Investing question

[Qum]

Guess I could preface with little info on my financial situation. I am currently enrolled in my companies 401k program which matches up to 4% a year. Now for the last few months I've been saving $10 a paycheck (I know it's not much but gotta start somewhere!) into a separate savings account in hopes of getting into the market myself. I have an account with Share-builder and plan to move the 100 dollars I have so far over and invest into some sort of stocks. My plan right now isn't to day trade since the amount of money I have is so small the trade fees would just eat it all up. I'm looking at maybe something that pays good dividends or has potential to grow a lot in the future. So that brings me to my question, what stocks/EFT/Mutual Funds do you guys like for long term investing (3-30yrs) and why?

The ones Share-builder recommends that I put my money into are:
ISHARES LEHMAN AGGREGATE (AGG)
S&P DEPOSITORY RECEIPTS (SPY)

Just trying to widen my knowledge before I put my money somewhere.

[I Love Vis Maior]

My answer is Wal-Mart. We all know that Wal-Mart is not going under any time soon and will not lose business, because they stay up and running while having that whole "find a price, we will make ours cheaper" thing going on. I don't know how much money you want to put into a stock, etc. But at any amount, just put in a small sum into a Wal-Mart stock and then build from there. If you see it going up or anything, buy more. And then you build from there.

[Reedu]

Unless you want to follow the stock market really closely, I would invest in a mutual fund rather than an individual stock.

I put my 401k contributions as well as any extra income in a Vanguard 2045 retirement fund:

https://personal.vanguard.com/us/FundsS ... IntExt=INT

Vanguard automatically takes care of switching from stocks to bonds as you approach retirement. Funds like that are good if you are confident you will not need to withdraw the money before retirement, and if you prefer a hands-off approach to investing while maintaining a stock-bond ratio appropriate for your age group.

If you think you might need the money for some reason before retirement, I recommend something more like:

https://personal.vanguard.com/us/FundsS ... IntExt=INT

Less risk, less reward.

[Xizorz]

Open a Roth, and move $5k into here, yesterday. Roth IRA contributions are freely withdrawable without penalty.

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The market hasn't grown in 11 years. If you're under 45 or so, anything that's not 100% equities isn't aggressive enough.

I don't think very many financial institutions will do the mutual fund option unless you have $1k-3k, though.

Make sure you claim the savers credit in April if your AGI qualifies.

If you want growth, pick a stock market fund like what I linked above. If you want stability, pick a bond fund or money market fund within the Roth.

[Xizorz]

My answer is Wal-Mart. We all know that Wal-Mart is not going under any time soon and will not lose business, because they stay up and running while having that whole "find a price, we will make ours cheaper" thing going on. I don't know how much money you want to put into a stock, etc. But at any amount, just put in a small sum into a Wal-Mart stock and then build from there. If you see it going up or anything, buy more. And then you build from there.

This is a terrible idea.

[Biffins]

Yeah I also recommend ROTH's for the tax benefits they provide, you want to read up on that Qum. Also, iirc from my Tax planning class, it has limits on how much you can contribute annually. This would be one of your best options if you didn't need access to the money, as you might incur losses if you need to withdraw (or trade fees depending where the money is placed).

If you suspect you will need access to your money, I might be inclined to check out ING or some other high quality institutions, to see what rates they are offering for cash in savings. Few months ago my folks got in on 3% on their cash from ING, with full access and no term-requirements to keep it in there.

[Xerred]

I'd rather not put any money into investments if its 100 dollars, you're paying a lot just to buy a stock. If you really want to move into stocks, you should buy at least 1-2k worth of shares at once just to make sure fees aren't eating up all your money. Also, avoid buying stocks based on preconceptions about what they do, always look at balance sheet, dividend, earnings and whether earnings are increasing. For example, a lot of people hear of say an AMD, but they haven't had positive cash flow in like 2-3 years. There are definitely opportunities in the stock market especially now, but as always do your research.

[Scopar]

Don't bother directly investing in stocks until you have AT LEAST a couple thousand (I would say minimum $3,000). The fees are going to only eat out any growth, you'll have to take greater risks just to make a relative profit.

The first question you need to ask though is how much risk are you willing to take. Before you start to looking at stocks, plan what you're expecting and what you'll be willing to lose. For example, if you're expecting to make 25% returns per year, you will have to be willing to lose the same amount (or more), in case your investment backfires.

How much risk you want to take is going to depend on what you plan to use the money for? If it's, for example, just to splurge (not a retirement fund), you may be more comfortable taking greater risks. But if it's for retirement, I would greatly recommend not dabbling in anything but blue chip based stocks (if you eventually get into the market or an EFT/Mutual fund in the stock market) despite how appealing they seem. It's easy to make money, but it's even easier to lose as well.

[Xerred]

Oh yes, and the most important part of any investing question:

http://www.youtube.com/watch?v=qI3IHahHQIg

[I Love Vis Maior]

Thank you, Xizors. I was trying to give one easy idea in a retard way of explaining it for quick and easy doing. But if you haven't noticed, Wal-Mart was doing great and I can openly say I came off with over $700k four years ago off of Wal-Mart stocks that I had purchased for only $80k. And if willing to keep a stock in for thirty years, that is more than enough time for a stock to grow. Wait twelve years and the stocks will be back at what they were a few years ago. In twenty years my firm has projected an all-time high. But I guess that doesn't matter because like I said, you've got this.

[Biffins]

Not to sound cliche, but buy and hold stock strategy doesn't work too well anymore unless you get in on a really strong, viable startup IPO, but those dont happen too often anymore.

I mean of course anyone who got in early on Walmart, Starbucks, etc would have reaped massive rewards. But to invest in them now just because they are good companies is not a good strategy. The name of the game in stocks is growing your portfolio, and how much more can a company like Walmart, Starbucks, etc grow? They have stores everywhere. You can earn far more money with far less risk from investments such as:

1) Municipal bonds, which have substantial tax advantages
2) T-bills if you are scared to death of risk
3) Cash CD's of 2-4% for a small percentage of portfolio

I'd just say you dont want to count on big firms to consistantly deliver growth because it rarely happens over a long period of time these days. 5 year chart of Walmart, for example, shows a decline of $5/share over that period ('04-'09). And say it had gone up $5/share instead, you'd be taxed rather heavily on that gain, versus a muni bond or tax-incentivized asset. Not even to mention that'd be a 5% growth over 5 years (more like 3.5-4% after taxes), which is pretty sad compared to alternatives.

http://finance.yahoo.com/echarts?s=WMT# ... =undefined

[I Love Vis Maior]

That actually makes sense to me . Honestly, I bought Wal-Mart early and did make a large sum. Otherwise, my investments are taken care of by my accountants, otherwise I know jackshit about it. So Biffins, take the stage! :D

[Xizorz]

And say it had gone up $5/share instead, you'd be taxed rather heavily on that gain, versus a muni bond or tax-incentivized asset.

Well, from 2011 onward this is true.

Most everything else is correct!