known Member

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    Extremely useful thread guys....

    Seeing as how I just did this:

    I'm thinking of selling my old car (2000 Audi A4 1.8TQ) and leasing a 2012 Jetta GLI in manual transmission.


    and a $15,000 check is in reach I will be using the info here.

    Also try this on for size.

    First job out of college salaried at $35,000 a year. I live in New York City (Queens) and pay $1400 a month in rent. No breathing room but I'm making it. Hopefully sales will start rolling in which makes up the other $25,000 in my compensation package.

    Living cheap is doable. I walk to work. (this took planning pre-move) I park my car at work where it is safe and I have it for sales calls. I live by myself and my soon-to-be wife will be joining me shortly. It does place a bit of strain on me but who doesn't have financial strain when just starting out?
     
  12. olualbert

    olualbert Well-Known Member

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    I'm a senior in college about to graduate. Still looking for a job, interviewing here and there. I have a modest amount of savings I've accumulated throughout my tenure at college (less than $10k but more than $5K, which is unarguably laughable to some of the big timers out there lol) and I'm trying to figure out what I can do with this instead of it just letting it rot away in my account.

    I'm aware that small capital = small gains, but hey, gotta start somewhere, right? Should I just wait until I get a full-time job and accumulate more capital and then start investing? What should I invest in? I actually wouldn't mind investing in some riskier assets/equity for higher returns, but I wouldn't know where to begin.

    Also, another question I have concerns 401ks. My plan is to max out my 401k contribution each and every single time, but I'm starting to wonder whether that's worth it, considering that that money will be locked away until I can take it out decades later. I'm sort of thinking that maybe I should contribute a modest sum (say, a couple hundred each time) and invest the rest of the money that I would be contributing into something else.

    Does anyone have any insight? I love nice things and love money, but I've come to terms that I need to live with as small a budget as possible and invest as much money as possible so I can take advantage of compounding gains.

    I really have no idea where to start, and while I do realize there are a lot of investor guides and books out there, I'd rather hear some surface level tips from SFers. After getting an idea of what would be best, I will look further into it, whether it be by books or advisors or whatnot.

    So yeah, where the hell do I begin?

    Thanks to anyone who takes the time to give me some advice!


    Since you dont have a lot of cash to work with, start buying American Silver Eagles- trust me, regardless of what anybody tell you here in the forum, this is the route to go. You will not go wrong. Invest in physical gold (meaning 24k gold bars and coins) and silver. Have about six months to 1 year of salary in cash in case of emergency. There is gonna be another economic collapse coming up in early 2012, tie your money to precious metals. Few words is enough for the wise.
     
  13. GreenFrog

    GreenFrog Well-Known Member

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    Since you dont have a lot of cash to work with, start buying American Silver Eagles- trust me, regardless of what anybody tell you here in the forum, this is the route to go. You will not go wrong. Invest in physical gold (meaning 24k gold bars and coins) and silver. Have about six months to 1 year of salary in cash in case of emergency. There is gonna be another economic collapse coming up in early 2012, tie your money to precious metals. Few words is enough for the wise.
    I'm intrigued.. but wary.
     
  14. olualbert

    olualbert Well-Known Member

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    6-7months ago, one ounce of silver cost around 19 dollars, today one ounce cost almost 40 dollars. In the same parallel, gold was around 1250USD, now gold cost is around 1430USD. Do the math...
     
  15. GreenFrog

    GreenFrog Well-Known Member

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    6-7months ago, one ounce of silver cost around 19 dollars, today one ounce cost almost 40 dollars. In the same parallel, gold was around 1250USD, now gold cost is around 1430USD. Do the math...

    Interesting. What are your thoughts on this?

    http://www.telegraph.co.uk/finance/n...or-a-fall.html
     
  16. otc

    otc Well-Known Member

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    6-7months ago, one house cost around 190 thousand dollars, today that house cost almost 400 thousand dollars. In the same parallel, gold was around 1250USD, now gold cost is around 1430USD. Do the math...

    Kthx
     
  17. olualbert

    olualbert Well-Known Member

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    Interesting. What are your thoughts on this?

    http://www.telegraph.co.uk/finance/n...or-a-fall.html


    At the end of this year, 1 ounce of silver will be around 50 dollars or less(definitely not lower than 40USD)....as the recession continues, the price of precious metals will continue to increase, probably, quadriple. By next year, it is very well possible for the price of silver to be around 100-200USD an ounce. Of course, since time in memorial, the price of any commodities always goes up and down. We will start to see a decline in the recession around 2013 (which may be a good time to get out of precious metals altogether), right now, is gonna shoot through the roof. By the way, stay the heck outa ETFs, invest in physical gold and silver.
     
  18. qma

    qma Well-Known Member

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    Very bright initiative! Here's a link to a text by Charlie Munger which I found to be very stimulating. “A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business”. Personally I think this man qualifies as one of the most intelligent people on earth. For further reading related to investment I cordially recommend: - The Intelligent Investor, by Benjamin Graham - Fooled by Randomness, by Nassim Nicholas Taleb Oh, also Investopedia contains alot of good information.
     

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