If I'm 25 and I only make 40k a year,How should I start my financial portfolio?
108583
All the above answers are good, but I would say it depends..\nWhat are you saving for?  Retirement?  A house?  Vacation?\nBefore wasting your time with a financial planner you really have to decide what your portfolio will be used for.  If it's retirement, by all means use your 401(k) if your employer matches any amount (it's free money and an immediate return on your investment).  If a 401(k) is not available, by all means look at a Roth IRA.  After 5 years your returns are not taxable.  Use the Motley Fool (www.motleyfool.com) for advice.  For long term investment, go with a mutual fund that follows the S&P 500.  I didn't, I was in large caps and mid-caps and haven't made the long term returns that Vanguard 500 returned (over the past 15 years).  Real estate, especially your own home, is a good idea so that it will be paid for before you retire.  Don't overspend yourself on real estate by buying more than you can afford.  Again, figure out what you are saving for and then make a plan based upon what you will need the money for in the future.  Bear in mind when you will need the money as well.  Mutual funds are good for long term (10-15 years+), but if you will need the money in a shorter term (say five years or less) and need for ALL of your original savings to be there, stick with money funds.  They pay more than savings accounts and generally won't lose principal the way your standard mutual funds, or even real estate, could.
597720
See a financial advisor.\n\nIt would be rare to double your money in a year.\n\nMost people would recommend a diverse portfolio.
227983
Your 401k is the best method you have right now.  If you can afford it, max out your pre-tax contributions.  At your age, I would lean toward a more aggressive portfolio in the 401k.  As you get closer to retirement you can change the mix to be more conservative.\n\nBesides the 401k, if you want to save more for retirement, you could look at a Roth IRA.  You may or may not qualify for one depending on your circumstances.\n\nAnother vehicle would be an annuity.  You can get them either fixed, indexed, or variable.\n\nSeek out a financial professional.  He can evaluate your individual situation and help you plan.
539106
I actually do finance and asset management for families.  If you were to retire TODAY... 1 million dollars at a modest 5% return would pay you $50,000 a year.  MOST could live pretty well off of that.  Depending on your age, you might need to save a little more just to battle inflation.  (essentially   $50,000 a year will not be worth as much each year)  And, if you do not own your home, this has to be taken into consideration as well.  I just read an article that predicts in the next 20-30 years their will be significant advancements in medicine allowing us to live well into our hundreds!  So be sure your prepared to go the distance!
259852
Take investment risks. Especially if you are young.
202390
Whatever you can afford.  The best way to get started is to figure out how much extra money that you have at the end of the month.  Make sure that it is money that you plan on investing for the long term.  You don't have to invest a big lump sum.  \n\nThe best strategy for a beginner is to systematically, dollar cost average into a low cost mutual fund.  Find yourself a good no load, index or growth fund and set up an account to automatically take a fixed amount from your bank account every month.  When the market is low, you are buying more shares and when the market is high, you are buying less shares.  You will find that you won't miss the money and in a short period of time you will discover the power of dollar cost averaging combined with the compounding of money.  Good luck!!
905949
find a trustworthy financial adviser to help you invest it.  it should earn an average of at least 10% a year or more..  if you're not earning that much after five years, find a different financial adviser..    it can mean the difference of millions of dollars in the long run..
1074203
Ahhh, the million dollar question for Roth accounts...\n\nAnd the answer is - it depends (sorry).  Unfortunately, you need a crystal ball for this one.  Your decision will likely come down to what you believe the future holds.  You need to consider several factors, but you basically have two courses of action to take.  \n\n1)  Take the sure thing - Roll your 401(k) into a traditional IRA and then convert it to a Roth IRA, paying tax upon the principal and earnings at your current income tax bracket.  The conversion option is currently subject to AGI limitations, so check with the IRS or a competent accountant first.\n\n2) Let it Ride - Simply roll your 401(k) into a traditional IRA and enjoy tax-free compounding of interest until you are able to take a qualified distribution (usually at retirement) at which time you will pay taxes on the principal and earnings at your future income tax rate.\n\nSo, look into your crystal ball...\n\nDo you believe that you will be in a higher tax bracket at retirement age than you are right now?  If so, the Roth conversion option may be the right choice for you as you will likely pay less in tax today than you would 35 years from now.  Likewise, if you believe you will be in a lower tax bracket in retirement, it makes more sense to simply roll your account to a traditional IRA, enjoy your tax deferral over the years, and pay the piper upon retirement.\n\nThere are several wild cards to consider in this scenario, not the least of which is the possibility that tax brackets change.  If you want my honest opinion, I think it is naive to assume that the historically low tax brackets we enjoy today will be around in 30 years.  I am also 31 years old and, without getting political, just look at the current landscape of our country and its budget deficits.  The cost of wars, strains on social security from aging baby boomers, etc, leads me to believe that the government is mortgaging our nation's current problems and our generation will likely have to pay for it.  And how will we pay for it?  Higher taxes.  All things being equal, if I were you, I would opt for the Roth conversion.
1143306
As you get closer to the 55-65 age range, you need to be more careful with your investments and reduce risk.  This is because you have less time left in life to recover any losses and due to less income from work.  You may be going into a "fixed income" situation and need to live on Social Security or a pension.  Therefore, you can't afford to take a big hit in stocks.\n\nI suggest a balanced portfolio of stock funds and bond funds as well as a money market fund.  You want to pick funds that perform well in bear markets.  As you grow older; you move money out of stocks and more into bonds and money funds.  Fidelity and Vanguard have several outstanding no load and low load funds.  Less than 10% of your portfolio should be in individual stocks at age 65.   \n\nIn addition, you may want to consider annuities.  One popular new product is the "Equity Indexed" annuity.  This allows you to bear zero risk of loss and participate in the return on the S&P 500 or some other market index.   You need to be sure to buy from a strong insurer and to only put in money you don't need to live on as an annuity is a long term product.  An annuity can provide a lifetime stream of income if funded properly.\n\nI suggest you meet with a financial planner.  This person should be a CPA, EA, CFP, or Chartered Financial Consultant.  They can be fee only or work on commission.  You need to ask lots of questions when hiring one.  Good Luck.
724026
Oh dear, your situation sounds dire. \nIn investing, there are risks to be taken, sometimes you may lose money but mostly, you can't touch your money if the market is down and your market is lock-down for an unknown period of time. Are you prepared to lose money? Or are you prepared NOT to touch your invested money for the next 20-30 years?\nI would think that your current financial background is not as strong, therefore, you should not be thinking of investments at this time. \nGet your fundamentals right first. The above answers are sensible, get a degree, get a good job that pays you maybe $3-$4k/mth, then you would have spare change every month in excess of $1k to invest.
630556
You definitely want to roll it over to a self-directed IRA, where you'll be able to invest in stocks, bonds, mutual funds, annuities, and yes, even CDs.  Stay away from the bank, their idea of a good return on an IRA is a 5% CD. No one under 55 should ever have CD's in their IRA, it's a waste of both your age (which can be a powerful weapon) and the IRA's tax-deferred status.  CDs are for much older people, or for money that needs to remain somewhat liquid--which is something IRA money does not.\n\nDespite Scuhbby's inane assertion that the average mutual fund does 16-30% (no, the average mutual fund loses money), mutual funds are absolutely the way to go.  Pick a broadly diversifed mix of assets classes, cover all your bases, and remember to rebalance every year.  A financial advisor might be able to help you with this, but if you have the tools, talent, and time to do it yourself, go for it.  And oh yeah, the discipline, which is the most important.\n\nMake sure you hit all the asset classes, such as large-, mid- and small-cap stocks, international stocks, investment grade and hi-yield debt, foreign debt, commodities, real estate, and precious metals.  Come up with a mix you're comfortable with, and sit back.  A properly allocated diversified portfolio will average 8-12% return per year, on average, and you'll be able to take advantage of the IRA's tax-deferred status.\n\nMOST IMPORTANT, if you qualify income-level wise, IMMEDIATELY look into converting your IRA (once you've rolled over the 401k) to a ROTH IRA.  Thus, not only will your preserve your tax-exempt status year-to-year, you'll also ensure all future earnings will be 100% TAX-FREE.  Even a normal IRA/401k requires you to pay taxes when you take distributions.  Converting could have some current year tax consequences, so consult a financial advisor for your specifics, but in nearly every case I have found it to be worth it.\n\nHope this helps!\n--J.
311338
The answer to this depends on what you will need the money for, and when you'll need it.  If it's anything over 10 years (ie retirement, kids' college education, saving for that vacation home, etc), equities-based investments are the way to go.  Long term, they've average an 11% return, compared to 6.8% for real estate, 5% for bonds, and 2.5% for cash investments.  Of course, stocks are a lot more volatile than most other kinds of investments (excepting commodities, of course), so short-term, a mostly-stock portfolio is a no-go.  \n\nIndiviudal stocks are usually way too risky to even bother with, to be even more forthcoming. In 2000, you could have invested in the #1 energy company in the U.S., or the #2 phone company.  What could have been more stable than a couple of leading utilities?  Ask the shareholders of Enron and Worldcom, respectively.  No, a far smarter, and safer, way to get that needed equity exposure is through high-quality mutual funds.  I'm not talking the junky tech-bombs that exploded on the scene the late 90's.  I'm talking about quality funds that own quality stocks, and have a quality track record to back it up.\n\nNo matter what route you go with, the most important thing is to DIVERSIFY.  Diversify, diversify, diversify.  I can't say it enough.  A good rule of thumb for most people is that your age should be the percentage you are in fixed income investments, like bonds, CDs, and cash.  Thus, the older you get, the more conservative you'll become.  Of course, your individual risk tolerance will vary.\n\nAssuming you are 25, a sample portfolio like the following will be sufficient:\n\n20% Large-cap stocks\n20% Mid/small cap stocks\n20% International stocks\n5% Real Estate Investments\n5% Commodities\n5% Precious Metals\n10% Governmet bonds\n10% Corporate Bonds\n5% International bonds\n\nAs daunting as that may or may not look, it can be achieved very easily through just a few mutual funds.  Consult a financial advisor, or do the research yourself if you have the time, tools, and talent.  Oh, and the discipline.  That's probably the #1 reason people go to financial advisors:  they realize they don't have the discipline to stick with a plan on their own.\n\nA portfolio like the one above should average 8-10% annually, or better.  They key is that all the different asset calsses behave differently when the same economic event happens, like, say, interest rates risiin, or a war starting in Bulgaria.  Stocks behave differently than bonds, which behave differently than commodities, which behave differently tha real estate, etc.\n\nUsing the "Rule of 72", where you divide teh number 72 by your return % to see how often your money will double, we see that if this portfolio is earning 8%, it will double every 9 years.  Compare that to a money market earning 2%, which will double every 36 years! \n\nThus, in 9 years, we can expect the diversified portfolio to be 100k, in 18 years 200k, in 27 years 400k, in 36 years 800k, in 45 years 1.6million, and in 54 years 3.2 million.  Thus we illustrate  the power of compounding, which Albert Einstein called mankind's greatest invention.  It also illustrates the power of starting early!\n\nAs a completist, I'll just mention that if the portfolio eanred 10%m it would double every 7 years or so, so that it would actually reach that 3.2 million number in only 43 years.  At 12%, it would reach it in just 36 years.  \n\nHope this helps!\n--J
1011254
Open up a 529 College Fund account. The sooner, the better.\n\nPut AS MUCH AS YOU CAN AFFORD each year (only YOU know what your finances are like).\n\nYou can't go wrong, no matter how much (or little) you put into it. Your fund is sure to grow after a few years of investing.
790930
This very basic formula is :\n\n100 - your age = % of portfolio in equities.  \n\nTake you age, and that's the percentage you have in safer investments i.e. fixed income.  As you get older, a greater portion of your portfolio gets allocated to fixed income.\n\nThis is a very quick and dirty way to start with an asset allocation.  You can tweak according to your own risk preferences, add an international component (5-15% of a portfolio), or increase exposure to small caps (again about 10% of a portfolio).\n\nDepending on your age I would look at Government bond funds, or investment grade corporate bonds for the fixed income side.  Some plans offer a fixed account which may be paying 4-6%, with no principal fluctuation, that would be a good thing to add some of your safe money to.  High yield funds are junk bond funds and can behave more like an equity investment than a fixed income investment, investing in them may give you a higher dividend, but you may not be diversifying your risk.\n\nAlso, your plan might offer a "Lifestyle" portfolio, which essentially picks your asset allocation for you based on the year you plan on retiring in.  It gets more conservative automatically as time goes on.\n\nHope that helps!
798466
invest in good mutual funds and concentrate on your full time occupation.
582050
First, I would make sure you have at least 3 months salary saved up in the bank or in a money market fund for an emergency fund. Financial disasters like getting layed off or sick happen to all of us.\n\nSecond, I would pay off all high interest debt. Pay off everything you can except the house mortgageand student loans. Paying off debt is one of the best investments you can make. You will have more money in the future because you won't have credit card bills to pay.\n\nThird, if you have money left, start investing in stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks, as individual stocks are too risky. For most folks this means buying mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money conservatively, in money market funds and bond funds, and part aggressively in stock funds. Vanguard.com has an on-line questionnaire which will give you an idea how aggressive you want to be. \n\nInvesting in a mutual fund IRA for retirement may give you an income tax break. Talk to your tax adviser. You may also be able to invest in a stock mutual fund via a 401K plan at work.\n\nBelieving someone you met over the Internet and know nothing about is risky. Read these websites for further information.
74870
Unless you already have $5mil, wake up and stop dreaming. Stock investing for a 1 year time frame is inappropriate. You stand a substantial chance of ending up with less at the end of 1 year. For that short of a time frame, CD's, money markets and conservative bond investments are more appropriate, but the prevailing rates are low and you would need to start with$4.8 mil or so to reasonably have a chance to reach your goal.