Whatever you do, don't tell that to a full service broker If you went to a professional financial planner with a CFP mark, they would spend a great deal of time with you trying to help you figure out what exactly your financial goals are. Once your goals are in place, a financial plan can be built around it, which will include how to invest your money to meet the goals. If that is too involved for you and you want a quick education in investment, I suggest buying Microsoft on margin and see how long your money lasts. jk. Seriously pick a 2010 target date fund and invest what you can. The ride will be less bumpy. When you figure out your financial goals (my preferred advice), you can be smarter about his whole investing thing.
I hate to say this but I doubt a good financial planner would be willing to spend a great deal of time with someone who has $4,000. Advisors typically receive between 3-6% of commissions for selling a product. For $4,000, they may make $150-$200. They have to spend an hour talking to you and another 30 minutes filling out paperwork. Then they have to answer questions from you in the future without getting paid. I'd suggest you go to a good website like some of the ones mentioned in this thread.
You should be able to get a financial plan for $500 to $1000, depending on how complicated your life is. I know Vanguard recently mailed me a "free" financial plan offer, valued at "$1000". Clearly $500 is a big nonrefundable chunk of $4000 that is being invested. A full financial plan may not be warranted in this situation.
They run a couple of simulated models based on some asset allocation questionnaire and extrapolate that portfolio til you die. Then they make some recommendations like maximize your 401 (k), make sure you have enough insurance, and rebalance your portfolio on an semi/annual basis. Is it important? Yes. Is it rocket science? No. Is a $500-$1,000 plan worth it? If it came from a person with a tax and/or legal background - probably yes. If it came from an insurance agent- probably no.
That sounds like the Ameriprise Financial Plan. You pay 500-1000 so they can tell you to put your money into a anuity or VUL policy. It's all a scam. Fully invest in your 401k and max out your IRA. If you do that you will be set for life in retirement.
And this could be very bad advice, depending on the person's situation. Maximizing retirement savings is not a bad thing, but an emergency fund, medical insurance, adequate life insurance, paying down credit card debt, etc. may be more important, depending on the financial goals involved.
Personally, I would look for a fee-only CFP. Go here NAPFA - National Association of Personal Financial Advisors to get a referral. If you want to DIY, I would suggest reading Making the Most of Your Money by Jane Bryant Quinn. BTW I do agree with the above. If you walk into a {full service brokerage, insurance, bank} office, you will likely leave with a bunch of their products with the agent pocketing the comissions.
No, I didn't say the world was going to end, I said it would be harder going forward for American corporations to grow their earnings . As a stockbroker you should know that the prospect of growing earnings is what drives capital appreciation in the market. And that the stock market history shows some periods of negative gains lasting 10 years or more (though granted they happend before the Fed really exercised much control over the economy) I suggested that our young friends would be better to invest their meager savings in advancing their own earning power rather than turn them over to brokers who's primary motivation is to profit themselves whle placing their funds at risk (whether great or small). But I will grant you that the allure of unearned income, promoted by Madison Avenue, financed by Wall Street, is quite enticing and may support stock prices for a while longer but the cold hard economic and political facts do not. There will be a supply of 'greater fool's until it is too obvious to ignor , no matter how greedy the fool. I think their are some great investments out there ( I recently bought in to a private gas exploration company that doubled my investment over the last 18 months) but I think just throwing $4000 out into the market is probably a bad idea. Look, are the factors I cited wrong? Are these not real potential stockmarket killing events? The stock market isn't the only 'thing' out there. It's just the thing that makes the most money for brokers.
I'm only half joking. 1st off...With a smaller stack like 4k,you might do well by swing trading it in precious metals,oil,and bluechips....high volume stocks.Build it up,learn the ropes, and set up that IRA.
Uhhhh. You're wrong. #1. Any broker worth their salt knows to place their money with another broker. Why? Because people buy and sell their investments on emotion, typically. #2. The stock market has only had negative earning once over a ten year span, and never over a 20 year span. The stock market has also outearned any other investment in the long run. Try to give me an example of something that has ever beaten the market in appreciation over time? You won't find it. #3. You seem to look at the market as gambling. And if someone picks just one pony, you're right. But any advisor will tell you to diversify. That isn't gambling. #4. You think people should just keep investing their money into booksmarts... This is laughable. Unless you are trying to get into a field where degrees = money, (and their are VERY few careers like this) your career advancement will depend primarily on your work ethic. And hell, even jobs that prefer higher learning will pay a good employee for the upper schooling out of their own pockets. Your statements appear to be made by a child. I've no idea how old you are. Simply my assumption.
IRA? Absolutely. But anyone with less than $100k to invest should put most of it into mutual funds. You simply can't diversify well enough with $4,000.
My apologies for the multiple posts as I don't have the edit feature. One of the most important things you could start with is a mentor.Someone to help guide you through the first couple of years....Trust me,I swing trade the big board and the NAS...and I had one.If you get into this on the side,eventually that precious commodity that is TIME will be yours.I also feel it is important to stress that it will be like going back to school and then some.The only difference is that you will be INTO it.In 2 - 3 years you could even have a completely new vocation.At the very least,Lil Pun,you should be able to augment your income very nicely. BTW...Lil Pun...This is an excellent time to enter the game.
Fatty FatBastard, Your right,what I suggest can be very dangerous to a novice approaching this without the aptitude and help.In most cases,diversification through mutual funds is an excellent route starting up for the longterm. There are those few though who can excel in this arena.....just presenting options.
Let's see, I'm 52 and made my primary living investing since 1983, yeah your right, I guess I don't know nothin. I would always urge you to max out you IRA's, put them in a low fee, low cost, balanced fund like the Vanguard Life Stategy funds. Picking stocks is gambling, neither you nor I can read a a corporate balance sheet and understand it, or even know if we can believe it. Diversification limits your risks of losing but it also limits your upside, your might as well just go with an index fund and ride the averages. People are always driven by their own well being. The billions of dollars spent by Wall Street every year on advertizing are not spent to make you money. Stocks go up because of the rule of the greater fool, how much money is Exxon handing out to their stockholders (4% I believe, less than a CD) If you really want to get rich, the best way to do it is to build your own company. Work ethic, yes, but it takes know how and credentials. I'm not out there in business but I would still guess that the top 10% of salaries in corporate America still go to people with advanced degrees. The original question was about $4,000. At 9% after 8 years you would be up to $8000 (before taxes) , less than if you educate yourself into a $100 a month raise. The better lifetime return on that (small) amount of money is to improve your own earning power. I didn't say stay out of the stock market, though I currently do not own any stocks myself. I said there were mounting factors of risk in the market that are making losses more likely and once you have taken a loss it is hard to get back to even. And I was 99% in the market on March 11 2000 and Black Friday in '87 so that is one life lesson I have paid for in spades. Enjoy your buzz Fatty.
for what it's worth, should you try to begin trading stocks, i suggest Scottrade for a no-frills, Internet-based discount brokerage. I'm a graduating college senior and I'm only working with $4,000 in my account. As of last week, I thought I was pretty slick with my portfolio - it had me at a 33% return on one year. But today, NWRG.PK (Einstein Bros.' parent company) sank 3 bucks/share and I think i just lost 15%. I'll still take the 18% I have left though.
Really? It seems like a rocky time to start for a person just beginning. I'm not really doubting you. Just wondering about your take on inflation and bank money around the world drying up.
be careful trading or you will be chalking that 4000 up to an education in the market.. always be ready to take profits and suck it up and take losses.
