I need help investing some of my extra cash

[phrankandbeanz]

I finally got out of some debt and finally is on the positive side of the bank account. I am asking for suggestions in ways to invest maybe a $1000 for either the long run or short run with very little or no risk at all.I heard of bonds, mutual funds and such. But can anyone elaborate more on this or throw in their $.02.

Regards
Frank

[RandallNeighbour]

Frank, you've hit upon the most highly debated topic anywhere, of all time... people discuss the "best" ways to invest money even more than they discuss religion or politics, and it's as emotionally charged as well!

My .02 cents' worth of "General Investing" advice:

1. Attempt to save at least 10% of your gross income each month. 20% would be far better, but everyone on this list has high fuel, insurance and maintenance costs on our little two-door toys, so this may not be possible. It's a lot like brushing and flossing one's teeth when he or she is young... doesn't mean a lot now, but when you're 70 and you can eat a steak with your own teeth, that's a wonderful feeling. Successful investing and solid financial standing is all about sacrificing today (not buying something on credit) to enjoy what can be had much later.

2. If you have yet to start an IRA (Independent Retirement Account), this may be the best way to invest your money... Roth IRA's are quite good in that you're using taxed dollars going into them and you are then free from taxes when you take it out when you're old and retired. This hurts a little now, but feels really good later!

3a. Hire a fully independent financial advisor...a person who charges a per-hour fee to give you advice about your finances and makes ZERO dollars off commissions or salaries from banks or financial institutions. Why? He or she has nothing to lose except you as a paying customer if you receive bad advice from them and they will be far more partial in their recommendations. They'll also help you accumulate wealth over the long haul if you build a relationship with them.

3b. Ask the prospective financial advisor to share their own finances with you. If they are in debt and living on the edge, run away from them! They obviously do not live by the advice they give others. My wife and I found a 38 year old man who has no debt, drives a 4 year old Toyota, owns his condo, and invests his money instead of spending it. His debt to equity ratio is zero... you should certainly ask whomever you wish to work with what their debt to equity ratio is, what kind of mortagage they carry as well as car and credit card payments. If they won't share this with you, walk away... and yes, it IS your business to know about their personal finances in this situation.

4. I can already read your mind "I only have a grand to invest. Why blow $200 of it on a financial advisor?" Well, think long term... he or she will help you invest the remaining $800 very wisely and future monies. It's a good investment.

Frank, all this advice is worth exactly what you paid for it. Nothing! So, if you don't like what I've said, chalk it up to asking a bunch of other Porsche owners to chime in on non-Porsche related issues. :)

Closing thought: Save $25 a month beginning at 21 years of age, and if invested wisely (a good Roth IRA, for instance), that monthy pittance will be worth far more than a million dollars by the time you are 60. It's all about allowing compounded interest to work its snail-speed magic.

[Frank]

I have alot of money in bonds.You can put you money in them,forget about it and a few years later have more then you started with.Bonds are very low interest paying now so I would use cds instead.Depending on how long you wish to tie up your money,they have 3 month,6 month,1 yr,and so on.They usually pay a set amount of interest.I like stocks but they are more risk.I use sharebuilder.com . They charge $16.00 to buy any amount of a certaint company you like and the same price for sell.I personally have most of my money in the stocks Maxtor (MXO),Perrigo (PRGO), Nam Tai Electronics (NTE), and Krispy Kreme (KKD).I just bought Krispy Kreme as they are VERY low due to bad news so I am hoping that will bounce back.You can go to cnnmoney.com to lookup and read about any stock.This is the best time in my opinion to buy stocks.Everything is very low and this should be a very good weeks with alot of good news coming.I hope this helped.This advice above is very good so you may want to read it twice:-)

[phrankandbeanz]

what are cd's?

[phrankandbeanz]

randall may I ask, what do you invest in?

[Frank]

Hi,
A CD is a form of investing similar to a bond but shorter term.Say you put $1000.00 in a 6 Month CD paying 4 percent a year.You can't touch that money for 6 months or you will be heavily penalized.Now,in 6 months you go to the place you bought it and they give you $1000.00 plus 2 percent since you had it for a half of year so you get half the interest.Now you have $1020.00.You can put that in a nother 6 month cd if you like then.Almost every bank sells cds.You may want to go to bankrate.com or http://www.bankrate.com/brm/rate/dep_home.asp to get the going rates as of now as they are always changing.You will be locked in the the rate at the day you buy it.Please let me know if you have any questions.

[RandallNeighbour]

Frank, my wife and I have a big chunk of our retirement savings invested in what is called a "mutual fund of funds" through Washington Mutual. We did this because:

1. It's quite safe and has had modest gains each year, even through the rough patches. This is mostly due to the fact that they've invested in everything under the sun and our money is amortized (spread out) over thousands of stocks, bonds, etc. When one takes a dive, we don't feel it for the most part because others are rising.

2. Washington Mutual's "fund of funds" has less than 3% overlap, which is important when investing with multiple mutual funds. Overlap is having the same stocks in different funds, which isn't good for you if that stock drops... you've double-dipped into it.

The balance of our cash is in an interest bearing checking account that actually is beating some CD's right now, and the money is fluid for our use... we must keep a very high balance though to get this interest rate... mind you it's not sky high, but it's ok for the market's position today.

We are also investing about 17k into a smallish rent house we own to rent it. We own it outright and we'll have $700 a month coming in soon from that and every penny not used for maintenance will go into retirement.

I have a goal of moving to Oahu (Hawaii) in my 50's and going back to school to become a marine biologist late in life. I'm 42 now, so I have some hard saving to do in the next 8-10 years. Know this though... we are on track to do this.

The secret to accumulating wealth is paying cash for things you want and getting completely debt free and staying that way. Think about it. I have no debt and cash in the bank. If I lost my job, it would be no big deal. I only have basic utilities to pay each month on my home and car insurance.

One could argue that investing money versus paying off debt is a better, but I have a buddy that didn't pay off his house three years ago when he could have done so easily and he's lost so much of what he's invested in the market that he cannot pay off his car, let alone his house! And I consider him to be one of the most saavy stock market investors I know.

There's two added benefits to being completely debt free. I sleep very, very well at night and my wife only seem to argue about how to invest our money and where to eat when we go out now and again. :D

[Aqueel112]

Step 1 go to vegas...

Step 2 bet on black.... :)

[Pablito]

Pay attention to randall, he has some wisdom to share. All he has said so far is in my opinion right on the money....One thing very important you should consider is your goal...What do YOU want to do. If you want to shoot for a quick buck, there's the stock market you can play with, if you want steady growth you can go either with money managers that invest in solid equity instruments or mutual funds that draw from a group of combined funds. If you want instant reward well...there's always a new set of side skirts for your Boxster...

I guess you should first find out what you want and start from there. Professional advise is always a good idea, either with a firm or with an independent CFP (Certified Financial Planner).