1. And... we're back. You'll notice that all of your images are back as well, as are our beloved emoticons, including the infamous :foo: We have also worked with our server folks and developers to fix the issues that were slowing down the site.

    There is still work to be done - the images in existing sigs are not yet linked, for example, and we are working on a way to get the images to load faster - which will improve the performance of the site, especially on the pages with a ton of images, and we will continue to work diligently on that and keep you updated.

    Cheers,

    Fok on behalf of the entire Styleforum team
    Dismiss Notice

Best and safest way to invest 20k

Discussion in 'Fine Living, Home, Design & Auto' started by Naturally Baked, Apr 12, 2010.

  1. Naturally Baked

    Naturally Baked Senior member

    Messages:
    158
    Joined:
    Mar 11, 2010
    I just came into about $20,000. I know its not a whole lot of money but for someone my age (22) it seems like a decent amount to get me started on the right road. I am looking for the safest, but most effective, way to invest this money. I am told some mutual funds make 15-20% depending on where its invested. I have also thought about putting it all into ford stock or some safe stock and putting like 2-3k in penny stocks.

    Anyway, just looking for some ideas from some of you who may be where I want to be in the next 10 years (multi-millionaires [​IMG] )
     
  2. bmf895

    bmf895 Senior member

    Messages:
    259
    Joined:
    Jan 31, 2009
    Good luck finding a mutual fund that earns 15-20% over a period greater than one year. 6-10% is more realistic over the long haul.
     
  3. greg_atlanta

    greg_atlanta Senior member

    Messages:
    876
    Joined:
    Sep 28, 2004
    Location:
    Atlanta
    How soon will you need to spend this money?

    If it's 5+ years index funds/ETFs are fine (avoid individual stocks). If it's less than that you need to stick to money market, savings, etc. Interest rates suck right now but should improve within a year. Don't get locked into a sucky interest rate with a CD.
     
  4. cotton

    cotton Member

    Messages:
    21
    Joined:
    Apr 1, 2010
    Leave it in a savings account or short-term CD until you learn some investing basics and/or consult an expert you trust. It's apparent from your post that you're not prepared to make an informed decision, regardless of what advice you may get here or anywhere else. $20,000 is a lot of money to piss away.
     
  5. DNW

    DNW Senior member

    Messages:
    10,526
    Joined:
    Mar 10, 2006
    Location:
    Recession, Baby
    Sign up for an etrade account and start daytrading. [​IMG] j/k. I echo cotton's comment.
     
    1 person likes this.
  6. J'aimelescravates

    J'aimelescravates Senior member

    Messages:
    1,012
    Joined:
    Mar 19, 2007
    Location:
    America's Venice
    I'll PM you my paypal address
     
  7. Mark from Plano

    Mark from Plano Senior member

    Messages:
    10,767
    Joined:
    Apr 11, 2007
    Location:
    Not in Plano
    I just came into about $20,000. I know its not a whole lot of money but for someone my age (22) it seems like a decent amount to get me started on the right road. I am looking for the safest, but most effective, way to invest this money. I am told some mutual funds make 15-20% depending on where its invested. I have also thought about putting it all into ford stock or some safe stock and putting like 2-3k in penny stocks. Anyway, just looking for some ideas from some of you who may be where I want to be in the next 10 years (multi-millionaires [​IMG] )
    Not one of the investments you listed would be considered "safe" in any reasonable context. Maybe as opposed to dropping it on black at the casino, but that's about it. You can lose up to 100% of your investment in any of the investments you mentioned. Penny stocks are the worst. Investing 100% of your money in a distressed company in a distressed industry (Ford) is not much better. Mutual funds are the safest of the ones you mentioned (that's not saying much) but any mutual fund with a history of returning 15-20% will be in a higher risk, more volatile sector that as likely as not will lose that much (or more) in any given year. You need professional help. Find a fee based financial planner (fee based is key) to help you decide on a plan. If you don't have a 3-6 month cash reserve, then this money should go into a CD ladder for a rainy day. After that you can start thinking about investing in equities or bonds. A good financial planner can help you assess your risk tolerance. Think about this: If you got your brokerage statement and this money had gone from $20,000 to $10,000, how would you feel? If you said anything but "calm" then the investments you listed are probably wrong for you. If you said that you'd want to vomit, then you need a much safer investment. Scared money makes bad decisions. Don't do anything until you have a well-thought out plan. JMHO.
     
  8. username79

    username79 Senior member

    Messages:
    2,144
    Joined:
    Apr 1, 2007
    QUESTION NUMBER 1

    For how long do you plan to invest it?

    QUESTION NUMBER 2

    How much risk are you willing to take, e.g. how much (if any) of your principal are you willing to lose?
     
  9. Naturally Baked

    Naturally Baked Senior member

    Messages:
    158
    Joined:
    Mar 11, 2010
    Thanks for the responses.

    For the questions above:

    I don't have any set time...I am not in any real financial need of the money just yet. As far as risk the post above kinda scared me lol...20 to 10k would make me sick haha....but I've always been the type of person who believes that in order to make gain you have to take risk. This is where I am torn.
     
  10. GQgeek

    GQgeek Senior member

    Messages:
    17,933
    Joined:
    Mar 4, 2002
    Location:
    Canuckistan
    Not one of the investments you listed would be considered "safe" in any reasonable context. Maybe as opposed to dropping it on black at the casino, but that's about it. You can lose up to 100% of your investment in any of the investments you mentioned. Penny stocks are the worst. Investing 100% of your money in a distressed company in a distressed industry (Ford) is not much better. Mutual funds are the safest of the ones you mentioned (that's not saying much) but any mutual fund with a history of returning 15-20% will be in a higher risk, more volatile sector that as likely as not will lose that much (or more) in any given year.

    You need professional help. Find a fee based financial planner (fee based is key) to help you decide on a plan. If you don't have a 3-6 month cash reserve, then this money should go into a CD ladder for a rainy day. After that you can start thinking about investing in equities or bonds.

    A good financial planner can help you assess your risk tolerance. Think about this: If you got your brokerage statement and this money had gone from $20,000 to $10,000, how would you feel? If you said anything but "calm" then the investments you listed are probably wrong for you. If you said that you'd want to vomit, then you need a much safer investment. Scared money makes bad decisions. Don't do anything until you have a well-thought out plan.
    JMHO.


    This. If you don't have a cash reserve, that's what you should do with a chunk of the money.
     
  11. oneeightyseven

    oneeightyseven Senior member

    Messages:
    9,677
    Joined:
    Apr 13, 2008
    give it to me. I will kop RO jackets and TB cashmere. Will undoubtedly go up in value. I'll PM you my paypal. Oh yah, make sure it's marked personal payment too; I don't want any pesky paypal fees!
     
  12. otc

    otc Senior member

    Messages:
    14,211
    Joined:
    Aug 15, 2008
    it is funny because 10 years ago, the advice that ford or GM were safe companies would have been accepted reasonably well...if you had listened to the advice then and stuck all your eggs in one basket

    well lets just say one of those baskets looks really shitty and the other one fell apart.

    open a roth IRA (assuming you have already paid out taxes on this 20k) as I would hope your future tax bracket is higher than when you are 22. Put a big chunk of it in VFINX or something similar and leave yourself a few k to play with (within the confines of a Roth) if you feel the need to buy a few shares of google or something.

    Time is on your side...by the time you retire, 20k in an s&p 500 index fund with very low fees (like VFINX...fidelity probably has one too) will have turned into a giant pile of money and withdrawals are TAX FREE.
     
  13. crazyquik

    crazyquik Senior member

    Messages:
    9,082
    Joined:
    May 8, 2007
    Location:
    Capital of Southern Elitism
    Spend it at thrift stores and outlets and then flip the clothes on eBay and the B&S forum.
     
  14. Naturally Baked

    Naturally Baked Senior member

    Messages:
    158
    Joined:
    Mar 11, 2010
    it is funny because 10 years ago, the advice that ford or GM were safe companies would have been accepted reasonably well...if you had listened to the advice then and stuck all your eggs in one basket

    well lets just say one of those baskets looks really shitty and the other one fell apart.

    open a roth IRA (assuming you have already paid out taxes on this 20k) as I would hope your future tax bracket is higher than when you are 22. Put a big chunk of it in VFINX or something similar and leave yourself a few k to play with (within the confines of a Roth) if you feel the need to buy a few shares of google or something.

    Time is on your side...by the time you retire, 20k in an s&p 500 index fund with very low fees (like VFINX...fidelity probably has one too) will have turned into a giant pile of money and withdrawals are TAX FREE.


    Thats a good idea...im obviously gonna spend a bit of it on some nice things for myself (can't let ALL the hard work I did go into a long-term fund [​IMG] ) I really wanted to get something that would eventually pay off grad school for me or allow me to purchase or put a down payment on a house atleast by the time I get my doctorate degree.
     
  15. Naturally Baked

    Naturally Baked Senior member

    Messages:
    158
    Joined:
    Mar 11, 2010
    Spend it at thrift stores and outlets and then flip the clothes on eBay and the B&S forum.

    to be quite honest I've made a couple grand probably just in selling items I bought on sale and re-sold through ebay or other forums.
     
  16. phreak

    phreak Senior member

    Messages:
    1,533
    Joined:
    Apr 17, 2008
    Not one of the investments you listed would be considered "safe" in any reasonable context. Maybe as opposed to dropping it on black at the casino, but that's about it. You can lose up to 100% of your investment in any of the investments you mentioned. Penny stocks are the worst. Investing 100% of your money in a distressed company in a distressed industry (Ford) is not much better. Mutual funds are the safest of the ones you mentioned (that's not saying much) but any mutual fund with a history of returning 15-20% will be in a higher risk, more volatile sector that as likely as not will lose that much (or more) in any given year.

    You need professional help. Find a fee based financial planner (fee based is key) to help you decide on a plan. If you don't have a 3-6 month cash reserve, then this money should go into a CD ladder for a rainy day. After that you can start thinking about investing in equities or bonds.

    A good financial planner can help you assess your risk tolerance. Think about this: If you got your brokerage statement and this money had gone from $20,000 to $10,000, how would you feel? If you said anything but "calm" then the investments you listed are probably wrong for you. If you said that you'd want to vomit, then you need a much safer investment. Scared money makes bad decisions. Don't do anything until you have a well-thought out plan.
    JMHO.


    I really dont think he needs professional help. Investing isnt that complicated. It seems that the OP knows a few of the options that are available to him, enough to make an informed decision on his own at least. Especially with a relatively small amount like 20k, he could really get a great return while having loads of fun and learning a ton too.

    If you want to be more passive, I would suggest you open a Scottrade account and just buy a few etf's that sum up to 20k; they do a decent job of diversifying with little to no effort minus the fees. If you want to be more active (some people really enjoy this part when they just start investing) read up on strategies and pick a few stocks that you think make sense. Dont just invest all 20k in one sit-down, watch the market closely for a few weeks/months.
     
  17. Parker

    Parker Senior member Dubiously Honored

    Messages:
    7,759
    Joined:
    Jan 9, 2005
    Location:
    Yerba Buena
    Thats a good idea...im obviously gonna spend a bit of it on some nice things for myself (can't let ALL the hard work I did go into a long-term fund [​IMG] ) I really wanted to get something that would eventually pay off grad school for me or allow me to purchase or put a down payment on a house atleast by the time I get my doctorate degree.

    Imo, OTC and Mark of Plano have good ideas. Although if you can learn this stuff on your own and avoid an advisor, you'll save some dough.

    For "safe" (conservative) long-term investments, I'd go with an all market index fund with as low fees you can find. ETFs are good too. If your goal is to pay off grad school or put a down payment on a house, that seems more of an intermediate timeline (5-10 years?) and so you'll probably want the principal to remain somewhat stable and you'll need access to it without penalty. You might need to go with a mix of stocks and (tax-friendly) bonds in a taxable account. (Though I recommend starting the retirement account as soon as you can).

    And of course some of it on some killer gear from B&S. Cuz fancy threads are an investment in your future, young man! [​IMG]
     
  18. username79

    username79 Senior member

    Messages:
    2,144
    Joined:
    Apr 1, 2007
    Best advice is to use it as cash reserve. Put it a CD, high yield account, etc. I consider 20K to be the bare minimum for a cash reserve. I can lose all income for at least 6 months and be OK.

    Otherwise put it into a low expense no load index fund. VFINX, steady 7-8% return.
     
  19. ANIKETOS

    ANIKETOS Senior member

    Messages:
    396
    Joined:
    Dec 14, 2009
    Location:
    Somewhere
    I have a real estate fund that guarantees 8% annually and looks like that number is going to jump to 11% with an IRR of 15%
     
  20. kmwrestle

    kmwrestle Senior member

    Messages:
    148
    Joined:
    Nov 12, 2006
    Location:
    Clinton MA
    I agree with the Roth idea
     

Share This Page

Styleforum is proudly sponsored by