I have around 5K “extra” income to use for investing. I do not know where to start, or even if I should begin during this indicate in my life…, though if I do start, what sorts of investments have been essential as well as comparatively safe? My idea is to have the tiny distinction to compensate off the seductiveness upon my loans.
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- I WANT TO START A COMPUTER SALES BUSINESS IN HYDERABAD, NEED DETAILS HOW TO START, HOW MUCH I HAVE TO INVEST.?
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{ 4 comments… read them below or add one }
You have to make it clear, first let us know in which country do you reside. And second thing do u have a total of 5K or you have 5K extra every month?
If you are in the U.S., I would start with something safe like a money market fund. Don’t invest in anything riskier until you learn more about investing (“Investing For Dummies” is a great place to start).
Consider the Vanguard Prime Money Market Fund with a current yield of ~5.05% APR.
https://flagship.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0030&FundIntExt=INT
Sometimes other institutions will have a higher teaser rate, but Vanguard tends to have the highest yields I’ve found over the long run. (Vanguard money markets are not FDIC insured, however.)
Article on teaser rates:
http://www.marketwatch.com/news/story/banks-advertised-rates-dont-always/story.aspx?guid=%7B0A13B6E2-FFB2-4E2B-BD42-E2D1E01C52E5%7D
ING and HSBC often have rates close to Vanguard, and most of their products are FDIC insured. Bankrate.com provides links to CD’s with high interest rates. You can check these at the following links:
http://home.ingdirect.com/
http://www.us.hsbc.com/1/2/3/personal/savings?code=husa
http://www.bankrate.com/
(If you are investing for a long period of time and are willing to accept some volatility, you should consider putting some money into no-load low expense mutual funds. These are not guaranteed, but over the long run produce much higher returns.)
I hope you find these sites useful.
Well, unless you can find a “safe” investment that guarantees a return greater than the interest on your loans, then you are better off making payments on the loan itself. When I was a college student, I was allowed to send in payments on my loan even while I was in college. So, I assume you will probably be able to do the same. Check with your loan originator for details.
Here’s the bottom line. In the long run, you can expect money market and bond funds (which are “safe” investments) to give you about a 3 – 5% return, on average. Stocks (which are “risky” investments) will give you a long-term annualized return of about 7 – 8%, with the understanding that in the short run the return could range from -20% to +40%. So, as we can see, the odds are stacked against you. I assume that the interest on your loan is not lower than 3% … so, statistically speaking, you are better off just paying down the loan. You will get a greater “return” on your money that way.
Then, after college, once you have gotten a job and settled in, you will be ready to invest long term. Here’s some reading material for you, free of charge, curtesy of me: http://www.invest-for-retirement.com