What is a good "starting point" (dollar-wise) to start investing?

[SunnyD]

I haven't ever been in much of a position to start saving up for the future, but even in these wonderfully troubled times, I think now might be a good time to start, even understanding there will likely be losses involved.

Given that I don't have tens-of-thousands of dollars to invest, what dollar figure would be a good place to start? Is there some minimum number required, or could I go in with something stupid like $500 and continually add to it over time, or is it just not worth it? I'm not looking for any sort of get-rich-quick, I'm more interested in starting to build a portfolio that in the next 30 years or so will be mature and robust, and will augment whatever retirement accounts or programs that happen to exist (if any) by then.

 

[Kirby]

tree-fitty

 

[DisgruntledVirus]

Do a 401k first, then Roth IRA, then once those are maxed start to look at investing in stocks.

 

[mugs]

How much will you be paying in commissions? Scottrade charges $17 for mutual fund trades IIRC, which would be 3.4% (of $500) to buy and another 3.4% to sell. So right off the bat you're down significantly. And that's assuming you only buy one fund. Stock trades are cheaper, but you need to buy more stocks to have a diversified portfolio.

 

[Schfifty Five]

Originally posted by: DisgruntledVirus
Do a 401k first, then Roth IRA, then once those are maxed start to look at investing in stocks.

This.

 

[BlueWeasel]

Originally posted by: Schfifty Five

Originally posted by: DisgruntledVirus
Do a 401k first, then Roth IRA, then once those are maxed start to look at investing in stocks.

This.

This recommendation is common around here. I've always wondered if the term "maxed" means the maximum contribution amount by law (ie, $15,500 this year for a 401k, $5,000 for Roth) or at least enough to get the full employer contribution.

My current setup is I contribute 6% of my pre-tax income to a 401k with 3% company match. I also contribute 6% of salary to a Roth. Therefore, a total of 15% of my salary goes into retirement, but I'm not close to reaching the federal 401k limit.

Do I need to contribute more to my 401k and Roth before even considering stocks?

 

[LS21]

on 1 hand you lose the tax advantages of 401k... on the other hand you may gain more flexibility in what to invest. also there are minimums required for a trading account so that might answer the question for you.

personally i upped my contribution to 401k (invested in diversified funds), dip into company discount stocks, and then throw a bit of money into a trading account as fun money

 

[waffleironhead]

Just pick a percentage of your income that you want to start investing in a 401k. even 1% adds up over time. Then next year when you get your raise, instead of living larger,just increase your investment percentage.

 

[maddogchen]

the first question we would have to ask you is do you have an emergency cash fund set aside if you lose your job? If so how many months is it? and how much money do you put in a month?

 

[Schfifty Five]

Originally posted by: BlueWeasel

Originally posted by: Schfifty Five

Originally posted by: DisgruntledVirus
Do a 401k first, then Roth IRA, then once those are maxed start to look at investing in stocks.

This.

This recommendation is common around here. I've always wondered if the term "maxed" means the maximum contribution amount by law (ie, $15,500 this year for a 401k, $5,000 for Roth) or at least enough to get the full employer contribution.

My current setup is I contribute 6% of my pre-tax income to a 401k with 3% company match. I also contribute 6% of salary to a Roth. Therefore, a total of 15% of my salary goes into retirement, but I'm not close to reaching the federal 401k limit.

Do I need to contribute more to my 401k and Roth before even considering stocks?

+ 6mo worth of savings for emergency.

 

[Beattie]

What you should do is to do your 401k through work to max out the match. So if they give you like 4% match, only put 4%. That way you get a 100% rate of return on that money. After that, you should invest up to the max into a Roth IRA. That means that gets the next $5000. After that, you can put more into the 401k up to it's max which is $15,500. Then once all that is done if you make even more money that you want to invest (and you should be investing about 15% of your income) then start looking at mutual funds that aren't tax advantaged. You can do stocks here also if you want, but I wouldn't.

 

[Night201]

Originally posted by: maddogchen
the first question we would have to ask you is do you have an emergency cash fund set aside if you lose your job? If so how many months is it? and how much money do you put in a month?

#2: Do you have any debt? I assume you dont' own a home/condo/etc.?

If your answer is no to 1 or both of the above, then you should wait and build up a little emergency fund and pay off your debt(s) first.

 

[FallenHero]

Originally posted by: Night201

Originally posted by: maddogchen
the first question we would have to ask you is do you have an emergency cash fund set aside if you lose your job? If so how many months is it? and how much money do you put in a month?

#2: Do you have any debt? I assume you dont' own a home/condo/etc.?

If your answer is no to 1 or both of the above, then you should wait and build up a little emergency fund and pay off your debt(s) first.

You can do both at the same time, just don't contribute as much to the 401k/ROTH. The earlier you get in the better.

If it is a choice, debt would probably be better. At least bring it under control.

 

[IHateMyJob2004]

Assuming $10 commsions, remember that with $500, 5% of that goes to commsion. You need to make 5% jsut to break even. Even i nteh long term, this is something to remember.

I have a general rule that I do not buy in lots of less than $5,000.

This gets more complicated thugh. Some will say you need to diversify. I say horse shit. Diversification is for those that don't know how to invest. Diversification is for those that do not know what they are doing and they should probably be in index funds. I AM DEAD SERIOUS ON THIS. I'll put all my money in WFC right now if I had to. Better yet, buy some BRK-B for under $4,000.

Having said that, in the end, you really want to keep your commission under 1% if at all posssbile. With a place like Aemrictradt that does $10 trades, that comes to $1,000.

Anyways, I'd recommend that you save up $5,000 and open up an account somewhere. Yu have plenty of time to learn. YOu are honestly best off piggybacking Warren Buffet.

I could go on and on. Head over t ogurufocus.com and go to the value investing forum. I and others will give you some wonderful advice.

 

[Bignate603]

If your employer does any sort of 401k do that first. They generally make it so it has no fees for employees so you won't have your money whittled away by those. $500 isn't a bad place to start, if you want to play it safe you can do a CD or something right now and just put some away each month to roll into the CD when it comes due. I automatically have 8% of my take home pay stuck into a savings account. That's to build up my emergency savings (just started out of school, I don't have a huge amount of savings yet). Right now I'm putting 4% into my 401k but plan to bump that up to 8% as soon as I knock down the $5k in student loans I have right now.

 

[DaveSimmons]

Originally posted by: BlueWeasel
This recommendation is common around here. I've always wondered if the term "maxed" means the maximum contribution amount by law (ie, $15,500 this year for a 401k, $5,000 for Roth) or at least enough to get the full employer contribution.

My current setup is I contribute 6% of my pre-tax income to a 401k with 3% company match. I also contribute 6% of salary to a Roth. Therefore, a total of 15% of my salary goes into retirement, but I'm not close to reaching the federal 401k limit.

Do I need to contribute more to my 401k and Roth before even considering stocks?

Yes. Your 401k and Roth should be invested in stocks too, if possible in low-fee stock index mutual funds.

set 1 of things to do:
- 401k up to employer match limit
- Roth IRA up to limit
- pay off all CC debt and stay debt free
- build up an emergency fund of at least 2-3 months in high-interest savings like ING Direct

set 2
- finish adding to 401k up to maximum allowed
- pay off other medium-high interest debt (car loan, etc.)
- add to emergency fund -- 6 months gives you breathing room and something for unplanned expenses

set 3
- save up for house down payment
- pay down any low-interest debt like student loans
- set up a regular brokerage account for non-tax-sheltered investing

This is a rough plan that will work well for most people.

One thing to remember about a 401k and Roth is that you only get the one year per $15K/$5K in which to do them. Once the window for 2008 is closed in April 2009, if you only put $1K into your Roth you've lost the chance at the other $4K of tax-sheletred investing forever.

Now that I'm making more money I've love to be able to put an extra $10-20K into a Roth to make up for past years instead of keeping the money in my regular, taxed, brokerage account. I missed my chance at that tax-free growth so now I pay every year

 

[imported_Lothar]

Originally posted by: IHateMyJob2004
Assuming $10 commsions, remember that with $500, 5% of that goes to commsion. You need to make 5% jsut to break even. Even i nteh long term, this is something to remember.

I have a general rule that I do not buy in lots of less than $5,000.

This gets more complicated thugh. Some will say you need to diversify. I say horse shit. Diversification is for those that don't know how to invest. Diversification is for those that do not know what they are doing and they should probably be in index funds. I AM DEAD SERIOUS ON THIS. I'll put all my money in WFC right now if I had to. Better yet, buy some BRK-B for under $4,000.

Having said that, in the end, you really want to keep your commission under 1% if at all posssbile. With a place like Aemrictradt that does $10 trades, that comes to $1,000.

Anyways, I'd recommend that you save up $5,000 and open up an account somewhere. Yu have plenty of time to learn. YOu are honestly best off piggybacking Warren Buffet.

I could go on and on. Head over t ogurufocus.com and go to the value investing forum. I and others will give you some wonderful advice.

This.