Someone tell me what to do!!

**gamecock43** · 07-28-2008, 12:06 PM

I dont know much of anything about investing except it will earn average 12% long term, but is scary and should not be done for short term goals.

So I guess you need to figure out your S&P purpose.

Is it for retirement? Because you are taking care of retirement already but extra money helps.

Is it to increase your net worth? Just realize it could be a good 10 yrs before you see a noticable net worth change.

Is it for future stuff? Again, remember when you NEED the money, it could be less than you put in if it is a short term goal.

But you are young, you are making waaayyy decent salary. So if you tend to be a liberal spender, I guess its better to put $400 a month into stocks than into eating out and new cell phones.

**billybob** · 07-28-2008, 12:11 PM

That's the thing, I don't know what it's for, but the idea is relatively long term (at least 10 years) The thing I want to avoid is tying up all my investments in retirement accounts that I can't access till I'm 65 or whatever. I'd like to have some net worth so that whatever life brings my way, I'll have it...

**gamecock43** · 07-28-2008, 12:20 PM

Ok, so you just want to make your money work the hardest it can for you.

A little bit ago people were taking about some type of bond that currently offers like 5% intrest over the course of 5 yrs or so. I dont know the details because I do not have $$ to invest in bonds right now. I think that is the SAFEST way to go if you do not have a stomach for seeing a loss on your money.

The stock market is not doing very well right now. I invested 3 yrs ago and actually have lost all profits plus $5,000 from my initial investment deposit. I am not a happy camper but have been advised not to get out because it is nearly impossible to make back the $$ I lost and get any kind of decent return by the time I retire if I get out of stocks completely.
-But if I could do it again I would have gone 80% safe investments. I cant stomach this. But assuming by your name, you are a guy, and men tend to have better risk tolerance (generally speaking).

If you have the money to blow short term and the patience to see a long term gain, go for it. It sounds like that is what you want, to increase your net worth the maximum you can. I dont know if S&P's is the way to go...wait for someone more advanced then me to help you out there.

**Scanner** · 07-28-2008, 12:23 PM

IF you are earmarking the money for retirement, you should shelter it in a Roth IRA. IF you are going with taxed accounts, then yes, index funds are usually the most tax-efficient, to reduce your tax liability at the end of the year.

**zetta** · 07-28-2008, 12:38 PM

First, suppose your company had a surprise layoff that you weren't expecting. Is $11k enough to cover your expenses for 3-6 months until you found another job? If not, I would work on increasing the amount you keep in the Emigrant account.

After that is in place, I would suggest sending the $400/mo to the Vanguard S&P index fund in a ROTH IRA. Investing more in retirement now will give you the greatest compounding, allowing you to invest less and live a little more freely in 5-10 years time. I believe you can take the contributions (but not the gains) out at a later date without penality if you are very concerned about having so much money locked away.

**maat55** · 07-28-2008, 01:39 PM

I would take 400.00 and invest it in an Roth IRA (Stock Mutual Fund) The rest I would allocate toward future car buy's etc.

**jIM_Ohio** · 07-28-2008, 02:24 PM

$800 extra and you have 11k in savings now.

Here are some thoughts:

1) Is the 11k 3months expenses? 6 months expenses?
I would make sure the 11k is 3 months expenses.
I would keep another 3 months expenses in something safer than S&P 500 (look at a balanced fund, for example, which is 40-60 or less (40% stocks, 60% bonds, or less than 40% stocks). The average return on this should be about twice what the cash returns, with normal positive returns each year (regardless of market).

Then I would consider S&P 500 among a few other options.
I would also make sure a percentage of free lance work income is set aside (set aside 10% or 15% for example).

Maybe the philosophy becomes save 20%. 15% goes into retirement accounts and 5% goes into the taxable liquid accounts. Just because an account is for retirement (401k, IRA) does not prevent you from gaining access.

1) a Roth IRA would allow you to withdraw the $5000 yearly contributions without penalty.
2) IRA monies can be accessed at age 59.5 without penalty and at any age provided you can maintain the same withdraws until age 59.5.

**billchrz** · 07-28-2008, 06:10 PM

Do you have any debt left other than the house? CC, car payments, student loans, etc?

**billybob** · 07-29-2008, 11:21 AM

Nope, no other debts at all...

Someone tell me what to do!!