Money advice

AFC-911 · 03-02-2005, 07:14 PM

Ok, I've got 4k in one of my accounts that I'm not touching, what should I do with it? I'm 22, I don't have an IRA, or any investments whatsoever. I also have zero debt.

What are my best options?

M.D. Holloway · 03-02-2005, 07:19 PM

Invest in a major oil company like ExxonMobile, or invest in a Roth IRA or invest in a Christmas tree farm. Iv'e known people that have done all of these and never lost. Then a agian, 4K is a nice deposit on a p-car, late 80's Targa would be my choice.

1973911s · 03-02-2005, 07:19 PM

I would find a Morningstar 4 or 5 star growth mutal fund, and invest it.

I have about the same in my daughters account and will be investing it this weekend.

Michael

AFC-911 · 03-02-2005, 07:29 PM

Thanks for the advice guys, keep 'em coming.

Lubemaster,

I have a larger, separate slush fund for the *right* P-car. I do think I have my priorities in order.

turbo6bar · 03-02-2005, 07:31 PM

Emigrant direct savings account at 3%, first. Then, decide your goals: long-term, mid-term, short-term. Short-term: bonds, dividend stocks, CDs, online savings account. Mid-term: growth stock. Long-term: IRA.

If you want hands-on, then start thinking about creative ventures.

MotoSook · 03-02-2005, 07:47 PM

Go to Vegas and blow it on booze and women

No really, put it in a savings account for now. Then continue to do your home work...you don't want to lock yourself into anything by acting to quickly.

There are no sure bets (although some folks think they have it figured otu) when you roll the dice on the market. Go that route, but not with all of the money. Just like most folks do...diversify.

RoninLB · 03-02-2005, 08:23 PM

Vanguard Total Stock Fund, then forget about it for 20yrs.

84porsche · 84porsche's Garage

I would say it depends on your total financial situation. If you are going to need the money in the near future for anything then you may want to keep it liquid. Once your in an IRA/Roth IRA, the money is technically locked until retirement. You can invest in mutual funds or stocks for that matter but mutual funds will offer a little bit more security.

competentone · 03-03-2005, 01:26 AM

Quote:

Originally posted by 84porsche
I would say it depends on your total financial situation. If you are going to need the money in the near future for anything then you may want to keep it liquid. Once your in an IRA/Roth IRA, the money is technically locked until retirement. You can invest in mutual funds or stocks for that matter but mutual funds will offer a little bit more security.

Good points about considering the total financial situation, but I'd add this about a Roth IRA: Only your capital gains are "technically locked until retirement" -- after the account has been open for (if I remember correctly) 5 years, you can withdraw any principal you've put into the account with no penalties.

That means, if you put the $4,000 into a Roth now and, if you are successful in growing that to some amount greater than $4000 in 5 years, you can withdraw the original $4,000 with no penalties or taxes due on the money.

You also can withdraw up to $10,000 tax and penalty free of any gains for a "first-time" (IRS has their own definitions of "first-time") home purchase.

The biggest disadvantage I can see with a Roth for a younger person: Being younger and investing, you'll probably be willing to take greater risks with your money. You'll probably be looking for higher returns -- higher risk investments might mean you will have losses. It is more difficult to use your losses suffered in a Roth IRA to off-set gains, or against ordinary income.

Here's my suggestion:

Keep your $4000 ready in a local bank. Get up every morning and search the classified ads for anyone selling a low-priced car with collector interest (I like Porsches for this) within reasonable driving/towing distance from your home. Often times non-"car" people won't understand the parts (or "collector") value in their "old car" so you can buy it for substantially less than what you can part-it-out for (or re-sell it for). If you pay attention to what cars and parts are desirable, know their values, and have a place where you can park, work on, or part-out a car -- and assuming the opportunity to buy actually presents itself (and you can get to it before someone else does), you'll be on your way to seeing your $4000 grow.

M.D. Holloway · 03-03-2005, 06:56 AM

I still say Christmas trees!

on-ramp · 03-03-2005, 07:14 AM

it's great that you have zero debt. stay away from credit cards and you'll do fine. the biggest killer is debt....you're not truly wealthy until you owe nothing.

Superman · 03-03-2005, 07:15 AM

21/28 torsion bars, fresh shocks, adjustable through-the-body front sway, Carrera rear sway, Elephant Racing bushings and alignment. Go ahead and just blow the rest...I suggest women.

tabs · 03-03-2005, 08:14 AM

Quote:

Originally posted by on-ramp
.you're not truly wealthy until you owe nothing.

When you finally reach being wealthy, by oweing nothing you will realize that debt can be usefull....For instance you can buy a house in an apprecaiting housing market have a mortgage on it, take the money that would have been used to pay the house off and invest it at higher rate of return than you are paying on the loan and take a income tax deduction for the interest you are paying...This is using mney to it's highest and best use....an abstraction if you will on the use of money...by tieing up your principle by paying off your debt, you are not creating any cash flow...your money in a sense is DEAD....or in an apprecaiting housing market your rate of return must be adjusted downwards because of the amount of principle you have invested.

What is wrong with credit card debt if the interest rate your paying is 1.99% for the life of the loan? However I am making the assumption that you are using the money for something that HOLDS or INCREASES in value.

Best advice so far is to review your financial situation with regards to the money....According to your needs you can invest for short term, medium term or long term...each has it's own paticular set of parameters.

If you are of mind to yu can work the money...as suggested by buying collectables (cars) I would suggest there are alot of different areas of collecting that can be VERY profitable. Knowledge is the key, and you have to start the process somewhere. I have found ART to be the most lucrative.

For long term investment you need tax deferal to maximize your return... YOu also have the option to keep some money in reserve and invest the rest for long term...Remember tther is nothing like the compounding of interest over time and the earlier you start the better off you will be in the long run...

Evans, Marv · 03-03-2005, 08:45 AM

In my opinion, and considering your place in life - ect., I think Ronin & a couple of the other guys have it pretty close. I would say put it into a Roth invested in a Vanguard balanced allocation fund and continue to contribute (dollar cost averaging) from now on. You have the opportunity to end up with a very tidy sum a quarter of a century or more down the line. Good luck.

turbo6bar · 03-03-2005, 10:05 AM

re: cash flow and debts. Having no debt is a true luxury if the cash flow is adequate. Many individuals are wrapped in an ever growing snowball. You work hard to buy the toys, and as you work harder, you need/want more toys. There is always a drive to acquire more. Well, what if you moderate your toy acquisition and decrease your work load? Doesn't everyone (tabs excluded) want more free time to enjoy life?

I thought investing in mutual funds was a great long-term investment. I started in 1986 with $200/month regular contribution. Well, after this bear market, I am left with only slightly more than the amount I have been contributing. On top of that, I was hit with capital gains taxes as the mutual fund managers did lots of trading.

There is no perfect/ideal form of investing. The variables are too numerous. Investors do not share the same risk tolerance.

Arvin, do you need income from this investment, or are you looking purely for growth? Are you willing to spend time managing the investment, or are you looking for fire-and-forget? Geez, so many questions.
good luck, Jurgen

M.D. Holloway · 03-03-2005, 10:21 AM

like I said, Christmas trees - easy

einreb · 03-03-2005, 10:24 AM

I'll tell you what I'd do, two chicks at the same time. Damn straight. I always wanted to do that. And I think if I had a four thousand dollars I could hook that up, cause chicks dig a dude with money. Or I would invest half of it in glorious mutual funds and take the other half over to my friend Asadulah who works in securities.

Dantilla · 03-03-2005, 10:38 AM

Stay debt-free.

I will borrow money ONLY for real estate. That's because it makes me more money.

There is no Porsche on this planet worth going into debt over.

You're starting out right.

tabs · 03-03-2005, 10:47 AM

I guess having enough liquid assets to be able to pay off if desired and/or use the cash flow from those assets to make payments on your debt load, changes the equation....

Sometimes something can be considered a TOY, but it is also an investment, an antique gun or piece of art... you have something of value at the end of the day...hopefully one that has increased in value...it might not have provided the greatest rate of return, nor cash flow.... but can be considered to be diversification of a portfolio...

Well Turbo you just hit the nail on the head about why I don't like mutual funds....If you had bought and held MMM, XOM, MSFT or CVX...you'd be sitting pretty right now....having collected dividends and/or capital appreciation over the years.

KTL · 03-03-2005, 01:25 PM

Quote:

Originally posted by einreb
I'll tell you what I'd do, two chicks at the same time. Damn straight. I always wanted to do that. And I think if I had a four thousand dollars I could hook that up, cause chicks dig a dude with money. Or I would invest half of it in glorious mutual funds and take the other half over to my friend Asadulah who works in securities.

Good call dude. Dudes with money invariably get doubled-up on by two chicks.

If I had 4 large to spare? Two words of investment advice:

Vandalay Industries

'Nuff said.