24 need savings advice

[frito125]

Hey im new to investing. Im a 24 year old guy looking to invest in a savings account. My dad thinks i should put my money in stocks and i will make more money if i keep it in there for a long time. I dont really know anything about stocks.

which is a better idea? Stocks or a high yield savings account?

and if a savings acount which is a good company with a steady apy? I notice that some may be really high now but they could go way down in a month or so.

[sweeps]

It's not an either-or proposition. You need to save money in a savings account for short term needs, and you need to invest in stocks for long term needs.

For the savings account side of things, go here.

For the long-term investing side of things, I would suggest opening a Roth IRA at Fidelity, Vanguard, or T. Rowe Price. You can invest in a "lifecycle" or "target retirement" fund which provides near-complete diversification, while you do a lot more reading and learning.

Best of luck to you.

[pfodyssey]

Agree with doing both.

For savings - GE INTEREST PLUS...bank on it...do not believe you will find any better (but you should still try).

[anonymous_saver]

What are you saving for, retirement? Emergency fund? Down payment? That can help us give you more specific advice.

Also, are you contributing to your employers retirement plan up to their match?

[CreditExpert]

it depends what your goals are, long term then the stocks are a great way to go, but its a high risk venture.
Short term the savings account will work as the risk is low and the money available if you need it in an emergency

[jIM_Ohio]

The more time you have, the more stocks will be more profitable than savings.

If money is withdrawn in 7 years or less, not sure which would have more money (stocks or savings account), I would say 50-50 as to which is better.

If money is withdrawn in 10 years or less, there are more times that stocks would have more money (I might guess 60-40) and the amounts stocks would have more might be significant (34% for cash at 3%; 250% for equities at 10%).

If money has 15 years or less, stocks would win most of the time (75-25 or 80-20 is my guess) and differences would be even greater (55% for cash at 3% vs 417% for stocks at 10%).

If time horizon is greater than 15 years, I believe history has shown stocks have beaten cash 100% of the time. This is what your father was thinking when he passed on the advice.

If some money is needed in 4 years, some is needed in 10, and most is not needed for 20, then you have a financial problem which is more complex and will involve some cash, some bonds and some stocks.

The longer you are invested in stocks, the less risk you have (because time will remove principal risk).

[maat55]

I suggest you read books on finance. Books will teach you about managing money from debt to investing. There are several ways to invest based on the goals you want to achieve.

Heres a list of good books:

The Total Money Makeover by Dave Ramsey.
The Millionaire Next Door
Rich Dad Poor Dad.
Personal Finance Desk Reference
The Wealthy Barber
Financial Peace
Master Your Money by Ron Blue

I wish I were your age when I leaned what I know now. Read Books!!!!

[responduser]

Originally Posted by frito125

Hey im new to investing. Im a 24 year old guy looking to invest in a savings account. My dad thinks i should put my money in stocks and i will make more money if i keep it in there for a long time. I dont really know anything about stocks.

which is a better idea? Stocks or a high yield savings account?

and if a savings acount which is a good company with a steady apy? I notice that some may be really high now but they could go way down in a month or so.

Your Dad is right. In savings account you will not get good return.

In stocks you can make more money, but there is some risk involved.

But, I wouls siggest you to invest in mutual funds. This is more safe than stocks and also gives better return than savings account.

If you don't have much time or you find difficulty to decide, find a financial planner who can do this for you.

[sweeps]

Originally Posted by responduser

I wouls siggest you to invest in mutual funds. This is more safe than stocks and also gives better return than savings account.

Not necessarily.