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Small time investor - (me)

Posted on 04/21/2004 8:58:49 AM PDT by brownsfan

I have a few bucks I want to invest. I have a 401k and I have bought the Janus fund in the past. I'm not happy with Janus, not only for the manipulation, but lousy performance in the last year or so. I've read that index funds are the way to go. I've also read that inidividual stocks are the way to go. Everyone has their own take. I figure I can't get too much information, so I thought I'd see what the freepers have to say. I'm looking to invest $3k to $5k. An additional question: My son is 21, and wants to save for a house in the next 3 years. So, that's his horizon, 3 years. He has a similar amount to invest, around $3k. I'm thinking index fund for him. Opinions are welcome. Thanks!

TOPICS: Business/Economy
KEYWORDS: money; mutualfunds; personalfinance; stocks

1 posted on 04/21/2004 8:58:50 AM PDT by brownsfan
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To: brownsfan
A clarification, my Janus fund is not part of my 401k, I simply mention the 401k to make it clear this is not my only savings.
2 posted on 04/21/2004 9:00:19 AM PDT by brownsfan (I didn't leave the democratic party, the democratic party left me.)
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To: brownsfan
I honestly don't know too much about investing... but I did have an IRA with JANUS for a while that made no money. I recently started a new job and began a 401k with Fidelity. They have doubled my money already.

These guys were great, they will council you over the phone. You need to tell them specifically what your goals are and they make suggestions. They suggested to me that I put certain percentages of my money into different areas... like I have 50% of my money going into stocks, 25% into Mid-Cap and the last 25% in mutual funds and the like.

I am extremely happy with Fidelity and recommend them. I check up on my money daily on
3 posted on 04/21/2004 12:32:40 PM PDT by bearkat (Your kid may be an honor student, but YOU'RE still an idiot.)
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To: brownsfan
Well, i'll take a stab at this.

1) When do you need the money?
2) How much risk are you willing to take?

If you have no immediate need for the money, i would put it into a ROTH IRA. With a roth, you can pull out the money you put in without penalty after five years (but not whatever interest you made). So it's a good place to put your money that will allow tax-free growth.

You asked about index funds vs stocks. From what you wrote, stocks don't seem to be the way to go. Unless you like the risk or have some juicy info on a company, steer clear of stocks. The volitity is difficult to handle for many people.

I would suggest a vanguard index fund, since they are very low cost and have reasonable growth. Index funds are where a computer picks the stocks to closely match market indices, hench the low cost. So they rarely perform much worse than the market, but conversely the don't perform better than the market either.

As for your son's money, three years isn't very long. There are a lot of short term investments, of which i don't know a whole lot about. If he's interested in the market, "balanced funds" are nice because they're roughly 50/50 stocks/bonds, thus more stable than stock funds. If he could find a money market fund with high returns, that may be an option. And there are bonds & bond funds that may be good also, but i unfamilar with them.

When you get to the point of weighing which funds are best, you can alwasys check out how they're rated on for free.

That's my input. Remember--you get what you paid for, and i'm not charging, so beware!

4 posted on 04/21/2004 3:34:34 PM PDT by TheMightyQuinn
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To: TheMightyQuinn
Thanks. Although I'm a novice, I'm not uninformed. I just like as much info as I can get before I move. The conservative in me. :) Anyway, thanks for the advice, most of what you said coincides with what I have read. The new information to me was the ROTH IRA. I didn't know anything about those. I've heard of them, but didn't know the money could be withdrawn penalty free after 5 years. That's attractive. My horizon is probably 10 to 15 years, but I like the flexibility. You can't predict the future, so I like options.
I have read about the Vanguard Index fund and it's almost always held in high regard.
As for my son, I think the market isn't necessarily the best place for him to be, but I'd like to get him started. No one started me, and I wished I'd have had a helping hand. It's not as mystical once you get into it. It's still confusing, but not mystical.
I got a trial of Jim Cramer's Alerts. It's very interesting. He publishes his portfolio, and tells you what moves he will make before he makes them, and why. The problem with that is that to keep in his action alerts, it's $50 a year. Not bad, but it's a management fee all the same.
I'm aware nothing will perform like individual stocks. So, it's seductive, but I'm not sure I trust Jim Cramer THAT much.
Anyway, thanks. I'm going to do some ROTH research today.
5 posted on 04/22/2004 6:05:14 AM PDT by brownsfan (I didn't leave the democratic party, the democratic party left me.)
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