Your Questions About How To Invest Money

Ken asks…

I am 25 and looking to invest money in a Roth IRA and need some advice. Can anyone help me?

I have been talking to a recommended financial rep and he was telling me that there is a 5.75% fee (how he makes his money) to each deposit i make into the IRA. Is that normal? My friend says she only pays $40 a year. I need some expert advice!

John answers:

When I was 18, I paid nearly 7% as a commission to my broker and to the mutual fund managers I bought from. It was not really worth it. However, I do not think it is a scam.

Unless you are a sophisticated investor, you will need advice to set up a decent portfolio. That is not cheap.

It is true.. You can use TDAmeritrade and eTrade and stuff like that; but, would you go to WebMD as a substitute for a doctor?

A Roth IRA is the way to go, for sure, for someone your age. (I am 28.)

The $40/yr Roth may be one solely invested at a FDIC-insured bank. My bank doesn’t even charge a maintenance fee if it’s just invested in savings, money market accounts, or CDs. A broker can offer you much more, like mutual funds, variable annuities, and eventually equities.

I would not suggest you plunge into the stock market at this point; nor do I suggest that you invest in CDs. You should shop around, but a good money manager will demand a higher price. You are basically paying $5.75 (a cup of coffee from Starbucks) for every $100 this guy or gal manages for you. I would suggest getting a diversified set of growth, growth and income, and income class A mutual funds. That means you will get some money back, which you can reinvest and make more money off of. You will be invested in stocks (growth funds), but not directly. Class A means that you do not get charged to pull out the money, only to put the money in. I think that’s the way to go. Pay once and get it over with; but, make sure that you will not NEED any of that money for at least 5-7 years.

A Roth IRA is interesting because the earnings grow tax-deferred, but despite what anyone will tell you otherwise, you can withdraw your money without the 10% penalty tax (even during the first five years). If you had it in a savings account in a Roth at a bank, that would be fine; but, if you go the investment route, you have to factor in fees. Make sure whatever money you KNOW you won’t need goes to the investment account, and that the rest goes into a liquid investment, like a short-term CD or savings account. Heck, a checking account or piggy bank is saving for retirement. 🙂

The only way you can beat inflation, though, is to be invested in the market. I do not suggest you do so directly (bonds, stocks, derivatives) just yet. Wait until your portfolio grows and your age grows to do that.

Joseph asks…

Could someone explain to me how to invest money/buy stocks?

Is there a minimum amount you have to invest? What does THI/TSX/NYSE stand for? How do I go about starting the investment and how do I read and understand charts of what investment is good? What are mutual funds and how does that work?

John answers:

Yes, you please visit-

Robert asks…

How can I invest money to make money?

I don’t have much to invest.

John answers: lets you invest any amount you want, if its a $60 stock and you only invest $25 it will buy the fractions of a share for you, then next month you can do it again and again etc…

Daniel asks…

Where and how to Invest money?

Im 20yrs old and I have some money put away. I would like to use that money to make more money for my future not to mention paying off school loans, however, I have no idea how to invest, the steps to investing, where to invest it. Im completely lost can someone help me?

John answers:

Investing is a fools game.

Lizzie asks…

How to invest money on a hedge fund?

I have some money to invest.

I would like to see some of the top performing hedge funds.

Can you supply me a nice list?

Best regards

John answers:

Amaranth Advisors
Bridgewater Associates
Brevan Howard
GLG Partners
Long-Term Capital Management
Man Investments
Marshall Wace
Och-Ziff Capital Management
Paulson & Co.
Renaissance Technologies
Soros Fund Management
The Children’s Investment Fund Management (TCI)

But unless you’ve got a few hundred million dollars, they’re not interested in your 10k. Hedge funds are for the very rich. They’re not interested in Joe/Jane Six-pack & their couple of thousand bucks.

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