If you are saving for retirement consider opening a Roth IRA.
If you are looking at a short term investment (like for school) then consider Certificates of Deposit (CDs) at a bank or credit union. Credit unions usually offer higher interest rates and lower fees compared to banks, so consider opening a savings account at one if you don't have one already. You can "ladder" the CDs to mature at different times to make your tuition payments.
For investing accounts consider places like Fidelity or Vanguard. Fidelity tends to have lower minimums, but Vanguard tends to have lower fees. Since you are starting out I would recommend starting with mutual funds or Exchange Traded Funds (ETFs.) With one purchase you will be able to diversify your investment and lower your risk. Look for funds that pay dividends - the compounding returns add up nicely over time.
If someone recommends a specific stock be sure you really do your homework. Stay away from anything under $5. They are considered penny stocks and are usually that low for a reason.
You might also try watching shows like Jim Cramer's Mad Money on CNBC or Nightly Business Report on PBS.
First of all, anyone who suggests CD's or money markets is out of their mind. You want to have $22,500 in three years? Put it in a CD. You want to have $28,000 or $30,000 in three years? Invest in indexed mutual funds. I recommend Vanguard, a very solid company with great low cost index fund. I would dollar cost average into the market though, because I'm concerned about a correction coming sometime this year.
First, open an account with Vanguard and put all the cash into their Total Market Bond Index fund. Then start to move into stocks with Vanguard's "500 Index" which tracks the S&P 500. I think you will need $3,000 to get into that fund. Then in two months, put $3,000 into an international index fund, then in two months $3,000 into a small cap index fund, and so on, until you have as much in stocks as you want.
Be careful with the total market bond fund, if interest rates start to go up, shift it into a money market account. But I think you are okay for at least six months and by then you will have $9K in stocks.
You can also accomplish all of the above with ETF's that you can get through Scottrade or any discount online broker. The nice thing about ETF's is you don't have to go $3K to start, it can be less.
Diversify and conquer!
If you want a moderate degree of involvement:
Go to assetbuilders.com and look at Couch Potato Investing.
If you want more involvement:
Buy high quality stocks (e.g.: XOM, JNJ, PG), reinvest the dividends and hold on for several decades.
If you want less involvement:
Buy a Vanguard 2040 Target Fund, for example.
Slow but steady wins the investment race. (pattern your investing like Warren Buffett)
Hello,
First off, I am 18 years old, & have finally saved a total of $22,000 USD. I have been reading books & gaining all the info I can on investing money. But I wanted real world info, How and what would be good to invest my money into? Thank you!
