Investing Help? (Iron Jay)

[Iron Jay]

ALright, I have managed to save a little money up and instead of blowing it on material things I have decided to start investing...I realize I should have been doing this up until now but I finally have money to finish school and put a little away...I was going to go open an IRA tommorrow...RIght now I have about $2500 to put in, I know they max at $3K...I have been reading a few books on investing but I wanna get someone's advice if anyone works in the investing field....Is the IRA the best place to start?

ALso, does anyone have any good books they know of that I can learn more about the stock market and how to make the best buys? Sorry if I should a little green but I have to start somewhere! Thanks...IRON JAy

 

[Bob Smith]

For books, this is a perfect place to start...

Get Ben Graham "The intelligent investor", "Security Analysis - 1940 edition' and Phillip Fisher "Common Stocks and Uncommon Profits".

 

[Iron Jay]

For books, this is a perfect place to start...

Get Ben Graham "The intelligent investor", "Security Analysis - 1940 edition' and Phillip Fisher "Common Stocks and Uncommon Profits".

Thanks B.S...YOu think Barnes and Nobel will have it?

 

[Bob Smith]

B&N should have them. I would actually recommend checking out your local library first. Security Analysis is...IIRC, about 800 pages. They arent really easy reads, as there are formulas and whatnot. But tons of good info about fundamental investing and stories to accompany the ideas.

 

[Hogg]

Go with a Roth instead. Though you cannot deduct the contribution against gross earnings, I suspect that your income stream is not such right now that you have to worry about taxes. The Roth allows you to grow your investment tax free so for example, over the years, you continue to contribute a couple grand to your roth and 40 years from now, you have a million or so that is tax free. With a traditional IRA, you will be taxed on your draws as income.

BS pointed out two very important books. Phillip Fisher's book "Common Stock and Uncommon Profits" is also a very good addition to any investor's library and "The Essays of Warren Buffett" yields much insight into the successul methods of investment selection.

I would suggest doing all of your buying off of Amazon.com since you will forego sales tax and you may be able to find the books used at a substantial discount to retail.

Take care bud.

H

ALright, I have managed to save a little money up and instead of blowing it on material things I have decided to start investing...I realize I should have been doing this up until now but I finally have money to finish school and put a little away...I was going to go open an IRA tommorrow...RIght now I have about $2500 to put in, I know they max at $3K...I have been reading a few books on investing but I wanna get someone's advice if anyone works in the investing field....Is the IRA the best place to start?

ALso, does anyone have any good books they know of that I can learn more about the stock market and how to make the best buys? Sorry if I should a little green but I have to start somewhere! Thanks...IRON JAy

 

[Iron Jay]

Go with a Roth instead. Though you cannot deduct the contribution against gross earnings, I suspect that your income stream is not such right now that you have to worry about taxes. The Roth allows you to grow your investment tax free so for example, over the years, you continue to contribute a couple grand to your roth and 40 years from now, you have a million or so that is tax free. With a traditional IRA, you will be taxed on your draws as income.

BS pointed out two very important books. Phillip Fisher's book "Common Stock and Uncommon Profits" is also a very good addition to any investor's library and "The Essays of Warren Buffett" yields much insight into the successul methods of investment selection.

I would suggest doing all of your buying off of Amazon.com since you will forego sales tax and you may be able to find the books used at a substantial discount to retail.

Take care bud.

H

Hogg, thanks my friend...Quick question, I know the Roth is tax free but is an advantage of a traditional IRA in that I can deduct the money w/o a penalty? I was just debating this as maybe I might need the money in case something came up?

 

[Iron Jay]

Hogg, thanks my friend...Quick question, I know the Roth is tax free but is an advantage of a traditional IRA in that I can deduct the money w/o a penalty? I was just debating this as maybe I might need the money in case something came up?

Hogg, one more ?...Can I set up a Roth IRA myself or do I need to have a broker do it for me?

 

[Hogg]

Hogg, thanks my friend...Quick question, I know the Roth is tax free but is an advantage of a traditional IRA in that I can deduct the money w/o a penalty? I was just debating this as maybe I might need the money in case something came up?

You will still take a penalty on a traditional IRA in the form of cap gains. You can refund a contribution prior to the due date of the tax year but if you were to say, wait 2 years and then decide that you want to take your contributions back out, then you will get hit with a penalty because you took a deduct against earnings when you made the IRA contribution.

The Roth is probably the second best method of retirement investment out there....401k and 403b is best because you can hide soo much more cash but it is taxable. With the Roth, even though it is presently only 3K for qualified individuals (ie, less than $ 110K agi single), it enables you to build a decent earnings pot for the future. Also, if/when you start contributing to a 401K, you can still exploit the Roth even if you contributed as long as you are under $ 110K agi (single) .

 

[Hogg]

Hogg, one more ?...Can I set up a Roth IRA myself or do I need to have a broker do it for me?

If your bank does brokerage, you can do it at your bank, or you can go to a Harris, Ameritrade, TD Waterhouse, Brown, etc. and set it up online.

I would buy an index or a no load or deferred charge mutual fund with the money. It is not enough cash to play individual issues with.

 

[Iron Jay]

If your bank does brokerage, you can do it at your bank, or you can go to a Harris, Ameritrade, TD Waterhouse, Brown, etc. and set it up online.

I would buy an index or a no load or deferred charge mutual fund with the money. It is not enough cash to play individual issues with.

Yea, I realize its not a lot of cash but I figured I had to start somewhere...I figure I can continue to save a decent amount of my earnings while I finish up my classes at school...After finishing up school I will be able to take full advantage of 401k and other investment options...

 

[Bob Smith]

Hogg, thanks my friend...Quick question, I know the Roth is tax free but is an advantage of a traditional IRA in that I can deduct the money w/o a penalty? I was just debating this as maybe I might need the money in case something came up?

I agree with Hogg's sentiments. Besides that, if you withdraw from an IRA, you are looking at early withdrawl peenalties, possible personal income tax and cap gains. Unless of course that money is used for in a few instances such as using the $ as a downpayment on a first house or medical expenses.

Again, Hogg is 100% on the money when suggesting an index fund or mutual fund of some sort over individual issues.

 

[Hogg]

Bob, how much money do you have in the market right now?

 

[nick e. guns]

Good to see you getting a start Jay. Even though it is not a lot of money, you will learn a lot of good lessons just getting your feet wet. I am inclined to disagree with Hogg about the mutual funds as I have been an active short and long term trader for four years now and can tell you that mutual fund companies are quite the crooks. That being said, because you are investing a low amount and don't have much experience, a low cost index fund probably isn't such a bad idea. Depending on how committed you are to actually making money in the markets, hopefully as your account and experience grows in the future you will get away from funds and move on to your own analysis and decisions. Another good resource for beginners is Investors Business Daily. The owner of this newspaper, William O'Neill has written a couple of very easy to read straightforward books on investing that will show you the basics of both fundamental and technical analysis.

Also, I don't know your personal situation, but one thing I would recommend is to buy a house or condo before putting money into the market. That is a more stable investment presently and is a great first step towards building wealth. As I said, I don't know your personal financial situation, but if you have any way to do so, I would definitely start there. Either way, best of luck to you.

 

[Bob Smith]

Bob, how much money do you have in the market right now?

A great deal less than you.

 

[Hogg]

A great deal less than you.

You did start though .....that is the good thing. I remember you saying that you were planning on kicking things off once you got your new job.

 

[crewboss]

You did start though .....that is the good thing. I remember you saying that you were planning on kicking things off once you got your new job.

go w/ hogg. a great fund, whenset up as a Roth, is the best deal for a young dude. the biggest advantage is cap-free withdrawl for the 1st time homebuyer. translation - if you purchased a mutual fund and accumulated $50K to put towards your 1st house, kiss a large percentage goodbye when you withdraw. If you set up that same fund as a Roth, it's completely tax free for the 1st time homebuyer. Great deal. Take advantage of it.

 

[fidobuster]

go w/ hogg. a great fund, whenset up as a Roth, is the best deal for a young dude. the biggest advantage is cap-free withdrawl for the 1st time homebuyer. translation - if you purchased a mutual fund and accumulated $50K to put towards your 1st house, kiss a large percentage goodbye when you withdraw. If you set up that same fund as a Roth, it's completely tax free for the 1st time homebuyer. Great deal. Take advantage of it.

you can only avoid the early withdrawal penalty on the first 10k you take out of an ira.

fidobuster.