Investing, best, Start, Saving, Option

by Center for American Progress Action Fund

Question by karoake_macheen:

What is the best option to start with when investing or saving?

Just say I want to start investing money here and there and deposit every month. Should I do a ROTH IRA, grab a certain stock from a company Walgreen, Wal-Mart, Sony or a High Yield Bond etc?.... How much should I plan to use to get a program going?




Best answer:

Answer by Jeff T
I don't have enough info to answer this, but I'll give it a try anyway.

You should only invest with money-to-spare, meaning that you need to have all of your debts paid off, and have a big emergency fund (six months pay) sitting as cash in the bank.
Why pay off the debts first? Because preventing a debt from growing counts the same as making a gain on a stock, except it's tax-free.
Why have an emergency fund first? Because you don't want to put every dime you have into the stock market and then find out next week your roof needs repairs before the snow starts.

If you have those two met, then here's how I would invest:
1) Invest in your 401K to the extent that you'll receive the company match.
2) Invest in a Roth IRA, up to the IRS's limit (someone else can correct me if I'm wrong, but I think it's ,000 a year)
3) Go back to investing in the 401K, until the total investment is 15% of your income.

Inside those, pick out four mutual funds (growth, growth-and-income, aggressive-growth, and international).

Picking out single stocks is risky. If you don't know what you're doing, you might pick the next Enron just as easily as you could pick the next Google.

So pick out 40 different stocks, and buy a little of each.
If one tanks, you're not hurt badly.
If 25 go up and 15 go down, that's a win, even if you don't know what you're doing.

What do you think? Answer below!

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