Need Help Investing

Very good info here. The only thing I would add is when investing in your employers retirement program do not put all you money into the companies stock. Think Enron not only did all those people loss their jobs they lost their retirement saving because they had all their money invested in Enron.

Great point, diversification is important. Don't put all your money in one company or even one mutual fund, spread it around so you're invested in US stock funds, international stock funds, small company funds and large company funds.

My favorites for retirement accounts:

Fidelity Contra Fund (large cap US)
Fidelity International Discovery (international stock)
Vanguard Small Cap Index Fund (small cap US stock)

I do a mix of these three. I'm 30, and am about 50% Contra Fund, 25% International Discovery, and 25% VG Small Cap Index. You're young too, so a similar mix is in order for you.

They all keep expense ratios fairly small, which means more money stays in your account. There are lots of other great fund options out there though, you can research on Morningstar to learn more about them. The most important things to look for are the expense ratio (target funds with less than 0.5%), and make sure it's a no-load fund (which is a fee to make the initial investment).

And one last thing, when you invest in stock, be prepared to ride the roller coaster. You will see your balance go up and down, sometimes drastically, from year to year. In 2008 my account lost 45%. In 2009 it gained 35%. Over the long haul, these big swings tend to even out in your favor, and you end up earning more with stock than you would with bonds.

Stocks are generally a bad idea for any money which you will possibly need to use within 10 years. Once you get within that time horizon, it's time to add some bonds to the mix. That's why you choose very safe investments for your emergency nest egg, and aggressive ones for retirement funds.

You've got a long way towards retirement, so get the earning power of stocks on your side:

A 25 year old investing $3000 per year in stocks, at an average of 8.5% return, will have a balance of $965,000 upon retirement at age 65.

A 25 year old investing the same $3000 per year in bonds, at an average of 6.5% return, will have a balance of $565,000 upon retirement at age 65.

The extra 2% earning power is worth nearly double the $ over a 40-year period.

Thanks guys for all the feedback. I will send you back responses if i need a bit more information.

I will also go over the specifics this weekend, when i get a breather from work.


As for my UVA background, I am an economics and foreign affairs major. So I know a decent amount economic cycles, consumer behavior, economic theory, etc. I have also taken a couple financial classes in college, but not a ton. Most of my financial classes divulged into discussion of the current financial situation and potential causes. So I do have a general understanding of concepts such as diversification, how i should be 100 stocks now, getting my employer to match my contributions. I am good in terms of the macro, but i need to work on the micro, to put in econ major terms.

Hoo, good luck. its a crazy world we live in

do what i did. build up a nice 401k over 5 years or so. have the stock market take a nose dive cutting your 401k in half. then when money gets tight and you need to pay the bills, you can take a loan out against your own 401k with penalties and all!!

i have a real question thoo. should i be putting money back into my 401k now? ive been putting money in my money market account (easier to access if you need some cash) and CDs.

My 401k has bounced back pretty strong after the '08 dive it took.

do what i did. build up a nice 401k over 5 years or so. have the stock market take a nose dive cutting your 401k in half. then when money gets tight and you need to pay the bills, you can take a loan out against your own 401k with penalties and all!!

i have a real question thoo. should i be putting money back into my 401k now? ive been putting money in my money market account (easier to access if you need some cash) and CDs.

Yes, you should be contributing to your 401K, especially if your company matches contributions.

If they match, and you don't take advantage of it, it's like walking right on by a table with a pile of money and a sign that says "free".

I know this is too late now, but never tap into your 401K before retirement, this is extraordinarily costly. Instead build an emergency fund to tap into when emergency strikes. Once the emergency fund is sufficiently established, increase your contributions to your 401K.

My 401k has bounced back pretty strong after the '08 dive it took.

Mine did too, because I didn't panic, didn't pull my money out or switch it to bonds. Instead I rode the rollercoaster down and then back up again, when the stock market bounced in 09. Now I'm not too much worse for the wear, because I kept a level head.

Oh, and it goes without saying, live within your means! Don't spend more than you earn. In fact, spend less than you earn, save the rest.

And one last thing, when you invest in stock, be prepared to ride the roller coaster. You will see your balance go up and down, sometimes drastically, from year to year. In 2008 my account lost 45%. In 2009 it gained 35%. Over the long haul, these big swings tend to even out in your favor, and you end up earning more with stock than you would with bonds.

Stocks are generally a bad idea for any money which you will possibly need to use within 10 years. Once you get within that time horizon, it's time to add some bonds to the mix. That's why you choose very safe investments for your emergency nest egg, and aggressive ones for retirement funds.

You've got a long way towards retirement, so get the earning power of stocks on your side:

A 25 year old investing $3000 per year in stocks, at an average of 8.5% return, will have a balance of $965,000 upon retirement at age 65.

A 25 year old investing the same $3000 per year in bonds, at an average of 6.5% return, will have a balance of $565,000 upon retirement at age 65.

The extra 2% earning power is worth nearly double the $ over a 40-year period.

A 25 yr old forced to pay Social Security at $7,000 per year will be lucky if there is even any money left at age 65.