Your Questions About How To Invest

Laura asks…

Is it wise to invest in a 529 Saving plan, even while our Economy is in a recession?

I want to invest in my child’s future for college. Is the 529 Savings plan an investment of choice? Where do i start, and how should i decide what company/financial firm should i start with? Our Economy is in a recession, is this a good time? I want to contribute about $50-$100 monthly.

John answers:

Invest in a plan for your child only if you have already invested enough in your retirement account to get an employer match. It depends on the age of your child. If there are 10 years or less until they will need the money, you should still open a 529 but put money into CDs or other safe investments. If your child has just been born, you have about 20 years to let that money grow so you can risk putting it in the market.

Thomas asks…

How can I invest to increase my money? And what are the best things to invest in?

Many people say that investing is a great way to increase your money, however I have no clue where to go or what to do to invest.
Thank you all so much for your answers 🙂

John answers:

You’re getting a lot of self-serving responses, here. Try this formula instead.

An introductory book like _Stock Markets for Dummies_ is a good place to start. This will give you a basic explanation of most things there are to know about the mechanics of stock investing.

Investors Business Daily (IBD) is a solid daily resource (and its complement, www.investors.com ). It’s a better newspaper than the Wall Street Journal and it is built around a particular approach to trading. You could read _How to Make Money in Stocks_ by William O’Neil too–he’s the founder of IBD.

Search your local library for other books on stock investing. Try to absorb as much knowledge and understanding as you can.

After you have extensively researched and gained a solid foundation/education then look to open a brokerage account and paper trade–this is trading with play money before you put real capital at risk. You should do extensively before you eventually place your first trade live. Your early live trades should be with a very small position size. Only increase position size when you have done well to limit losses when the market has turned against you.

Michael asks…

How do I invest in the London Stock Exchange?

I want to invest by myself in the London Stock Exchange. I’m only a student so can only invest £50-100. I know this is nothing but at the moment I just want to get into it and start learning so when I do have money I can invest it confidently. I’m more interested at looking at % returns and losses than the actual money itself.

Is it possible to do this and if so, where and how?

John answers:

A stock exchange has stocks that they trade. You would not invest in the stock exchange, but rather in the shares of companies traded through that facility. Your parents can help you with this.

John asks…

What would be the best way to invest a lot of money?

We are investing a little under $400,000, and was wondering how to invest it. We have it now in mutual funds, and I was wondering if that was good or if it should be moved somewhere else. We will withdrawal them money in 4 – 10 years. Any suggestions?

John answers:

First you should do some reading. I suggest the boglehead’s guide to investing. It is written in easy to understand english. It is not a get rich quick book or one that touts stocks. It will guide you as to how to reasonably allocate your assets.

Mutual funds can be good or fair depending on their cost. But they are usually much more suitable than individual stocks. Also investing is for the longer term and 4 years is a little short so any money you will need in 4 years might be at more risk in the market. If the market goes down it might not recover in the 4 year time frame. For that money you might consider some short or intermediate bond index funds or CD’s. For money that will be more than 4 years you

If you read the book I suggested you will make your own choice or choices. To keep it simple you might want to keep the money in one diversified fund. I like the Vanguard funds. Take a look at the Vanguard Star fund, Life Strategy Conservative or Target Retirement 2010 (don’t worry about the year look at the allocation between stocks and bonds)

Good Luck

Paul asks…

How can I directly invest in mutual fund to avoid the entry load?

Is there any site to invest directly or do i have to go to CAMS office?

John answers:

Contact Fidelity Funds.

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