Hey there Clutchfans.. So I started working about a year ago (when I graduated from undergrad). I am now at a point where I have a good amount of money saved up and it is sitting in my Checking Account gathering dust and not making any interest. As the saying goes, money makes money...I had a couple of questions in regard to how I should handle my finances. Before we get there I will give you a quick background on my finances. I use 1 credit card for all my transactions. I pay that credit card bill with my checking account in which almost all my money sits. I have a solid $8,000 - $10,000 that I am willing to invest or put somewhere in order for it to grow. My questions: 1. How much money should I leave in my Checking Account? Enough for 3 months worth of my average monthly credit card statement? 2. Where/How do I go to start my investment with the money that I have. I have no interest or knowledge to invest in the stock on my own. I guess I am looking for a broker? or put my money in a mixed portfolio and let it grow for a few years. What is your advise for the best way for a beginner to invest money? 3. Is 10 grand too little to even make an investment? Should I wait longer? I have a separate savings account with some more money I can pull from in order to make a larger investment. 4. Finally, if I do make some investments where I do see my money again for "X" amount of years. At my age of 22, what do you think is the best range for that X number of years. 5? 10? Thanks for all the help. Any advice outside of my questions that you would like to add, or your own personal stories...would be great. :grin: GO ROCKETS !
Grab all $10000, and go and buy EUR/CHF at your nearest brokerage dealer. or, ya know, take the time to build a balanced portfolio. First option is funner.
1. I would build a little bit more of a cushion than 3 months of credit card expenses. I would have at least 6 months of TOTAL living expenses. No right answer here, but just what you're comfortable with and what disaster(s) you want to be ready for. 2. Probably easiest to start a Vanguard account and buy some index mutual funds. This is the easiest and cheapest way to get a diversified portfoilio. 3. You can invest any amount. There's no reason to wait to invest money. Just make sure that you don't need it any time soon. 4. I would leave the money invested until you need it. No reason to sell it after 5 or 10 years if you have no good reason. Conversely, if you know you have some expenses coming up, keep more cash handy so you don't have to sell anything earlier than you need to. The reason for this is that in the short-term, you generally don't have an idea of what the market does. So if you invest money that you know you'll need, you might have to sell for a loss. If you have a longer time horizon, you can recover from short-term losses as the stock market has generally gone up in the past. Congratulations on doing well so early in life! Hope it helps.
My advice is to invest half your savings into a good mutual fund. Mutual funds are relatively safe compared to investing in specific stocks.
I would probably be a little more risky in your investments. As you get older you get more conservative but nows the time take more of a gamble.
You need to list your financial goals. For example, 1. Create an emergency fund. 2. Buy a car. 3. Marry a spend thrift p*rn star. 4. Buy a house. 5. Pay for kid's college. 6. Retire. etc. Prioritize your financial goals. Attach a time frame to each goal. For each financial goal, make separate investments. The time frame will dictate your investment choices.
1. put 6 months of living expenses in a money market account that you have access to in case of emergencies. I have a debit card attached to my account, and if I need to repair my home AC, my car, any other emergency, thats the ONLY time I use that account. Shop online for the money market account that gives you the best return. 2. Once you have that established, then begin to put 15% of your monthly income into retirement. If your company matches you on a 401K or something similar, invest in that up to what they limit, then put the rest into an IRA where you can control the mutual funds. Check the track record of the mutual funds, see how they've performed over the last 10yrs and go with the ones with the best LONG TERM track record. Don't jump in and out of stocks or funds, your investing for the long haul. 3. Now you have a savings account and retirement account started...now start saving for a house, fun, etc. Pay cash for vacations..you'll enjoy them much more knowing you won't have to pay for them later. Looks like you've got a great start for a young age..keep it up & you'll retire with dignity when your ready.
