have about 2k in an online brokerage account, student with little expenses just looking to get an early start into the market. I already put some into a vaguard index funds and bought a couple of low risks stocks. looking to see what i should do with the rest of this money rather than just have it sit in a bank...

how's your emergency savings?

~4k

how many months of expenses is that?

i would contribute whatever you can to a Roth IRA (you have to have earned income to do this so do your homework first) and stick all of it in a target retirement fund.

i have very minimal expenses and i don't work im working on school 100% at this point since im still under my parents essentially. pretty much the only things im paying for are food/gas. so you don't recommend investing in the stock market? I should just stick it in a retirement fund?

A retirement fund is the stock market. And I agree, as usual, with Tyler.

yeah a TR fund will contain some percentage of stocks. the later the TR date, the more stocks it has (relative to bonds).

if you don't have earned income you can't contribute to a Roth so it sounds like that option is off the table. i think you're already on the right track here (living below your means, saving, thinking about investment early in your life) so keep it up. as your portfolio grows and you get a job, you'll have more investment options open to you.

What exactly is a TR fund? I'm a noob and just got into all of this within the last month or so. And yeah I thought I couldn't contribute to a ROTH yet due to that fact but I wasn't sure.

a Target Retirement (TR) fund is a single investment that seeks to be broadly diversified -- to cover all the bases a retirement portfolio should cover.

http://www.genywealth.com/targeted-retirement-funds
https://personal.vanguard.com/us/fun...RetirementList

btw different brokerages have different names for these types of accounts. fidelity calls them freedom funds, some call them lifecycle funds, etc.

so is it similar to an index fund? and are there only the 4 mentioned in the article or does each brokerage company have their own?

it actually contains multiple index funds. e.g. here's the breakdown of vanguard's 2050 fund:

https://personal.vanguard.com/us/fun...FundIntExt=INT

1 Vanguard Total Stock Market Index Fund Investor Shares 62.9%
2 Vanguard Total International Stock Index Fund Investor Shares 27.1%
3 Vanguard Total Bond Market II Index Fund Investor Shares† 10.0%

yes, many brokerages will have their own with slightly different composition.

as long as i'm here (and since this comes up rather often), i'll explain why i think TRs are cool.

- they give you instant diversification. note that by owning a single TR fund, you've got a piece of US stocks, international stocks, and bonds -- three of the key asset classes in any portfolio.

- minimum purchase is just $1k. each of those funds has a $3k minimum, so to do it "by hand" you'd need a minimum of $9k.

- TRs are a very simple way to get your investing life started until you learn more and/or save more money.

Keep in mind that Vanguard uses index funds in their Target Retirement Funds--one of the reasons many prefer Vanguard to other fund families. Others do not do this. Fidelity for example has all kinds of different actively managed funds in their Freedom Funds. This makes them more expensive than Vanguard and they run the risk of underperforming the market. With Vanguard, you pay less fees and will be sure to get market returns.

thanks for the advice, so I only need to put 1k in one of those funds? and if i can buy them on td ameritrade even if it is one the the Vanguard TRs?

did not realize this. thanks dale.

yes.

yes, though you will likely pay a transaction fee to buy vanguard funds on td ameritrade while you may not have to pay a fee to buy a similar td ameritrade fund.

So I've decided to invest in a variety of international index funds. I'm an Australian citizen resident in the Isle of Man (British Isles).

I haven't really done any real analysis of what countries to invest in - my only feelings are to not do anything in Europe 'cause that all seems like an economic basketcase. Any thoughts on the below percentage distribution of international index funds?

38.5% USA
19.2% UK
19.2% Pacific
11.5% Canada
7.7% Australia
3.8% South Africa

Any other recommendations on where to read on this stuff?

josem,

did you evaluate this decision to "slice and dice" different regions vs just holding an all-world stock index? if so, why did you choose to slice and dice?

i understand your trepidation about the economic situation in europe, but by skipping it entirely, you miss an opportunity to buy low and sell high. you may also want to consider how much you're "avoiding" europe given how interconnected the world economy is these days.

someone else will have to guide you if you're convinced that weighting-by-individual-region is the way you want to play it. gl!

The best performing stock markets have been in South America (Argentina, Chile, Brazil). Just because Europe is a basket case does not mean the companies are and the U.S. is worse off than Europe imho.

It is hard to lose 5K in stocks (unless you play pennies don't!). Stocks move extremely slowly unless you do options (sometimes it takes a decade for an overvalued stock to unwind ebay yhoo even though they are well run). Generally you want to hold at least 1 year to avoid short-term capital gains tax.

If you pick any sp500 stock with a yield over 3, you will probably beat the market. problem is if Obama wins dividends stocks might crash due to dividend taxes he is proposing.

At your age I would just get a broker and buy 1 stock. Then study income statement, balance sheet, and cash flow statement to see why stocks fall or rise. Ignore news. Basically try to predict what the p/e ratio will be in 5 years multiply by 15 and compare it to the current price. Be careful of growth stocks because often the growth stops or is cyclical.

http://www.dividendgrowthinvestor.com/ virtually any stock on this site it will be hard to lose on.

Thanks for the feedback, you guys make sense.

Josem, you also want more exposure to your home stock market. Even though australia is a small part of world GDP, if their stock market doubled and everyone got richer and drove the price of things up, you would want to make sure you were hedged by having a decent australia exposure as well.

i made $18k in earned taxable income in 2011, i could easily write off all $18k if i wanted. however, i was thinking write off $13k and then have $5k in earned taxable income so i can add $5k to my roth ira for 2011. i have 2+ years of expenses saved up, 0 debt, etc so its not like i need the $5k. smart idea?

Can't see any reason not to do it. Earnings will be tax free and you can always withdraw the $5,000 if needed.

1. Truth in this.
2. Please explain how you came up with this.

what are you talking about? need more details of what you're trying to say (what type of income is it? what type of write offs are you talking about, etc). What you're suggesting might not be legal and it may not even be necessary. You can PM if you don't want to spill your tactics to entire world, but def need more information.