Investment Advice...

1.2gees · 1.2gees's Garage

Hello, I'm a student... I should be starting college as a full time student next semester.
I have a part time job (varies 20-35 hrs a week) as a mechanic. I have about $3100 saved up, and I make descent money. ($200+ a week, after my expenses). Currently I live with my parents and just started to get about $400 from them a month. I have no big expenses, save for about $411 a month of insurance (don't plan to change that), that should go down big time if I can keep myself from getting another ticket in the next year or so. I get my license back in 5 days after a year of suspension. Anyway, chanses are I will not have to work for my college/living expenses, some luxuries included, but nothing too fancy.

Anyway, I currently have about $3100 saved in the bank and have brought my car up to pretty descent levels in suspension, tires, etc. I also have another $750 saved up for DEs, and what little maintenance that it should require for the next few months.

I'm trying to decide where to invest this money. I'm not scared of anything long term, as I do not need this money for anything. I originally planned to buy myself either a Porsche 968, and turbo charge that, or get a 944 turbo but I think I'd rather invest with my first $5,10, or even 15k.

I'm getting ready to subscribe to Money, and The Wall Street Journal this week. Within about two months from today, I'm guessing I will have about $5k, so should I go IRA, or CDs, Mutual Funds, or "....." tips?

I'm open to suggestions, and currently don't know much at all about how to manage my money. I'd rather play it safe with my first $5, or 10k, but will possibly play with the second $5k I raise or whatever may follow. I plan to be in school for about 6 years, starting 2002.
Thanks.
Ahmet

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It's all the driver...
My page over1g@hotmail.com
Porsche owners Gallery.../My 944

pwd72s · 10-14-2001, 05:43 PM

Research various IRA plans. At your young age, I'd suggest ROTH plans. Also, at your young age? A low cost broad as possible index fund, such as Vanguard Total Market...
put the max in every year, odds are you'll be a millionaire at age 65 without paying any capital gains taxes when you cash in. Do a web search for Vanguard Funds...go to their website, you'll learn more. Bottom line..it's your money, you owe it to yourself to do the homework, manage it well, because no professional manager will care about YOUR money more than YOU do. Good Luck, Paul

Jim T · 10-14-2001, 05:50 PM

It is unlikely that that small amount you are talking about is going to be retirement money. In other words, you are going to be using it at some time as you are starting out.

Given that it is a small amount, and that it is not long term money, it is not worth putting it at risk. Even if you could return 15% over the next couple years, that is not much that much money in your pocket ($750). To get 15%, you'd have to put the entire principal amount at risk. Given your situation, its not worth it, esp. in these uncertain times.

I'd just put it in a CD or money market.

If you really think you are going to not touch the money until you are 60, I'd put it in a Roth IRA, you can put $2000 in this year and $2000 in a couple of months for next year. You get tax deferred gain (if in fact you get any gain during the next couple years), and you can withdraw the principal without penalty if you need it. If you are going to put in in a fund, I'd stick with a broad market fund, like the S&P 400 or 500.

[This message has been edited by Jim T (edited 10-14-2001).]

pwd72s · 10-14-2001, 05:58 PM

"I'd stick with a broad market fund, like the S&P 400 or 500"

Uh Jim, the Vanguard total market (no load) fund with it's extremely low management fees isn't broader????? The Vanguard fund is the broadest fund there is, as far as I know...but hey, what do I know? I'm not a broker, working for fees. edit subject: Jim's advice was sound...but see? Even this brings out some debate. This shows the importance of YOU doing YOUR research, choosing YOUR investments. "hot tips" usually come most often from sharks...people who take a percentage of your investment money in fees and "services". The percentage taken in these "fees" can make a huge difference in YOUR bottom line. Do research! No load fund companies like Vanguard can get you started.

[This message has been edited by pwd72s (edited 10-14-2001).]

1.2gees · 1.2gees's Garage

I'm looking into it, this will be my decision to make at the end ofcourse...

I could have about 10k by this time next year, if I think the return will be satisfactory. I'd like to be able to pull the money if I need to at some point, but chanses are I won't need to do that. I will always probably have a roof over my head until I'm out of college at least. I won't have to work for rent, or maybe even a second new car (that costs less than $18k), I won't have to work for my living expenses, and perhaps not even cable. I just need to have the security of knowing that if something happens, I have money to fall on, but again chases are I won't have to touch it. I don't want to save until I'm 50 either. I'd like to have something by 35...

I'm just looking for some pointers. Looking at ROTH IRA right now. Thanks for the replies thus far, I'm open for more. ($10k in IRA by this time next year, than play with about 5k in the stock market perhaps, or a mutual fund?)
Thanks again.
Ahmet

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It's all the driver...
My page over1g@hotmail.com
Porsche owners Gallery.../My 944

ljonespwc · 10-14-2001, 07:26 PM

1.2, investing in the stock market is very risky right now. However, risk either scares people or excites them (sometimes right out of their money). I am of the latter group, and 5 weeks ago, I purchased $30K worth of Nortel, Cisco, and Oracle. Two weeks ago my $30K was down to $24K, and as of last Friday, it's up to $32.5K. It's a roller coaster ride. If your cash needs are short-term, your money is better spent in Las Vegas--at least you get some entertainment value for your dough. If you can wait 3-5 years, you'll likely do very well. Invest in what you know--I know technology stocks, and tend not to diversify too much. Hope this helps. Lance.

Jim T · 10-14-2001, 07:44 PM

Those are ALL considered broad market funds. Some are broader than others, but they are all broad market.

Like I said, in his sitution, my first advice would be to stay out of the stock market right now all together. Realistically, the money he is talking about is not long term money, and the best thing to do with it would be to keep the principal safe.