Hey Diceman, regarding investing, check out a book called
The Richest Man in Babylon. I took some classes for my degree at school like financial managment, personal financial planning, principles of investment, and other related classes. That book was one we had to read. It’s easy to understand, and has a lot of good info.
http://en.wikipedia.org/wiki/The_Richest_Man_in_Babylon_(book)http://www.luinc.com/elibrary/rmb/richestmaninbabylon.pdfFirst, you should save 10% of all you make to invest in yourself and your future. Use the time value of money to your advantage while you’re young. For short term investing, look around and find the highest rate you can for a savings, money market, or similar type of investment. You might be able to make a better investment by personally investing in undervalued items for sale locally that you could sell on eBay, etc. You should have 3-6 months cost of expenses in liquid assets for emergencies.
Inflation averages about 3% a year. If you just stick cash in a jar, it will lose value over time. So, you need to find an investment for your cash that has a return of 3%+ just to break even. I have a PayPal Money Market account that currently earns 4.64%. Personally, I make better returns by reinvesting my money in more things to sell.
For longer investments (5-10 years) put your money in the stock market. Historically, the total of the entire NY stock market since inception averages out to 12-13%. Minus the rate of inflation, that’s like 10% return average per year. To diversify your portfolio, you can buy shares that encompass the whole market through Vanguard or similar companies. To realize returns this high though, you need to invest for 5-10 years (7-10 is better) to adjust for the fluctuations in the market and average returns near this high.
First you should be saving for your retirement. You can in 2008 put $5000 a year in a Roth IRA. The money grows tax free (because it’s already taxed income) and you can withdraw it tax free when you retire. Every year you should put the most you can in a Roth IRA for retirement. You can get whole market shares for your Roth IRA, and average around 10% returns with the profit reinvested until you’re older. As you age, you diversify your portfolio with less risky (but lower return) bonds, precious metals, etc. before you retire. You can easily retire a millionaire or richer if you’d like. It’s all a matter of having the discipline and getting your financial house in order, and saving early and using the time value of money to your advantage.
It cost me many, many, thousands of dollars to learn this info. I hope it helps you. <img src="/ubbthreads/images/graemlins/laugh.gif" alt="" />
