Investing

[LooksGood]

Hi, I know there is already a thread on investing but I didn't want my post to get lost in a sea of others.

At 28, I've come to realize that in life it's not just about working hard, but making the right decisions at the right time. I think investing is a perfect example of this. It takes me an entire year to make low six figures while there are other people who spend 2 months researching something, take a 5 minute action, sit back and watch hundreds of thousands of dollars double. Now of course they had training that I am not taking into account, but my point is that 30 years from now, they'll have been sitting on there laurels making as much or even more money than me, who has been working.

I would love to know how I can start learning more about investing, how much capital I need, etc. I have spent hours researching online and reading books like Rich Dad, Poor Dad so I'm asking for more sophisticated advice than "read 'The Street'". Here are my meager investments so far:

1. Maxed out my 401k for company match, takes out $400 from my paycheck each month.
2. Set up a ROTH IRA without any funds chosen because I don't know how to pick stocks.

I have about 60-70k saved up sitting in my bank accounts. I am a little hesitant to invest liberally in stocks because I know many people lose their shirt from this. I know real estate is a better option, but living in the Bay Area I can't afford the initial investment cost.

Thank you.

 

[ppllzz]



Hi, I know there is already a thread on investing but I didn't want my post to get lost in a sea of others. 

At 28, I've come to realize that in life it's not just about working hard, but making the right decisions at the right time.  I think investing is a perfect example of this.  It takes me an entire year to make low six figures while there are other people who spend 2 months researching something, take a 5 minute action, sit back and watch hundreds of thousands of dollars double.  Now of course they had training that I am not taking into account, but my point is that 30 years from now, they'll have been sitting on there laurels making as much or even more money than me, who has been working. 

I would love to know how I can start learning more about investing, how much capital I need, etc.  I have spent hours researching online and reading books like Rich Dad, Poor Dad so I'm asking for more sophisticated advice than "read 'The Street'".  Here are my meager investments so far:

1.  Maxed out my 401k for company match, takes out $400 from my paycheck each month.
2.  Set up a ROTH IRA without any funds chosen because I don't know how to pick stocks.

I have about 60-70k saved up sitting in my bank accounts.  I am a little hesitant to invest liberally in stocks because I know many people lose their shirt from this.  I know real estate is a better option, but living in the Bay Area I can't afford the initial investment cost. 

Thank you.

no risk no reward. don't expect to make huge money if you don't take huge risks, whether its starting a company, shorting growth stocks, buying into potential value traps, or taking a job with a highly cyclical industry like banking.

 

[GreenFrog]

At age 28, you can get away with being moderately risky. I'm only 23 and I'm actually risk-seeking so I place huge bets with my investments. YMMV.

Figure out X dollars you'd be comfortable losing, hypothetically, and invest with that sum.

You could always invest safely with a Vanguard fund that tracks the S&P (I think the ticker is VFINX). The S&P is up ~11% this year, which is not bad at all.

I personally think 2013 will be a decent-to-great year for the market and you seem to be semi risk averse, so I might look into that option.

ETFs are hugely popular too. Please don't invest in any actively managed funds. Not worth it.

 

[Saturdays]

This may be tough to pull off with your savings, but find 'For Profit' projects and start up companies. Become a legal partner or investor. Obviously you want to research and find out if its something worth putting your money into. But you have to start somewhere.

Run a business on the side of your current job. Find a market and create value in that space. It takes effort and time, but it could be worth it.

Like GreenFrog said, invest in low risk funds that track the S&P.

OR a combination of the above.

 

[Concordia]

Why just US stocks? There is a Vanguard fund that will track a global index, including emerging markets. Not the be-all and end-all, but an excellent place to start.

 

[Saturdays]



Why just US stocks? There is a Vanguard fund that will track a global index, including emerging markets. Not the be-all and end-all, but an excellent place to start.

im sure it was just an example

 

[Medwed]

Consider investing in real assets at home or abroad, that is how fortunes are made. The main principal of investing for the future imho is leverage. If you earn your income in US to invest in US you must look at areas where your money has the largest leverage (state to state income, RE prices etc) or look abroad for the same indicators. Don't be afraid to be bold. Greece is developing into the tastiest investment area atm, it will default and will be as profitable for investors as Argentina in 90s. Except Greece will be better because of it's location and established tourism destination.

Hoping to make a fortune in a stock market at this point and time is like betting on horses. Roth IRA is premature imho, will you be very rich when you retire? Will you draw your income from US assets or will you be retiring abroad? Why Roth now?
Between inflation, fees , taxes and unpredictability of the market and government actions I don't see stocks as anything but a blind bet. One exception would be IPO of a major, privately owned company such as ( Visa, MC, UPS, Goldman, etc) those are almost sure to make you money. So if you see Price Waterhouse or Costco going public...invest.

 

[CunningSmeagol]

^^^^What is this I don't even

 

[Texasmade]



Consider investing in real assets at home or abroad, that is how fortunes are made. The main principal of investing for the future imho is leverage. If you earn your income in US to invest in US you must look at areas where your money has the largest leverage (state to state income, RE prices etc) or look abroad for the same indicators. Don't be afraid to be bold. Greece is developing into the tastiest investment area atm, it will default and will be as profitable for investors as Argentina in 90s. Except Greece will be better because of it's location and established tourism destination.
Hoping to make a fortune in a stock market at this point and time is like betting on horses. Roth IRA is premature imho, will you be very rich when you retire? Will you draw your income from US assets or will you be retiring abroad? Why Roth now?
Between inflation, fees , taxes and unpredictability of the market and government actions I don't see stocks as anything but a blind bet. One exception would be IPO of a major, privately owned company such as ( Visa, MC, UPS, Goldman, etc) those are almost sure to make you money. So if you see Price Waterhouse or Costco going public...invest.

wtf? PwC will never be able to go public.

 

[legorogel]

understand the efficient market hypothesis.

Investing is more about not making mistakes than to find the next google.

 

[Quadcammer]



This may be tough to pull off with your savings, but find 'For Profit' projects and start up companies. Become a legal partner or investor. Obviously you want to research and find out if its something worth putting your money into. But you have to start somewhere.
Run a business on the side of your current job. Find a market and create value in that space. It takes effort and time, but it could be worth it.
Like GreenFrog said, invest in low risk funds that track the S&P.
OR a combination of the above.

meh venture or angel investing is about as risky as it gets...in fact, you are basically giving money away with the glimmer of hope that you hit it huge.

Now unless you are only putting a small amount in each project or are a baller (as I don't think the OP is), this is not a strategy I would pursue.

 

[sdb5057]

Honestly, the only way to make real money without risking your future is to use OPM. Bank loans, private investors, whatever. Use that money to make enough profit to pay off the loan/investor and still have cash left. If you properly prepare and shield yourself, even a losing investment wont end up biting you in the wallet.

If you can't do that alone, find a business partner who can (and offer sweat equity in return).

It's really not too hard so long as you have something to offer (experience, contacts, knowledge).


*Edit*: I am assuming OP knows how to do proper due diligence. Never put money into something that isn't already worth what you are investing in (aka the valuation).

Example: If some kid has a great idea that is patent pending and needs $50k to build/license out the idea, figure out what the patent is worth and what your investment will buy. First ask yourself if your $50k now is potentially worth the patent and whatever the kid purchases with the $50k should he default on paying you the contractual return. Then ask yourself if your $50k investment will give you enough upside should the investment succeed.

Set up proper contracts with milestones unlocking a % of the investment and an expected buyout option should something happen.
1. If patent is approved, $10k. Company value is now $20k (the patent value) and you expect to own 50% of the company.
2. If prototype succeeds, $10k. Company value is now $50k (patent value and materials cost, etc) and you expect to own 50% and an option to buy or sell % of the company, etc.
3. If an order for x is made, $Xk and so on.

The more work you do before making the investment, the less likely you are going to lose your shirt.

 

[AfterIt100]

Look into crowdfunding websites if you'd prefer investing in private companies.