What is the best way to invest money?

[obscurity]

I have a bit of money saved up. I would like to start some long term investing, but dont know where to start. I have over $10k but dont know what to do with it.

 

Any advice??

[luvursmile]

Mutual funds or real estate...depending on where you live.

[rocio]

see a financial advisor. better yet, see 3 of them.

[obscurity]

Hm... I live in Alberta, Canada.... real estate here is so expensive. A descent house is $300k+.

 

Should I get an financial advisor or stock broker?? Or do they just eat up your money in commissions??

 

Very lost as you can see

[obscurity]

see a financial advisor. better yet, see 3 of them.

 

3?

[Cassie]

1. How old are you?

2. Do you have a retirement account? If so, are you funding the maximum allowed?

 

Oh, and don't invest in anything until you understand it yourself. A.k.a., you don't need a financial advisor. Unless you enjoy throwing your money away on exorbitant and needless fees.

[obscurity]

I am 22 and still in school. (school money isnt an issue)

No, I dont have a retirement account. ( I thought i didnt have to worry about that yet!!)

[luvursmile]

I would suggest mutual funds, they are more balanced, thereforeeee less risky than individual stocks.

 

If have no clue at all, then yes, you should see a finacial advisor. It shouldnt be that expensive.

[Beec]

Your best choices are probably stocks, funds that invest in stocks or real estate, potentiall in such things as REITs (real estate investment trusts, and you can buy interests in them like stocks). With funds, some of the cost of the funds will always eat into your earnings, over you doing your own stock picks. But the fund managers are paid to make picks. Unfortunately, few fund managers beat the S&P 500 year in and out. So a fund that mirrors the S&P 500 may be a good choice, and look for one with low fees.

 

Do some research into all of these ideas before choosing, and don't take just my word for it. Free advice is often worth what you paid for it.

[rocio]

Please, please don't invest in real estate in Alberta right now. Leave that to the experts. My brother builds houses in Fort Mac and I can tell you that whole business is a big mess if you don't know what you're doing (thankfully he does know what he's doing and is becoming rich as we speak - bless him)

 

I say to see 3 financial advisors because some are pushy and others just aren't any good. Shop around and go with the one you have a good gut feeling about.

 

What part of Alberta are you in? My uncle is an incredible financial advisor in Calgary.

[obscurity]

lol exactly that location!

[dreamingwithabrokenheart]

I agree, if you're interested in long-term investing may want to set up a retirement account. it's never to early to start, the earlier you start the more compound interest you'll get on your investment.

 

if you don't want to lock up your money in a retirement account, as Beec said invest in some stock mutual funds. Maybe, an S&P index fund, over the last 60 years or so its averaged around 8-9%. and investing your money in an index fund is cheaper (fees) because its passive and the portfolio manager is just putting your money rather than picking stocks.

 

you should contact asset management firms such as Charles Schwab, Fidelity, Vanguard and the likes, the larger institutions like Merrill, UBS, morgan stanley have minimum asset requirements I think around $100k and up

[Mandoro]

As for stocks, Peter Lynch wrote a few investing books that I read and they were great. I came upon these by my cousin who does his own investing via online.

 

The books are: link removed , link removed, link removed

 

My cousin also told me about Jim Cramer's website link removed it has alot of investing info. Along with that he also had Jim Cramer's book, I would tell you the title but I don't remember it.

[Cassie]

I am 22 and still in school. (school money isnt an issue)

No, I dont have a retirement account. ( I thought i didnt have to worry about that yet!!)

 

* cringe *

 

Oh, my eyes, my eyes !!!! Thank goodness you're still young. Here is a little food for thought for you, link removed - NOW -. Do not waste another second on this board until you've read through it ! It's a simple enough read.

 

(you may have to research the equivalent in Canada, as I'm unfamiliar).

 

I'd also suggest going to your local library and picking up a copy of link removed.

 

Never invest in anything you don't undestand. You don't need a financial advisor, my dear.

 

Welcome to the wonderful world of financial management and awareness. May your $10,000 prosper and, with wise decisions, flourish into millions. Because if you start now, it will.

[obscurity]

Thanks all for the wonderful advice.

 

I will definitely look into the things you guys have said. It is scary going into the unknown especially with the possiblity of losing money!!!

[Cassie]

Obscurity, don't go into the unknown though. Just take some time to arm yourself with information and research. Don't be intimidated. You'll be financially saavy in no time. You'll soon be saying, "financial advisors, pfft. who needs 'em? I have complete control over my finances."

 

Good luck!!

 

Start with that retirement article and then browse through the rest of the site if you have time. Ramit is a recent Stanford grad who offers excellent - free- advice on investing. He's an ace guy.

 

I also have a financial management website, you can link removed if you'd like.

 

Now go kick some butt, girl!

[gattsuga]

i live in alberta too, and i wouldn't invest in real estate right now. the winter months are generally the best times to buy a home, but that's pretty much over now.

 

right now, i'm playing in the stock market, but these have certain risks associated with it. If you want to play safe, invest in mutual funds, or blue chip stocks. those usually give you a return of ~10% a year.

 

good luck

[adahy]

Mutual funds.

 

With the money you're "saving" each month, you need to be purchasing more shares not sitting on it (you're actually losing money)...keep reinvesting and have it automatically withdrawn each month.

[tomeradv]

It seem like the economy in alberta is doing pretty well with all the oil thats up there, not only that but real estate seems like a pretty safe investment these days as well. with so many choices in investing it can be overwhelming and thats why it is always good to have a financial advisor alibiet a good one who knows what they are doing in order to help you. Leadsco is paving the way for finacial advisors and there clients, Leadsco was able to find me a finacial advisor who was a good fit for me. They found suitable matches at no cost to me the client and once there was a good fit the finacial advisor was able to work with the me to come up with a suitable plan of action. Whether it be retirement planning or stocks and bonds Leadsco can help.

[charley]

I am a real estate expert, but I'm not familiar with your local market. thereforeeee, I cannot give any advice on that.

 

I will say this however:

 

An investment councelor sells stocks, bonds, CDs, mutual funds, and many various types of non-real estate investments. Naturally an investment councelor will tell you that real estate is NOT a good investment because they can't sell that and can't make a commission on that. They want you to buy something they can make a commission on. So their advice is always biased against real estate. That even happens in my local area where real estate is an excellent investment.

 

On the other hand, a real estate agent, including a commercial real estate agent, is the exact opposite problem. They sell real estate, NOT stocks, bonds, mutual funds, etc. thereforeeee, they will always tell you that real estate is the best investment, whether it is in your area or not. I was a commercial real estate agent for years and now write investment analysis software used by commercial agents and investors.

 

Since I was a commercial real estate agent, and am still in that industry, but now from the software end of it, I know commercial real estate agents very well - as well as I know real estate. I also know their competitors very well too (the investment councelors).

 

Both the investment councelor and the real estate agent want to make a commission because they need to make a living. So they will always tell you that something in their inventory is the best investment for you, whether it is or not. They might even believe it, but that doesn't make it so. The fact is that they don't even know what else is available to you, if it's not in their inventory.

 

The only unbiased, quality advice you can buy is from a Certified Public Accountant (CPA).

 

That said, if you were to buy real estate, I'd recommend a duplex, and you live in one side. Then the rent from the other side can pay part of loan payment and insurance, or in my local area the rent from one side would pay all of the loan payment and insurance every month so you can live rent and payment free in the other side. So in my local area you could then live free and your investment goes up in value due to property appreciation, and there are MANY tax benefits. In my local area, and in many parts of the USA, this is the best type of first time investment. In fact, in the USA, you can do this 7 times and still get low interest, owner occupied loans and in many parts of the country end up being wealthy in about 8 to 10 years. However, I don't know your local market, nor do I know Canadian tax laws. So I don't know if this idea is practical for your local area.

 

Also, keep in mind that real estate requires maintenance, which means that you either must have the time and ability to do it, or to do much of it (mow yard, occasional plumbing or electrical problems, needs a roof every 20 to 30 years, etc). So you have to either be able to do all or part of maintenance yourself, or be able to pay to have it done. Non real estate investments do not require as much time or effort or management. So consider your abilities, available time, and if you can pay to have someone else do those things. You'd have to make a budget that includes all your income and expenses, including the income and expenses from the duplex (or other property). Don't forget to figure in the tax benefits because that's money off your taxes. Actually, this is exactly what my software does. It makes a monthly and annual budget and also shows the investment benefits (and dangers).

 

Personally, I'm handicapped now due to having my neck broken in a car accident. I'm not parlyzed, but I'm no longer able to do the maintenance things I used to be able to do. That is why my money is currently invested in a high 10% annual interest compounding monthly private CD aka private contract note that in 6 months will increase to 15% annual interest compounding monthly. It requires no physical maintenance. If I was as physically fit as I used to be, I'd be invested in real estate income property. Since I'm not as physically fit, I'm invested in a private CD aka private contract note, though still related to real estate since it's with a local real estate developer who's using my money (and many others') to build luxury condominiums. Point is, since I'm handicapped, I got out of the real estate market. i.e. - I no longer own the income property real estate directly myself because I can't deal with the maintenance. Instead, I'm now invested as explained above, which is not really a real estate investment at all, it's similar to the sort of thing an investment councelor would sell, except this one is private (not a publicly offered or advertised security). It's nice because it requires no physical maintenance (or any of my time to manage it).

 

Everyone must live somewhere. So owning a duplex and living in one side might be a good first investment. Of course that depends on your local real estate market, and I know nothing about your local market. Once you have your living situation handled; then, is additional income property real estate a good investment for additional investments? That party depends on the individual. Do they have the time, health, and ability to do the maintenance themself? If not, do they have the management skills and resources to hire it done, time to manage it, and can the investment still work out for them (if hiring maintenance help)? For some people in some locales, real estate is the best investment, but that depends on the individual, their local real estate market, and which property they invest in.

 

I'd be very wary of a private CD aka a private contract note (in effect making a private loan and owning the contract note to receive payment(s) (principal and interest) on the numeric schedule agreed to in writing as part of contract). You'd only want to do that if you knew the borrower very well, trusted them, knew they had excellent credit, and you had a signed contact specifying terms. I felt comfortable doing that because I know the real estate developer I loaned my money to has excellent credit and has been a successful developer since 1965 (47 years), though 20+ years experience would have been enough for me to feel comfortable.

 

There are ways to increase your security with private notes like the one I have since it's related to real estate, like having the property mentioned as security in our contract for repayment, having it notarized at time of signing, and then attaching the contract and amortization schedule to the real estate by recording it at the local assessor's office. That means the property can never be sold to anyone without the lender - i.e. - lien holder (that's me, or you if you did this) getting paid first. However, if I did that, the borrower (real estate developer in this case) would have that show on property title reports, which would reduce his ability to borrow money from commercial bank(s) on that property, which would make it more difficult or impossible for him to complete the project. i.e. - I'd be more secure on my note, but in return I'd get a much lower interest rate, at which point I may as well have bought a publicly offered government CD since it's most secure (though low interest).

 

I suggest you consult an accountant, ideally a CPA (Certified Public Accountant) so you can get some quality, unbiased advice from someone who is NOT trying to make a commission off you. Financial advisors and real estate agents are paid on commission and thereforeeee they cannot afford to be unbiased. Once your CPA helps you form the best plan for your situation, then you can use an investment councelor or commercial real estate agent to help you carry out the plan, if you need their help and expertise. Once you learn enough, you can then buy (and sell) online (for publicly offered securities) or direct (for real estate - direct with the seller). Naturally I'd personally deal direct (represent myself) in real estate. For securities, I would consider hiring some professional help since that's not my strongest area of knowledge, though I did deal direct when I invested in the private CD (contract note) and that is working out very well and I paid no commission. However, my background as a commercial real estate agent, real estate software expert, expert related to real estate and business contracts, and loan related math made me more than qualified to represent myself. The average person should have used a lawyer or CPA for this. Many did. There are many local people who invested in the same private CD arrangement with the same R.E. developer. Some investors had their lawyer or CPA represent them. The more experienced investors represented themselves.

 

Personally, I would not hesitate to hire an expert in any area where I was not an expert. However, I always examine their monetary motives. An expert paid on commission only gets paid if you invest in their inventory of investments (biased advice). An expert NOT paid on commission gives impartial, unbiased advice (CPA or lawyer). CPAs know more about money, but lawyers know more about contracts. If you can't afford both (most of us can't or don't want to pay for both) then I'd choose the CPA with 15+ years experience on the job since they know a lot about money and probably enough about contracts. A CPA would refer you to a lawyer if needed (for contract advice or to make a contract). Perhaps the CPA can make the contract for you (not sure). As a commercial R.E. agent I was legally allowed to write contracts related to real estate and related money. So possibly a CPA can do the same. CPAs certainly know money well and give unbiased advice.

 

P.S. - I intended to NOT post anymore at E. I guess I might make an occasional exception in the financial area.

[TTTT]

It really depends on the risk you are willing to take. The higher the risk really means higher the return. If you are willing to take more of a risk, consider developing a portfolio of diversified shares. 5 different lots of shares in 5 different industries (or even countries). That way you protect yourself from industry collapse or economical slow down.

 

Not sure where you are from, but buying government bonds maybe an ok thing to do. If you are not into risks, place the money into a high interest bank account e.g. 6 +

 

Buuut, it would be much better for you to see a professional.

 

Thanks

[poloplayer]

Hi,

 

I would not recommend CDs (or anything which a bank offers other than an IRA), or any bonds, annuities, or other fixed income instruments unless you are well over 50. Barely any risk = barely any return. Do this when you are older and want to gain something, however, you're older and don't work as much so you want to play it safe.

 

Also, don't play with derivatives unless you know what you are doing. Very risky = very high return, but you can lose money very quickly.

 

Liquid - easy to buy or sell

 

Passive - place money in and sit back and relax:

 

ETFs or Index funds. You are a passive investor, the expenses are very low, and your return will be "average." Average here means you mimic an index. iShares are good for MSCI mimics and Spyders for S&P.

 

Mutual funds. Passive as well, however, the expenses can eat up your returns. Check each funds excess return and expense ratio. Compare this to their annualized return. All funds cite annualized returns for marketing purposes - that distorts the picture as expenses can eat up some (in some cases all) of the return. The difference is what you actually earned. Dodge & Cox, Vanguard, and Sit offer some good ones. International and emerging markets have been returning ~20% past 2-3 years. Please keep in mind that 50% of all funds DO NOT beat their benchmark (index) each year, which means, the professionals who do this for a living can't beat the market.

 

Active - you need to know what you are doing:

 

Stocks. This is your best bet, however, this is active investing. You need to stay on top of it, do your due diligence, monitor, rebalance, etc., however, you can make a killing if you know what you are doing. On average, stocks have offered a 12% annual return over the last 60+ years.

 

Illiquid - hard to buy or sell

 

Real Estate. Great investments, especially at a time of subprime tanking and so many foreclosures on the market and mortgage rates relatively flat. You will be able to find some great deals out there, however, make sure you can make the payments. Also, it might be tough to sell down the road, especially when you are in a bind and need to get out. Can you pay the taxes, maintenance if needed, etc.?

 

What's the best way? Only you can answer that based off of:

 

1. How risk averse you are

2. What your time horizon is

3. And what you are looking for (growth, value, dividends, appreciation, etc.)

 

If you don't know too much about investments, then I would suggest you purchase into either (A) ETFs, or (B) mutual funds. I'd suggest doing this after you place money into an IRA ($4k a year) and let someone else do the dirty work for you. Or, if you are more into real estate, then go that route. If you have a lump sum and are willing to shop around, then you can find a great deal within the next 6 months.

[FortunateOne]

Charley and Poloplayer have made excellent posts. To add my two cents, in anything you decide to invest it's better to be an inside player than on the outside. I do real estate investment for a living and being on the inside has paid off for me. You would not believe how much you can save by eliminating the "rebate" (hidden commissions) that's factored into the pricing of products. So what ever you invest in, do your research and maybe become licensed or a least work part time in it so you can navigate your way in a profitable manner.

 

Check out my thread: