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Investment advice for a 24 yr old
Old 12-13-2010, 11:30 PM   #1
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Investment advice for a 24 yr old

This is my first time investing and I would appreciate some advice from you experienced folks. I'm looking to invest about 10k. My aim is for long term growth. I'm not looking for any "get rich quick" schemes.

As of now, I'm thinking about putting 40% into in the S&P, 30% into google and 30% into a foreign index. I want to keep things simple until I've learned the ropes. Is my idea stupid, okay, good, or absurd and why.

Obviously I will be seeking the opinion of a professional as well and this online advice is merely another outlet. So yeah none of the "you shouldn't ask people online for financial advice" type comments please.

Thanks.
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Old 12-14-2010, 06:11 AM   #2
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If you don't have a RothIRA open yet, I'd look into opening one (probably at Vanguard, Fidelity or similar) and invest in a targeted retirement plan (like Vanguard 2050 for instance - most places offer one now). Look for low fees when comparing them. If you have $5k earned income this year and next, you can put all $10k in (5 for this year 5 for next). A good long term start.
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Old 12-14-2010, 06:16 AM   #3
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I would also substitute "bond fund" for "google" in your planned asset allocation. Hold off on even considering individual securities until you have learned enough to evaluate them (if ever). Otherwise you run the risk of taking on way too much risk without realizing it.
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Old 12-14-2010, 06:32 AM   #4
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remove google, and split that between the following

10% to a small cap stock fund (think wilshire 4500, russell 2000, or a managed fund)
10% to a bond fund (think total market bond index, corporate bonds, government bonds, or some combination which is INVESTMENT GRADE - avoid junk bonds)
10% to google, a stock portfolio, or something else (like Real estate, commodities, foreign small caps, emerging markets stocks or something else).
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Old 12-14-2010, 06:35 AM   #5
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RedSilk,

1. Get this book



2. Learn it. Love it. Live it.

3. Get wealthy and have a great life.

Oh, and you shouldn't ask people online for financial advice.

Sorry, couldn't resist.
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Old 12-14-2010, 12:27 PM   #6
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I would add, the secret to a good retirement is "Don't outlive your income."
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Old 12-14-2010, 12:54 PM   #7
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Quote:
Originally Posted by Onward View Post
RedSilk,

1. Get this book



2. Learn it. Love it. Live it.

3. Get wealthy and have a great life.

Oh, and you shouldn't ask people online for financial advice.

Sorry, couldn't resist.
+1

And before you do any investing you need to understand the ramifications of buying different asset classes in taxable vs tax-deferred accounts.

I fully agree that you need a simple split between equity and bond index funds, but you need to know that if you buy a bond index in a taxable account you be paying taxes on the monthly dividends....that's not a good thing!

The book covers all of this and is likely available in your local library. Happy reading and welcome to the forum.
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Old 12-14-2010, 07:44 PM   #8
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I don't think you should be consulting the opinion of a professional because they are generally not qualified and just want to make money off of you.
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Old 12-14-2010, 08:45 PM   #9
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Quote:
Originally Posted by RedSilk View Post
This is my first time investing and I would appreciate some advice from you experienced folks. I'm looking to invest about 10k. My aim is for long term growth. I'm not looking for any "get rich quick" schemes.

As of now, I'm thinking about putting 40% into in the S&P, 30% into google and 30% into a foreign index. I want to keep things simple until I've learned the ropes. Is my idea stupid, okay, good, or absurd and why.

Obviously I will be seeking the opinion of a professional as well and this online advice is merely another outlet. So yeah none of the "you shouldn't ask people online for financial advice" type comments please.

Thanks.
Your idea is fine I'm even ok with buying your 5 shares of GOOG. Conventional wisdom is that you don't have assets to pick individual stocks and there is much wisdom in this advice. However, when I was your age investing in mutual funds was boring and buying individual stocks was fun. So for me the choice not between buying an mutual fund or individual stocks. The choice was buying a stock, or a new computer, or skis, or big screen TV in which point Goog is a much better investment than the alternatives.

Do open up an IRA or max out your 401K and don't buy individual stocks in anything but your mad money taxable account.
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Old 12-14-2010, 09:20 PM   #10
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I don't think you should be consulting the opinion of a professional because they are generally not qualified and just want to make money off of you.
Haha. I will be seeking financial advice from a close friend who works in the industry (whom I will not be paying). I don't trust anyone who's looking to make money from me so I'll be doing my own research as well.



Thanks everyone for your advice. Unfortunately, I don't think I can open a Roth IRA account because I'm currently working overseas. (correct me if I'm wrong)
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Old 12-15-2010, 06:27 AM   #11
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They work in the industry? They are a close friend? That ought to be interesting. Perhaps they are one of the 1% known to be good guys, but there is a higher probability that they are in the 99%.
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Old 12-15-2010, 06:38 AM   #12
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Haha. I will be seeking financial advice from a close friend who works in the industry (whom I will not be paying). I don't trust anyone who's looking to make money from me so I'll be doing my own research as well.



Thanks everyone for your advice. Unfortunately, I don't think I can open a Roth IRA account because I'm currently working overseas. (correct me if I'm wrong)
If you file US tax returns then maybe you can.

An IRA is a tax shelter, so if you need a tax shelter, it might be an option (and there are other options too if taxes are an issue).
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Old 12-15-2010, 07:04 AM   #13
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To contribute to an IRA, you need earned income that is not excluded by the foreign earned income exclusion. Furthermore, there are income limits as well. So just because you are working overseas does not preclude you from making a Roth contribution, but there are the usual rules.
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