Re: Starting Investing

[rodriguez24]

Besides, when you are young and starting and only have limited to funds to invest, the best place to earn equity and quickest appreciation is by owning a place. Far higher % increase than stocks or bonds and less risky.

Can't argue with that.........

[ADeadSmitty]

Good choices Dave.

I agree with just about everyone's comments. There is no reason not to have even your "emergency" stash in some kind of interest-bearing account, as long as it is entirely riskless and it is immediately available to you in case the emergency materializes. The money-market account is just that.

Dave, as far as your long-term investments, you're definitely right to want to be diversified, but you can be pretty well diversified just by owning one mutual fund. The whole point of mutual funds is that it pools the money of lots of people who don't have much to invest, and couldn't diversify on their own, so they all own part of a diversified portfolio. So you may well be able to put even a small amount of money into a very well-diversified investment. Just make sure you pick a mutual fund that really is diversified, and isn't like "The Ponzi Scheme Fund."

[JVides]

1) Retirement - I got a ROTH IRA

I prefer a simple IRA as opposed to a ROTH IRA, since you get the benefit of a tax deduction in the current year.  That's a matter of preference, though.

2) Long Term Investment

Mutual funds are well diversified, but if you want to invest in high risk / high reward, look for funds with high beta numbers. (Beta numbers refer to the stock's reaction to the stock market).  I'm 31, and I'm 3/4 invested in high beta stocks, 1/4 invested in "benchmark" stocks.  The high beta stocks tend to do very well when the stock market does well, but do very poorly when the market does poorly.

3) Short Term

your home is a great investment right now because of the exclusion of gain from the sale of a primary residence.  You can exclude up to $250,000 ($500,000 for couples) in gain from the sale of your primary home from income taxes every two years.  

4) Emergency Fund

If you invest it, keep it liquid; don't tie it up in investments that will make the cash difficult to access.

You seem to be headed in the right direction.  You're definitely planning for retirement, which in itself is more than most people in your (our) age group do.

[JVides]

I will now take my "accountant" hat off...

[runtheball]

Anytime people ask me about investing, the first thing I tell them is to stop renting, if they are.  

Secondly, invest as much as you can in your 401(k) plan, if offered by your employer.  It's free money that your employer gives you.  Don't ever turn free money down.

Third, CDs, bonds, and money markets are all good for short term.

Investment real estate is absolutely great for anyone who has extra cash on hand to do it.  Be careful and do your homework first though.  

Most important - stop spending on luxuries and things that are
intended to impress your friends, family, or girls.  Ever notice that a lot of millionaires are cheap skates ?  Exactly !