What is a good investment plan for starters?
I'll be having $300 that I can set aside every month for savings. I'm currently not living with a partner, but planning to get married in 1-2 years. Therefore I would like to invest the money so that we won't be too tight financially once we start our own household. My partner has also steady savings an an investment account in mutual funds, but he doesn't discuss it a lot and seems like a passive investor. I know my dad invests in mutual funds, but also has stocks and real estate. I really don't know much about investing, but am willing to learn the easier forms of investment to get a feel of it before proceeding to learn riskier things. Before I find out the best type of investment for me, I'll probably just deposit it in a savings account in the bank and hope I make interest from it, but not for too long; my dad says that despite the gain I make from interest I will still lose money due to inflation. What are some forms of investment that I can look into for a start? Would it be wise to diversify, or should I just split between saving and concentrating on one form of investment that works? Are there some websites with easy step-by-step guides for first time investors, and possibly quizzes for determining my options? Are there affordable non-affilitated classes or seminars (i.e. ones that are not organized by or sponsored by investment institutions) that I can look into? I live in Jakarta, Indonesia if that matters. PS. No mention of Robert Kiyosaki / Rich Dad please, that fellow is a con artist who happens to be good at igniting fantasies and empty motivational talk. I won't even consider multilevel marketing or network marketing. Although I have respect for good and honest manufacturers like Amway, I despise their business owner networks and "education system" because it involves a lot of dirty politics and manipulation Big Brother style. I've heard of health insurances which come with an investment plan, like that offered by Prudential, but I don't know how that works out, or if I have to find downlines in order for my money to grow. Thank you for genuine answers which attempt to satisfy my question. Please kindly note that if you advertise businesses and websites here, your answer will be removed and your points will be deducted.
Investing - 5 Answers
Random Answers, Critics, Comments, Opinions :
1 :
300 a month is a nice start, I like to start out the people that I teach with some simple easy to understand strategies. Here is one that your dad can appreciate. It is called dividend capturing. When a company is profitable they either reinvest the profit back into the company or they pass the profits on to the investors in the form of dividends. The nice things about companies that pay out dividends is they are making money. To qualify for a dividend check you need to own the stock on or before the date of record also known as the EX-date. Also you don't have to keep the stock all year just one day to qualify then resell it for what you paid for it or more. It is possible to do this strategy 10-20 times per month if you like and it doesn't take that much time. Another nice thing about dividend paying stocks they tend to be stable and are good companies to hold on to. I know you must be thinking that commissions will eat up your profits but there are online brokers that will only charge you as little as $2.50 per trade. I'm going to give you a link to a blog that has more info on this strategy it is http://moneymakeslifebetter.wordpress.com/2010/08/10/ex-dividend-dates-43-for-august-11th-21-for-august-12th/ In my source there is also a link for some free information on other strategies that maybe helpful.
2 :
Being frank - there is no right answer to your question. the stragetegy of investment depends on the amount of risk u r willing to take / nature of investments / the type of market you are in etc..etc.. Its a big list and you need to do some study before starting to earn some money that would hedge the inflation rates.. However there are few risk free returns like bank deposits , Fd's RD's etc... however - the returns wont be that great. You have to keep in mind this rule always - "Risk and returns are directly corelated" Start learning to study the markets - till then u can leave ur money in Fixed deposits
3 :
Yes, it matters that you're in Jakarta. You don't have access to the Interlibrary Loan system in the US where you can get almost any book for free, or I could give you a hundred titles. You should probably save your money until you have at least a thousand dollars to start, or commissions will be the bigger percentage of your transaction. You sound pretty well educated and level-headed. The best way to learn is from a book. Start with Investing for Dummies and Investing in Stocks for Dummies. It's a good series. Try to develop a plan, learn about risk and money management, then test your plan on a simulator before you risk your money. If you don't want to learn how to invest in stocks, you can always choose a fund or ETF that does it for you. http://www.howthemarketworks.com./ http://www.fool.com/ http://stockmarket.makemoneyideas.in/ http://simulator.investopedia.com/home.aspx (simulator, and finance terms and definitions) http://www.top10traders.com http://investing.sitesled.com/ www.stockcharts.com http://futures.tradingcharts.com/learning/ http://www.fool.com/school/basics/basics... http://beginnersinvest.about.com/library... http://www.mysharetrading.com You asked for a Plan: Here's a good one from the Motley Fool website Unified Theory of Everything Financial Revealed in Dilbert and the Way of the Weasels By Scott Adams 1.Make a will 2.Pay off your credit cards 3.Get term life insurance if you have a family to support 4.Fund your 401k to the maximum 5.Fund your IRA to the maximum 6.Buy a house if you want to live in a house and can afford it 7.Put six months worth of expenses in a money-market account 8.Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement 9.If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio Check the bottom line: A portfolio with an asset allocation of 70% in Vanguard's Total Stock Market Index (VTSMX) is doing just fine, performing remarkably close to the S&P 500 index. Moreover, that simple two-fund portfolio is perfect for the vast majority of America's 95 million investors who are passive much as Adam's Dilbert character. The truth is, most investors have little or no interest in Wall Street's casino action; all the time-consuming research, the sophisticated stock-picking tricks, the costly trading necessary to play in a market drowning in 10,000 stocks, 18,000 funds and more than 100,000 bonds. Most investors have jobs and kids as their top priority. Moreover, Dilbert's simple two-fund portfolio compares favorably with our other lazy portfolios.
4 :
Start with a well diversified portfolio consisting fundamentally strong stocks , commodities , precious metals , etc.. So that if one sector dose not do well it will not effect your portfolio...
5 :
Investing money in any good financial instruments which have growth is a good idea.
