how would you invest

[financebanter]

Re: How would you invest

You can buy a house or property.

[Drac]

25K a year is a good amount when you are young, but you will need quite a bit more in the future. How much do you expect your income to increase in the next few years?, How do you want to see yourself in five years? and ten years?.
What I want to make you think a little bit about your future income potential, and maybe will be a good option to use some of your savings to pay for additional education that will provide a safer and better income in the long run. Make sure to get a college degree, or a masters degree now that you have no bills or big responsibilities. Later on may be too late, now is the moment to invest in yourself.

[littleroc02us]

Being 26 and having no debt with the ability to take advantage of compound interest for over 30 years. wow! You've got a great chance.. Read the book "The Little Book of Common Sense Investing". There are a lot of quotes by Warren Buffet and other successful investor that give great advice. The talk about an experiment that Time did on comparing a 20 year track record of the S&P and 5 different fund investors and had them all invest $50,000. The Fund investors played around the market and moved stocks around and charged their normal fees, while $50,000 was invested in a total market Index fund and never touched. What they found is that not one Fund investor could outperform the Index Fund over the first 10 years. After that Time pulled out the contest for no apparent reason, but at that point the best individual investor made 105k, the worst made 60k. The cool part is that the Total Market Index Fund made 138k.
Personally, I would max out your Roth Ira for 30 some years and put it into Index Funds and other Mutual funds and never sell. Staying the course is IMO is the right thing to do. There will be bad times, but on average the Index fund has achieved around 8% since inception. Look at Vanguard if you are looking for a place to start.

[snafu]

In some cultures, DKs live at home until marriage or moves for employment. The old rule of thumb was to balance invest by subtracting age from 100. That would suggest 75% in equity, 25% in income/bond investment whose balance would be adjusted annually. Keep in mind that when you invest in the stock market, perhaps beginning with mutual funds, you can sell with a a one business day turnaround cash in your bank account. As a 1st step, I suggest some easy to understand books like Investing for Dummies or Wealthy Barber for example.

There is no reason to jump into anything with both feet. Look at Dollar Cost Averaging [DCI] in an Index Fund like Vanguard as a starting point. Talk to a few Fund salesmen but remember they are selling a product no matter their title and they get a commission from every dollar you invest. For that reason you are looking for the best 4-5 star funds with low MER [Management Expense Ratio]. Be certain you are comparing 'apples' to 'apples' or 'oranges' to 'oranges' as Funds have different investment targets. Over time you will be shocked to discover you are 'the millionaire next door.'

Personally, I find the desire to retire at 40 or very early bewildering. Any time I've been unemployed, I found it the most deadly, boring, unproductive period. Perhaps having solid financial underpinning allows me to do the work I love. I wish everyone could walk out the door looking forward to the challenges of the day.