Your Questions About How To Invest

Helen asks…

What happends when city pension fund boards invest millions of dollars in a risky business?

Several city pension fund boards agreed in 2006 to invest $68 million in DV Urban Realty. Who and how does this affect? Is this legal or illegal? Is it ethical?

John answers:

Is it legal? Yes. Is it ethical? Only if everybody that is affected by the risks understands what they are getting themselves into.

Perhaps the city pension fund board came to the conclusion that the only way that they could make this work was to invest in risky investments. It probably would not have worked any other way. So basically they rolled the dice and are hoping that they win. However there is a much bigger chance that they will loose. I don’t think it is ethical since it is risky but business is business. It is a good thing for them that americans don’t take education as seriously as they should or they might not have been able to pull this one off.

Michael asks…

What is the best way to invest my money for the future?

I am 25 with about $3,000 to invest. What do I invest in to get the best return?

John answers:

If you have earned income, invest your $3000 in a Roth IRA, in a global mutual fund. Check out American Fund’s Capital World Growth and Income.
Why a Roth? Principal is always available for withdraw. Earnings grow Tax Free.

Richard asks…

What is the best way to invest if you make continuous deposits?

I’m 18, single, and in the Air Force. Since I don’t really have any bills, I would love to invest some money. Right now I’m taking about 100 from every check and putting into a savings account, but apparently that doesn’t make very much money from interest. I don’t know too much about investing but I know the basics. If anybody could help point me into the right direction that would be great, thanks.

John answers:

Consider using a service like They allow you to deposit a fixed amount each month and buy *parts* of stocks with that money.

For example, if you transfer $100 into the account and tell it to invest in Apple (AAPL) which is $254/share right now, you will buy 39.3% of a share each month. This way all of your money is active in the market and you don’t have leftover cash not doing you any good.

Of course, this also takes advantage of the principle of dollar cost averaging which means you buy less % of a stock share when it costs more and more of it when it costs less. You’re automatically adjusting your investing strategy to the market without having to change a thing!

Mark asks…

What is the best thing to invest in to plan for retirement starting at 21?

I have been laid off for two years. I have $250.00 and I would like to invest in some thing at in 46 years. I will have some good amount money to retire on. What should I invest in stocks and bonds or CD’s.
I can only put out $250.00 as of now.

John answers:

I would recommend you invest the money stock ETFs. Since you are many years away from retirement, you should have the vast majority, if not all, of your retirement invested in growth assets, rather than income producing assets such as bonds or CDs. An ETF will give you diversification even though you only have a small amount to invest. Vanguard offers commission-free ETFs with very low expense ratios.

Sharon asks…

What are good companies to invest on right now?

We have a stock game that will start tomorrow and we will invest 50K imaginary dollars in stock. We have to invest in at least 4 companies and after 10 weeks the winner gets 200 extra credit points. I already have 2 companies that I want to invest on. I need ideas on what to invest on. Any ideas?
The key here is quick money. We only have 10 weeks to play. Also, I would prefer companies that are not so obvious and well-known. Think outside the box.

John answers:

Small cap stocks for fast growth, but it’s risky
you won’t hardly see any changes investing in large cap stocks
they would probably go down in price as the market corrects itself, but this all depends on bernanke
i would recommend holding in cash, but i dont think that’s gonna do you any good
i would recommend DPZ

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