19 year old with $ to invest

[iracer7]

I've worked quite a bit since turning 16 and since parents saved for college and I live at home while going to school, I've got quite a bit of money left over after paying my car payment and car insurance. I got a 10k cd at Discover Bank at 3.44%, and have roughly 4k left over that's sitting in my Discover savings account earning 1.49%. I want to do something with about 3k of it, allowing for a little risk, to get started in investing instead of just cd's and savings accounts. I've heard a lot about vanguard and what they have to offer, but know little about investing. Any advice would be helpful.

[jIM_Ohio]

stocks give a better return over 20-30 year periods, but over any shorter time period you have a real chance to lose money. There has "never" been a 20 year period where stocks have lost money. There have been 10 year periods with negative returns (great depression and the 1970's comes to mind).

when you say "a little risk", what do you mean?

$3000 invested could gain $1000 as easily as it loses $1000 in a given year. Year over year as you get smaller (5-10%) type returns, the likelihood a -33% year puts you in the red lower, but you need time.

Tell us what you expect for a little risk.

[jpg7n16]

and how soon will you need the money again? next year? 2 years? 5-10 years? can wait until retirement?

[iracer7]

I don't need the money honestly, I've got 2 jobs and and a consistent stream of money coming in with ~40% of it going into a savings account. I upped my car payment so that will be paid off within 11 months. I'd say a little risk as in about a 85% chance of making more interest on the amount invested than if it were in a cd, so something that will usually get me ~4% a year. Vanguard has a
LifeStrategy Income Fund, which has a low-to-moderate risk, something like this is what I'm looking for.

[swanson719]

Vanguard is far and away the best place to put your money as far as costs of investing outside of a bank are concerned. They consistently turn the lowest fees.

However, if you don't need the money, why not put it into a Roth IRA and forget about it? I would put it into Vanguards S&P 500 Index Fund. The expense ratio is miniscule and long term you will see much greater growth than any other type of fund. Index funds keep low expense ratios and you don't have management fees. After 50 years, an index fund will return between 30% and 40% more than any other type of fund because of the money saved on fees and the effect those fees have on compound interest. Vanguard was founded on the principle of the low cost index fund. It is all stocks, and has a terrible 10 year record because the market has been bad for the last decade. It's not an actively managed fund.

[97guns]

i admire you for being so financial minded at the early age of 19, im pretty sure you have the leg up on 99% of the people on this forum. i myself had not started saving untill i was 27-28. my advice would be to keep it liquid as at your young age you will find yourself stumbling upon many different types of invesments, if its locked up in an IRA you wont be able to access it. if you can max out an IRA for the tax break and then keep the reserves liquid i say go for it though. in liquid i mean it can be in the form of stocks, real estate or any other form that your not locked into untill retirement age. once again your absolutly doing the right thing by just saving and i commend you for it.