Gold 401K

Where do I start investing?

I want to invest a modest amount of money, but don’t know where to begin. $500, is that too little? Should I go with an IRA, Mutual funds? stock market? gold? Silver? Matress Boxxspring? I don’t want to just pull some random thing out of my…nose. I understand the basic concept ot the stock market, and I really don’t want to start 500, and in three months have 495. I afraid of loosing money, but I know nothing ventured is nothing gained. Someone, please give me some help.

$500 isn’t much, but it’s definitely a start. Many investments have minimums that are a fair amount higher, but once you have $1000, you can at least put it in certain money market accounts. If you might need the money again soon (possible car repair, hospital bill, etc.), it’s best to have money in a savings account or a money market account. If you don’t need it right away, you can put it into a bond index fund. If you won’t need the money for at least three years, start considering a stock index fund. IRAs are good places for retirement money. You should save for retirement, but it can be expensive and difficult to get money out of an IRA before you are retirement age (with a few exceptions, like buying a first house). Whatever you do, shop around for banks/finanical companies that don’t charge a lot of fees. This applies to checking accounts (what’s the ATM fee?) as well as mutual funds (what’s the fund’s operating fee percentage?). Stay away from anyone who promises to get you rich quickly. Spend less than you make. Save up 1-3k dollars for emergency reserves and keep that in checking/savings/money market. Once you’ve done that, start putting money away for retirement (IRA, 401k), probably in some combination of bond and stock mutual funds. If you are saving up for a house, a car, or a wedding, invest that in a low-fee mutual fund. I recommend index funds because their fees are usually much lower. If you are afraid of losing some money, go with bonds instead of stocks, but generally speaking, stocks outperform bonds over the long term.

Another thing—while it’s good for pretty much everyone to have emergency reserves, people who have credit card debt should pay that off before investing. If you have any credit card debt, make it a priority to pay that off. Paying off credit card debt is like investing money at 12-18%.

January 29, 2010 Mid-Day Stock Indexes Review