Age 19, looking to invest
 

Hello all,

I am 19 years old and have the daunting task of investing my money. I currently have 72k, but obviously I am not looking to invest all of that.

I am going to invest 20k in something that my father is recommending so that is out of the question as of now.

Let's set aside 7k for short term expenses (Too much? I go to a college and don't really pay for anything).

For poker I would like to have 30k set aside.

That leaves a measly 15k left. However, I make about 30-35k/month, so I want to start setting everything up now.

I would like to put the bulk of it for this month in a savings account, but which one is the best. I have been searching and Emigrant gives 5.15% interest a year? Are there any stipulations. Is that the account that you can't take money out of until 59 1/2?

Then, what should I be looking at in terms of stocks? Can I just really buy the DOW S&P and the Q's and expect 8-10% ROI a year? What about mutual funds?

Re: Age 19, looking to invest
 

I think emigrant gives you 5%, and your money is 100% liquid. No fees for withdrawals and no minimums. You can't go wrong by keeping all your money in there while you decide on something.

Re: Age 19, looking to invest
 

The account you can't take money out of until you are 59 1/2 is an IRA.

This is also a good idea, if you start it at 19 you will be way way ahead of everyone else. you can put up to $4000 per year, and if you get a roth IRA it will be sheltered from tax when you withdraw it.

www.vanguard.com is a good place to go for roth IRA.

Re: Age 19, looking to invest
 

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I currently have 72k... I make about 30-35k/month

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Re: Age 19, looking to invest
 

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I currently have 72k... I make about 30-35k/month

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WTF if you make 30k a month you should be able to put together 100k to invest with in no time.

Re: Age 19, looking to invest
 

I'm a realtor and land in Florida has come down about 30-40% in a lot of areas. It's definately a buyers' market now, and people are giving away some of these quarter acre buildable lots that the builders and investors have been flipping to build homes on. There is way too much inventory now which is why prices have come down, and not much been selling the past year, but starting to pick up a bit end of summer. There are signs of a bottom nearby. These 1/4 lots that are, for example, back down to $35k in Palm Bay, FL.....ran up from about $16k 3-4 years ago to up 55-60k ...just from 2004-2005. I don't think they are going back to $16k based on surrounding areas, and since that area is just a year or two behind where I live in Port St. Lucie (lots are $75k here and were up to $100+ last year), I have a feeling the lots 45 minuntes north which are 35-40k can run to 70-75k when the buyers return. I think if you can bottom fish in some hot areas, I'd put some money into some of these lots. I know...it's not a guaranteed 5%, but in a hot market these lots move anywhere from 50-100% in a year, and you can mortgage them with 20-25% down to increase your ROI%. I really don't expect the market to go crazy like before, but I can easily see these going up 10-20% (which is a conservative estimate) compiled over 3-5 years that could be a good return. Rental property may also be something to look in, but I've never really cared too much for that as vacant land is less headaches.

Besides Florida, which ran up a bit too fast and now correcting, I am going to start looking into other markets like the Carolinas and Texas.

But....if you really want to play it safe, I'd be sticking with the CDs and municipal bonds. Liquid CDs are probably the best since you can withdraw whenver. In these time, cash is truly KING. If you're into stocks, check out the homebuilders like DHI, LEN, CTX, maybe KBH. These are the biggest in the business and had a good run before they started tanking. PEs are down to 4 and change so unless they go belly-up they should be flooring around here. SOon as market turns around and they get inventory problems under control (which they are)....these should be one of the better stocks again.

Re: Age 19, looking to invest
 

I recommend doing what Work4Fish420 says--invest it all in the flordia real estate market.

Re: Age 19, looking to invest
 

NO WAY INVEST IT ALL IN FLORIDA. That is still kinda risky right now. That is what I've been vested in the last few years and is scary with the oversupply right now. I advice a good mix between land and other stuff. My short term goal is to have about 1/3 invested in FL real estate, 1/3 liquid tools (like CD/Cash, mutual, maybe a few stocks to trade, etc.) The rest remainding 33% will be .....well....poker, but don't think the fiance will like that too much [img]/images/graemlins/smile.gif[/img]

Re: Age 19, looking to invest
 

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NO WAY INVEST IT ALL IN FLORIDA. That is still kinda risky right now. That is what I've been vested in the last few years and is scary with the oversupply right now. I advice a good mix between land and other stuff. My short term goal is to have about 1/3 invested in FL real estate, 1/3 liquid tools (like CD/Cash, mutual, maybe a few stocks to trade, etc.) The rest remainding 33% will be .....well....poker, but don't think the fiance will like that too much [img]/images/graemlins/smile.gif[/img]

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Could you point us to some relevant sitse where lots are for sale?

Re: Age 19, looking to invest
 

Thanks for the responses. Only recently have I been playing enough/good enough to make this kind of money/month, but it will be standard.

I am going to look into Emigrant, but my Dad gets P plus 1 on withdraw-at-any time loans with his company so I might put my money there for now since P=8.

I am a little hesitant to start investing in real estate in other states (I don't know enough about it and it looks like a shot in the dark due to my lack of knowledge). Is there any way you could provide more relevant links Work4Fish? Thanks for the responses.

Re: Age 19, looking to invest
 

I am a real estate agent, and cover most of the SE coast of FL. If anyone is interested in some custom tailored lot links for specific areas, email me at [email protected] . I have a business email also, but I'd rather not post it here. For staters, I both bought and sold lots to these peeps (all of my investment thus far has been either in Palm Bay or Ocala/Marion Oaks or Silver Springs Shores)....

http://www.stlucieland.com/

Currently, now that lots have gone WAY down, I'd stay away from the center/rural areas of FL and think Palm Bay at $25k a lot is a steal.

This site is ok, but lots seem to be a little more pricier than average...

http://www.stlucielots.com/

http://www.vacantlotsales.com/

Re: Age 19, looking to invest
 

Or....if you want something shorter term and liquid, can always just bottom-fish and trade the homebuilder stocks instead. I just got back into the market last week after a year hiatus..just a few G in margin account for some extra play money. But, my favorite builders now are DR Horton (DHI) and Lennar (LEN). I think most or all of the bad news is reflected in the beatdown in price, and they are already starting to form a base and creep up again. DHI at $23-$25 and LEN anywhere between $45-$50 should be fine. Any good news that comes out from here should help drift them back to highs...especially if sales start to pick up again in 2007. In my markets, I am seeing signs of at least a bottom and some buyers are returning, which has to be somewhat good news.

Re: Age 19, looking to invest
 

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Thanks for the responses. Only recently have I been playing enough/good enough to make this kind of money/month, but it will be standard.

I am going to look into Emigrant, but my Dad gets P plus 1 on withdraw-at-any time loans with his company so I might put my money there for now since P=8.

I am a little hesitant to start investing in real estate in other states (I don't know enough about it and it looks like a shot in the dark due to my lack of knowledge). Is there any way you could provide more relevant links Work4Fish? Thanks for the responses.

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Don't listen to Work4fish. He is giving you terrible advice for your situation. THis is why you need a financial advisor...it will cost you something but you need the education.

Also -- what does you dad's company do and how big is it? It is not a no brainer that those loans are safe.

Re: Age 19, looking to invest
 

Listen to Scorpion Man. He knows what he's doing. Before I even read his post I did not get a good enough vibe from the previous responses. First, putting money in municipal bonds + CD just because it's safe is not smart because you're losing value. Second, you are not looking for long-term investment with IRA which you can take out when you're 59 1/2 (Roth IRA is the better one, there are several types). At the age of 19, you will not be getting your money's worth from a financial advisor who you pulled out from a website/yellowbook. A SOLID referral would be fine. Mutual fund would be the best way to go for you if you really want to "play it safe", per se. I'd suggest you to read some books, browse around the forum a bit to see some posts from Sniper or El Diablo.

BTW, 19 year old + 15k does not get you the real estate that you want. A hole in a wall would be an actual description of the place you're buying.

Hope this helps. [img]/images/graemlins/smile.gif[/img]

Re: Age 19, looking to invest
 

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Don't listen to Work4fish. He is giving you terrible advice for your situation.

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Thirded.


To answer your second question: in terms of stocks, you should look into investing with index funds.

Also, if it's possible put as much as you can into a Roth IRA. You essentially get to skip paying taxes on your gains. With a Roth IRA, you can withdraw your principle at any time (up to the amount you've put into it). Only your gains are not withdrawable penalty-free.

Re: Age 19, looking to invest
 

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Don't listen to Work4fish. He is giving you terrible advice for your situation. THis is why you need a financial advisor...it will cost you something but you need the education.

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Agree with the first part diasagree with the second. It doesn't take much time or effort to educate yourself on the basics of investing, and you don't need an advisor to it. Go to fool.com and start reading. Check out the "index funds" section first.

Re: Age 19, looking to invest
 

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Don't listen to Work4fish. He is giving you terrible advice for your situation. THis is why you need a financial advisor...it will cost you something but you need the education.

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Agree with the first part diasagree with the second. It doesn't take much time or effort to educate yourself on the basics of investing, and you don't need an advisor to it. Go to fool.com and start reading. Check out the "index funds" section first.

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So, Greg...you are going to have to use your own judgment on this one. You are going to find that Zim's sentiments here are the majority opinion on these boards. While I do not think it is horrible advice, I think it is not optimal advice for a 19 year old.

I am twice your age, I have an MBA from a top school, I was a professional investor in the markets for 15 years...and I find it helpful to use an "advisor".

The practical problem is that most advisors suck, and a bad advisor is worse than no advisor. That said, a good one would be tremendously helpful to you. The suggestion (made by many on these boards) that you can just read up on indexes and be fine is overly simplistic in my view. THere are many financial products you are going to be introduced to over time -- everything from life insurance, to choosing between ETFs and mutual funds, to being presented with opportunities like the one you are talking about with your dad, to ultimately learning how to investigate individual stocks, to writing covered calls, to understanding the implications of wash sales, to a myriad of tax and ultimately estate related questions. Some of these options have confusing and hidden fee structures...some of them have pitfalls that are hard to see if you have not been around the block. Also, a good advisor will, from time to time, give you ideas that are value added that might make you, for instance, overweight small cap vs. large cap, etc.

There is also research and thought pieces available from the wireline houses that you might find educational.

My take is this -- it is not that expensive to use advisors and there is no lifelong commitment. At the least, start with one and learn the ropes a bit. If, after you gain comfort, you decide you are getting no value out of it or want to do it yourself - toss the guy. It's a very cheap education.

I also find that having an advisor around is helpful unless you are a very diligent person. Many people will leave assets lying around in suboptimal ways for years just out of laziness. A good advisor will make sure this doesn't happen.

You have a tremendous amount to learn, and the world does not end with a globally balanced index approach. AFter you get educated, you might decide that that is your preferred approach. But get educated before you make that decision.

Everyone on these boards focuses on the 1% or so (before tax if you structure it right) that it costs to use an advisor. I am focused on the 10-50% potential costs that many people incur out of ignorance.

p.s. after i wrote all this i reread your post and realized you need a bit more $ before executing on my advice above...but I still think you should do what I said. It is also possible you could find a good guy who would take you on if he believes you will have substantial earning power over your lifetime. If a guy would take you on for 1%, you are paying $500 (pretax, you can often cut that down by deducting it) per year for his services at $50k. People don't fill their own cavities, cut their own hair, and file their own lawsuits. I don't understand why people at 2+2 think its a slam dunk that you should invest without any help.

Re: Age 19, looking to invest
 

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You have a tremendous amount to learn, and the world does not end with a globally balanced index approach. AFter you get educated, you might decide that that is your preferred approach. But get educated before you make that decision.

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Well we can certainly agree on this but have reached opposite conclusions.

There's nothing you can learn from a advisor that you can't learn yourself, and I urge you to do so. At the very least learning the basics will help you to choose a competent advisor and allow you to feel a little bit more in control of your own finances. If you have no desire to learn on your own, by all means hire an advisor, but be very careful about who you choose.

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People don't fill their own cavities, cut their own hair, and file their own lawsuits. I don't understand why people at 2+2 think its a slam dunk that you should invest without any help.

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I really really dislike this analogy. There's a very sobering and oft quoted statistic which may open your eyes to the investment world if you haven't already heard it: 75% of mutual funds on average don't beat the market. That is to say, if you just took your money and plopped it in an index fund and never learned another thing about investing, you would beat 75% of the professionals in charge of mutual funds. Could you, by doing nothing, be more effective at filing a lawsuit than 75% of lawyers, or cutting your own hair than barbers, or filling your own cavities than dentists?

Now there are no absolutes in what I'm saying here. Some mutual funds beat the market, and some financial planners will help you more than you can help yourself, but understand that their first obligation is to themselves and their firms and not you, and you should be skeptical about what they say. The reason most of them exist at all is because their clients aren't educated enough about personal finance to hold them accountable. So do yourself a favor and learn at least the basics of investment and then go from there.

Re: Age 19, looking to invest
 

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You have a tremendous amount to learn, and the world does not end with a globally balanced index approach. AFter you get educated, you might decide that that is your preferred approach. But get educated before you make that decision.

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Well we can certainly agree on this but have reached opposite conclusions.

There's nothing you can learn from a advisor that you can't learn yourself, and I urge you to do so. At the very least learning the basics will help you to choose a competent advisor and allow you to feel a little bit more in control of your own finances. If you have no desire to learn on your own, by all means hire an advisor, but be very careful about who you choose.

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People don't fill their own cavities, cut their own hair, and file their own lawsuits. I don't understand why people at 2+2 think its a slam dunk that you should invest without any help.

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I really really dislike this analogy. There's a very sobering and oft quoted statistic which may open your eyes to the investment world if you haven't already heard it: 75% of mutual funds on average don't beat the market. That is to say, if you just took your money and plopped it in an index fund and never learned another thing about investing, you would beat 75% of the professionals in charge of mutual funds. Could you, by doing nothing, be more effective at filing a lawsuit than 75% of lawyers, or cutting your own hair than barbers, or filling your own cavities than dentists?

Now there are no absolutes in what I'm saying here. Some mutual funds beat the market, and some financial planners will help you more than you can help yourself, but understand that their first obligation is to themselves and their firms and not you, and you should be skeptical about what they say. The reason most of them exist at all is because their clients aren't educated enough about personal finance to hold them accountable. So do yourself a favor and learn at least the basics of investment and then go from there.

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Ummm... when you say "open your eyes" are you talking about OP or me? You continue with your simplistic analysis of investing. Of course mutual funds trail the market. Mutual funds, in aggregage ARE the market, but with fees layered on and, generally, modest cash balances holding them back in up markets (which are more common) and helping them in down mkts (less common). THey also have transaction costs, which are negligible in indexes. This is the sort of thing that a good advisor would elucidate.

Indexing is not the end all be all. There are decisions to made around asset allocation, and they are not static. There are other decisions (should I loan my brother money? should I invest in my dad's restaurant) that an advisor can help with. There are some gnarly tax situations if you ever make any real money. I will say it again...it is very cheap to learn this way, particularly when your assets are small. You can always change to investing on your own later in life. You are not experienced enough or old enough to learn what you need to know in totality from the internet. In addition, just having someone on top of your portfolio so you don't get lazy and let things get out of whack is probably worth the price of admission for many people.

Learning on your own is a good thing, no doubt about. YOu have to ask yourself honestly how much time you are willing to put in. It's been twenty years for me, many of which were 14-15 hours per day...and I am still learning. Maybe I should use Zim as my advisor, since he already appears to have it down pat!

Re: Age 19, looking to invest
 

if you have no idea where to put your money, put it in the bank.

What you need to do first is spend time to educate yourself in all the methods of investing and choose which ones is best for you.

Re: Age 19, looking to invest
 

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Ummm... when you say "open your eyes" are you talking about OP or me?

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OP, sorry for the confusion.

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Of course mutual funds trail the market. Mutual funds, in aggregage ARE the market, but with fees layered on and, generally, modest cash balances holding them back in up markets (which are more common) and helping them in down mkts (less common). THey also have transaction costs, which are negligible in indexes.

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Mutual funds are what most people are invested in, and the fact they can get away with subpar returns while pocketing enormous profits says a lot about the investment community. The same principle certainly applies to financial planners although it's impossible to back that up statistically.


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This is the sort of thing that a good advisor would elucidate.

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Or any decent website.

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Learning on your own is a good thing, no doubt about. YOu have to ask yourself honestly how much time you are willing to put in. It's been twenty years for me, many of which were 14-15 hours per day...and I am still learning.

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I agree with this but I guess it really depends on what returns you're shooting for. It doesn't take very long to learn enought to beat the market however.

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Maybe I should use Zim as my advisor, since he already appears to have it down pat!

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Well ok but then you can't badmouth me. [img]/images/graemlins/smile.gif[/img]

Re: Age 19, looking to invest
 

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Only recently have I been playing enough/good enough to make this kind of money/month, but it will be standard

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Of course it will. What could go wrong?

Re: Age 19, looking to invest
 

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Or....if you want something shorter term and liquid, can always just bottom-fish and trade the homebuilder stocks instead. I just got back into the market last week after a year hiatus..just a few G in margin account for some extra play money. But, my favorite builders now are DR Horton (DHI) and Lennar (LEN). I think most or all of the bad news is reflected in the beatdown in price, and they are already starting to form a base and creep up again. DHI at $23-$25 and LEN anywhere between $45-$50 should be fine. Any good news that comes out from here should help drift them back to highs...especially if sales start to pick up again in 2007. In my markets, I am seeing signs of at least a bottom and some buyers are returning, which has to be somewhat good news.

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No offense, but realtors are usually the last to know when a real estate market tops. I am heavily short on those two stocks, also Centex. One of them or more will probably file for bankruptcy before the end of the decade.

Re: Age 19, looking to invest
 

Since you have the cash, buy you a house! Put alot down and finish college. IF you make 30k a month you should easily be able to pay off a house in a years time. That way if you ever lose your bankroll, atleast with your College degree and a house paid for, you aren't out on the street! That is +EV

After that, look into a money market or at some online banks. I won't give advice on this. Do your own DD. Also what are you going to college for. This might better help people suggest you something that you might like. I do a little forex and penny stock trading. But I like to gamble.

Re: Age 19, looking to invest
 

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Ummm... when you say "open your eyes" are you talking about OP or me?

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OP, sorry for the confusion.

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Of course mutual funds trail the market. Mutual funds, in aggregage ARE the market, but with fees layered on and, generally, modest cash balances holding them back in up markets (which are more common) and helping them in down mkts (less common). THey also have transaction costs, which are negligible in indexes.

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Mutual funds are what most people are invested in, and the fact they can get away with subpar returns while pocketing enormous profits says a lot about the investment community.

The same principle certainly applies to financial planners although it's impossible to back that up statistically.


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As a whole, everyone will get market returns, less fees. Cheaper the fee, the better your chance of outperforming. This applies to all funds and investments and planners, but gross of fees, for any fund/planner that loses to the market, someone must best the market, by definition. [Fees can reverse that, obviously.]

The important thing is too look at risk and return. The 'index' everyone is making reference too [95% of the time] is the SP500 which is *only* large-cap, US stocks.

That is not a proper allocation, that is throwing one dart and hoping it does well, at one small sub-sector of the investing market. Should it be a part of your portfolio? Sure, it's cheap, somewhat tax-efficient, easy to buy, and you get a fairly good correlation to that sector. But that leaves every other part of the investing world incomplete.

Interview several planners, educate yourself, ask people you trust for advice, do a little homework, and see what you like based on your risk/return tolerance.

Re: Age 19, looking to invest
 

OP: this is very poorly disguised brag thread.

Re: Age 19, looking to invest
 

I have some lots in North Port available for sale. I bought them a year ago and I need to sell them now. The prices have come WAY down since I bought them,so it's really not a good time to sell but we have an illmess in the family and I need money.It is a great time to buy and this will be a very very good investment for anyone involved

Re: Age 19, looking to invest
 

WOW, there is some really horrible advice in here, hopefully I can help you out a little.

Real estate: can be an awesome investment, the thing is, you MUST put in the time to know the market, know the trends, etc. etc....in other words, if you wnat to invest in real estate, great, but you need to put some time into it.

A financial adviser is really not needed. They're overpriced and generally only will offer you "investment options" that make them money (aka a commission) and aren't always in your best interest.

My advice, start by putting it into a savings account. Watch shows like Suze Orman and other CNBC shows. Pick up some books, take the time to read up on areas you like. And then slowly start out. You're only 19, so you have PLENTY of time to get going. Even if it takes you the next 6 months to find out what you want to invest in, no biggie at all.

p.s. when investing, always think about "why" someone is giving you the advice. People like "work4fish420" obviously want you to buy land through him, so it'll obviously be "skewed" towards that...he could be giving you AWESOME advice, or he could be selling you swampland, so make sure you do your research [img]/images/graemlins/wink.gif[/img] And if it sounds too good to be true, it probably is [img]/images/graemlins/wink.gif[/img]

If you're interested in real estate, and want a good book to start off with, get millionair real estate investor by gary keller, great book, I've read it like 5 times through.

Re: Age 19, looking to invest
 

Some financial advisors aren't overpriced if you don't have a rigorous understanding of investment theory.

Think about how many stupid people invest stupidly. Are they really that close to investing optimally that a 1% fee will actually hurt their risk-adjusted returns?

Re: Age 19, looking to invest
 

Wait.

Your 19 years old. Things to invest in: booze, strippers, drugs, tobacco. With the $2K you'll have left after that investment go bung that on roulette. go for red.