Starting to invest on my own - few questions

Quote from DinkinFlicka : I think 6 months to a year (or is that too large of a range?).

If six to twelve months is your time horizon, savings is your answer, not investing.

Quote from barnz008 : Like Brian asked, when you do want it back and how much do you risk losing?

I initially said 6-12 months, but read on for new questions!

Quote from Brian1 : If six to twelve months is your time horizon, savings is your answer, not investing.

2 new questions:

1. Since savings is my answer for a smaller horizon (6-12 months), what are other options than just a savings account for something that is greater than .25%?
2. What would be a good time horizon for which the answer would be investing? I ask this just to see whether I can accommodate that kind of time horizon with my current funds.

Quote from hAvAAck :

Glad I can offer some entertainment!

Quote from barnz008 : Holding interest rates (Fed) at essentially zero is an attempt to boost asset prices on one hand and prevent toxic nothingness on bank's balance sheets to be marked to market.

Could you please clarify the above. I'm not a finance/econ guy, so having trouble following.

Do you mean other assets are worth more because the money isnt put into savings instead?

And...Im lost about the toxic balances / marked to market part.

Quote from 1stbuy : Do you mean other assets are worth more because the money isnt put into savings instead? And...Im lost about the toxic balances / marked to market part.

In other words, with ZIRP the Fed is essentially coaxing people like the OP here to "gamble" for a greater return then they'd typically get on any savings account, MMA, CD, whatever. We all know the real return on savings is negative [you'd have to make 10%+ per year to keep up with the cost of things you need to spend it on.] so the temptation to take on more risk to overcome that is huge.

If the "TBTF" banks were forced to move their bad mortgages, worthless derivatives, balance sheet loses, and other garbage into the actual market to be sold, it would set off the domino effect everyone talks about. To prevent it, the Fed has to maintain "liquidity" to them by keeping overnight rates at essentially zero (25 bps right now IIRC) and, in effect, try to inflate it all away. It's a ponzi scheme because the banks are insolvent and will fail, but that's another thread by itself.

Quote from DinkinFlicka : [*]Since savings is my answer for a smaller horizon (6-12 months), what are other options than just a savings account for something that is greater than .25%?

REITS, high yield corporate credit, TIPS, commodities (funds or individual plays).

If you want to lose all of your money, there's plenty of advice in this thread to help you with that.

Quote from DinkinFlicka : Since savings is my answer for a smaller horizon (6-12 months), what are other options than just a savings account for something that is greater than .25%? What would be a good time horizon for which the answer would be investing? I ask this just to see whether I can accommodate that kind of time horizon with my current funds.

1. Possibly a CD, but plain, old savings (which is what a CD is) is your best route. Some online savings accounts are offering 1.25% or more.

2. 10+ years. Possibly 7+ depending on what you do with the money.

Quote from vaultaddict : If you want to lose all of your money, there's plenty of advice in this thread to help you with that.

Had a bad run recently?

Quote from Brian1 : 1. Possibly a CD, but plain, old savings (which is what a CD is) is your best route. Some online savings accounts are offering 1.25% or more. 2. 10+ years. Possibly 7+ depending on what you do with the money.

Put in to a CD in India. Currently 9.5% Fixed Rate CD for 1 year.

(As long as you can ignore the loss due to the exchange rate & depreciation.)

Just how much more money do you think you are going to get with $3k over 6 months with zero tolerance for loss? What a total waste of time this thread has become.

Quote from 1stbuy : Had a bad run recently?

Not at all.

I don't day trade.

I'm not going to throw stats at you, but I'll give you the important info.

Day trading is a huge risk. Yes, people make money. How many? Not nearly enough. Most people that day trade lose most of the money they invest. Yes, some make millions. Those people are generally investing 100,000's of dollars. With 3k, you could make millions (over time), but most likely you'll end up losing most of your 3k. If you do make money, the best you can really hope for is 10's of thousands. Which sounds great while you're in college, but really isn't that much.

My advice for you is to either spend the money and enjoy yourself, or put it in a CD with the highest interest rate you can find (or a higher interest checking or savings account - check out Ally or Discover for decent savings account rates).

Either save up for a goal (nicer apartment/house at some point, a car, whatever it may be), or spend it and enjoy it.

If you're looking to invest it, look at a minimum of 3 years, and put it in an index fund. At 3-5 years, your risk isn't too terrible, and you're more likely to make money than to lose money (if you let it sit there, and take it out only when you're ready, not out of fear that the market is tanking).

If you just leave it in a short-term account (CD, savings, etc) for 6 months to a year, you're really just losing money (inflation makes your money worth less in that time than your interest rate earns for you).

If you really want to make more money, spend your time in college getting good grades, and finding good job opportunities (internships, co-ops, part-time jobs in your field of interest, etc). Get a nice suit for interviews, and practice interviewing with the career counselors at your school. In the long run, that will earn you a lot more money than trying to be a day trader.

Quote from dealgate : Just how much more money do you think you are going to get with $3k over 6 months with zero tolerance for loss? What a total waste of time this thread has become.

OP only said he was trying to get 1%+

Just flip an iPad or iPhone for a $30 profit, and call it quits

Quote from 1stbuy : OP only said he was trying to get 1%+ Just flip an iPad or iPhone for a $30 profit, and call it quits

LOL - Exactly my point! $3k isn't shit. Short of day-trading, nothing will make a little bit of money a lot. Just spend it all and be happy.