Noob Investor Here

[wfsaxton]

So I'm young, naive, and idealistic. 28 y/o, single, renter, and make decent money ($70k+). I have about $40k in my 401k and about $10k I'd like to play with in the market.

A lot of interesting reads here, both in the articles and on the forums, but seems like I'm doing the exact opposite of what I should. Maybe someone can help me out here.

- I was looking to get into the stock market (my buddy has been making good money following 'tips' which I was hoping to duplicate)
- I was looking to buy a home (0-down on a condo)

It seems like both of these things are the wrong thing to do, according to what I'm reading. Can someone, perhaps, give me some advice? point me to a primer? Help an average joe like myself?

[Jim Nickerson]

Newbee average joe;

Playing is something some do in the street without respecting the danger of doing so, and I guess it could be said the same for investing. The younger the child in the street, the greater the potential for a bad outcome.

Importantly, you are searching for answers to allow your actions to hopefully turn out for the better, as perhaps opposed to doing whatever it is your buddy seems to be doing successfully as far as you know. I presume your not doing what your buddy does bespeaks of some skepticism of his action.

You have a number of things in your favor as I perceive things. You are young. You apparently have a good job at the moment, and you already have $50K in capital.

I presume you are educated in something, and I presume you have already worked for pehaps 5-6 years. If those presumptions were to be close, it suggests that you have been making good money for a while--I presume it woud take that to accumulate $40K in a 401K. It also suggests if you now have only $10K in your account, that you must have just about bought all the stuff you have wanted over the past few years.

Assuming that you have a job, that is likely to continue for a long time--if such is possilbe, then first you should grasp that your greatest asset is the ability to earn more potential capital. Earnings only translate into capital if you do not spend all you earn. The best way, I finally learned at an age way older than yours, is to buy what you need and not everything you want, and if you are serious you can save a lot of money. I would ask myself do I have enough money saved to live for a year if I were unemployed? I would ask myself am I insured if I should be come disabled? Am I free and clear of interest bearing debt? I would achieve those things before I start throwing money into the stock market. It likely will require patience but should reward you later.

I do not know how much of this website you have read or have read otherwise about the negatives that exist in the US now. To me it seems not to be a good time to be "playing in the street if you are young and inexperienced."

Save your money, and pay attention to what is happening--and I am not sure you can determine what is happening watch the financial networks or reading the popular press.

Read some books, but not those that hype getting rich quickly or easily--for most people, I do not think that happens. Learn all you can, and depending upon your background, that might still not be enough, but it will be better than where you seemingly are just now. If I only had $10 to invest, I would find a good money market fund and park it there while I am trying to get smarter. Be patient in all that you do. If you want to buy a house, and if you believe house are going to be cheaper later in many places, be patient and save your money for a good down payment.

This may all sound like crapola, but had I asked the same questions at your age, which I didn't, and gotten this answer as a starter and followed it, I would have been better off earlier.

Good luck, don't be greedy and don't let impatience push you into doing things that perhaps in later years you will regret.



Jim

[EJ]

So I'm young, naive, and idealistic. 28 y/o, single, renter, and make decent money ($70k+). I have about $40k in my 401k and about $10k I'd like to play with in the market.

A lot of interesting reads here, both in the articles and on the forums, but seems like I'm doing the exact opposite of what I should. Maybe someone can help me out here.

- I was looking to get into the stock market (my buddy has been making good money following 'tips' which I was hoping to duplicate)
- I was looking to buy a home (0-down on a condo)

It seems like both of these things are the wrong thing to do, according to what I'm reading. Can someone, perhaps, give me some advice? point me to a primer? Help an average joe like myself?



1st book to read:

The Random Walk Guide to Investing - Burton G. Malkiel

You can get it from the itulip reading room here or any book store for about $15.

[Alfredo Dominguez]

It won't do much good to study finance without an initial grounding in economics, specifically the Austrians. The Ludwig Von Mises Institute has an online bookstore featuring several titles aimed at the beginner: http://www.mises.org/store/For-Beginners-C9.aspx

[jk]

i have to disagree with the idea of starting by reading about the random walk/efficient market theory.

let me suggest instead that you visit
hussmanfunds.com
and read john hussman's weekly column. there are archives there, too, i believe. he will give a down to earth, clearly thought out way at looking at the stock market. he is not an idealogue, not a permabear, nor a permabull.

i also recommend the weekly column at
2000wave.com
by john mauldin. again, look at the archives, too.

i recommend hussman's strategic growth fund as a core holding- it's a way to get exposure to the stockmarket but with your risk controlled. he has made money in both up and down markets.

i'd also suggest putting 10% [at least] into gld as another core holding.
and this is not a bad time to hold some cash. it's likely you'll have the opportunity to buy things cheaper in the not-too-distant future.

[wfsaxton]

Thanks Jim. You're reading of me and my situation is spot-on! I'm also realizing, right now, that I've spent a lot of money on crap over the past 6-7 (post-college) career and I have a lot better handle on how I can save much more of it. I'm keeping 5% to 401k (can't beat the 4% match my company offers) and will start socking away much more.

I'll probably check out one of those books for my 'bedtime' reading. Thanks for the advice.

And as far as Hussman and Mauldin...I read a couple of the articles and have learned a lot of stuff right away so you (JK) definitely showed me stuff I can sink my teeth into.

Couple more questions--I assume most of you aren't financial advisers, but I have more specific questions about what I can do and perhaps y'all are willing to help me more:

- $7k out of the available $10k I mentioned is in a Roth IRA, 1% return money market. I've only been putting $$ into it because Roth's are basicly liquid (ie glorified savings accounts), but its really just sitting there doing nothing. Is a Roth good for someone @ my age? It seems stupid to have one when all I'm going to get out of it is tax-free income, on that 1%, when I'm 65. Hardly exciting for someone with a 401k...

- $10k is nothing for a down-payment, so I'm pretty sure I'll use the money elsewhere and have to go for a first-time buyer, 0% down option. Having said that, I have about $6k in school loans, $7k car loan (6% interest I believe). The school loan is low interest so I was thinking about paying off the car loan right now and then start saving my car payment money. This, again, would require withdrawing from the Roth. Sound like a good idea?

- How does one buy "gold"? I just opened up an ameritrade account but a search on it came up empty on the site.

Again, thanks for the all the feedback!

[Jim Nickerson]

I think you should put things into low gear--go slowly, except to save more.

I am tired. will make a couple of "for what they are worth" comments tonight to tomorrow.

Jim

[jk]

you can buy gold under the symbol GLD, each share of which represents 1/10 oz of gold. i would agree with jim, though, when he suggested you slow down, read some more, make sure you know what you feel comfortable doing. the markets will still be there tomorrow, next week and next year. you've got plenty of time, so do some more reading and thinking first.

[wfsaxton]

Yeah, mayhaps I'm a tad anxious. Thanks for the advice thus far, though. I appreciate anymore that may be forthcoming.

[jeffolie]

Stock Trader's Almanac, 1992
Yale Hirsh




Extraordinary Popular Delusions & the Madness of Crowds
AUTHOR: Charles Mackay

Why do otherwise intelligent individuals form seething masses of idiocy when they engage in collective action? Why do financially sensible people jump lemming-like into hare-brained speculative frenzies--only to jump broker-like out of windows when their fantasies dissolve? We may think that the Great Crash of 1929, junk bonds of the '80s, and over-valued high-tech stocks of the '90s are peculiarly 20th century aberrations, but Mackay's classic--first published in 1841--shows that the madness and confusion of crowds knows no limits, and has no temporal bounds. These are extraordinarily illuminating,and, unfortunately, entertaining tales of chicanery, greed and naivete. Essential reading for any student of human nature or the transmission of ideas.

In fact, cases such as Tulipomania in 1624--when Tulip bulbs traded at a higher price than gold--suggest the existence of what I would dub "Mackay's Law of Mass Action:" when it comes to the effect of social behavior on the intelligence of individuals, 1+1 is often less than 2, and sometimes considerably less than 0.

[jk]

re tulip mania check out the link below, information saying maybe it wasn't so crazy after all. it is just one example of DERIVATIVE STRATEGY COMIX, something i stumbled on a while back. some of the episodes are a stitch. i particularly recommend "memorial day" at the second link.


http://www.derivativesstrategy.com/magazine/comix/9602_1.asp

http://www.derivativesstrategy.com/magazine/comix/0005_1.asp

[Jim Nickerson]

[StartQuote}
Thanks Jim. You're reading of me and my situation is spot-on!
[/QUOTE]

"Spot-on" strikes me as a term for the medicine one puts on one's dog for fleas and ticks. Does it mean "right"?

If 5% contribution to your 401K is not the max you can contribute, get it up to the max you can put into the plan. Whatever your employer contributes is gravy.

Roth IRAs weren't around when I worked. From what little I know, they are the best savings method that exists, if one can afford to pay the taxes. To my understanding a Roth should be the last thing one ever liquidates, and one can be passed on to beneficiaries and maintain its ability to always be liquidated without taxes--unless the law get changed.

I assume you must have opened it early on and because of earnings level can no longer add to it, and that it is in some bank which only pays minimal interest on IRA's under $10K or so. Were it mine I would try to hang onto it, and get it into a brokerage house where along with other accounts it would be eligble for better interest rates or even investments. A lot of mutual funds have minimal levels of $2000 to buy shares when the investment comes out of an IRA.

You need to find something on the web on in a book that explains the "magic of compounding interest." 1% is not a good interest rate. As above you need to get that money out of whatever instituion that is taking advantage of the smallness of the Roth.

I am not a financial advisor.

It strikes me that you are hell-bent to buy a house or condo. Perhaps buying a condo right now is the absolutely wisest thing you could possibly do, but the otherside of the coin could be that it is the stupidest thing you could do. You really need to get some good advice about what you seem ready to jump into. That advice would best come from someone who is not a realtor--if you want unbiased advice--and who knows about where you are living and what is your worst case scenario as far as continuing to be employed.

Despite the apparent interest savings to you from taking out your Roth and paying off your car, I think I would try to pay $1K a month on my car for seven months out of pay checks and in the mean while find out how to park your Roth somewhere else if that is possible

I would also, if you get busy reading and imporving your understanding about what may be going on in the world with regard to debt, look at your 401K to see how it is invested now and try to answer the question of whether there are other choices in the plan that might be safer.

I do not know what sort of education you have or how good it was. Regardless of whatever degree one gets, I believe there are two results that a good education should provide. The education should make one aware of how ignorant he/she is when it comes to the massive knowledge that exists in the world today, and it should imbue one with the importance of critical thinking--achieving the latter may take awhile even if you deem it of the ultimate imporrtance

You might be well served to spend the money to see some financial advisor. One caveat is beware of people whom you pay to give you advice when their livelihood is made from selling things they advise you to buy.

From what little overall I know about you, I say again as several others have advised, you need to improve your knowledge and save as much as you can.

I cannot tell you more.





Jim

[Jim Nickerson]

Shoot! I screwed up a post, sorry.

spot-on strikes me as a term for medicine that one puts on one's dog to rid it of fleas and ticks. Doies it mean right?

You seem hell-bent to buy a condo. That might be wise or it might be dumb right now. You need to get your knowledge level up so that you are capable of making the best decision, or at least a good one. That is not going to occur immediately or in a day or two.

Were I you, I would find out if the investments in my 401K are as safely invested as they can be. Determining that takes knowledge. Put all you can into your 401K, unless you are required to put it into the company's stock, then I might think twice about that.

You need to get your Roth into an instutution where you can invest it or draw more interest if it remains in cash. A Roth I believe is the last thing one should ever liquidate under what I can imagine are most circumstances, but I could be wrrong.

Before I seriously considered liquidating a Roth at your age, I would pay the max I could out of my paycheck each month to pay off the car note and then drive the car til it is worthless. You need to search web or find a book that explains the magic of compounding interest. Young age is when this can best pay off, and you are about to enter the 2nd third of your life expectancy.

It might be best for you to pay a financial planner for his/her advice, but beware that the advice entails your buying something he/she sells. Pay a planner for the advice, not investment products it pushes.

I have no idea what is your educational background. A good education, regardless of the field, should provide you with two things at least. One is to appreciate how ignorant eveyone is when it comes to all the knowledge that exists in the world. Secondly, it should imbue you with the importance of critical thinking--achieving criticality in thinking is probably never-ending.

This is all I can suggest. Good luck.

Jim

Jim

[Jim Nickerson]

Newbee:

If you haven't already chanced upon Eric Janzen's thought on the housing market, look at it--it could be worthwhile.

[url]http://www.itulip.com/housingbubblecorrection.htm[url]

Jim

[AmericanBushi]

I feel "Noob Investor's" pain! The only difference is that I'm NOT young, NOT single, and DON'T have capital. So for me the advice to get smart first makes a great deal of sense as it's my only option currently!;)
I've started, because of the great advise listed above, to check out the MISES site. Can anyone offer a good "reading list." I think all of "us Noobs" (even the lurkers who aren't posting:D), would benefit a lot from it. Thanks in advance, the user's of this site are incredibly supportive and I know it's appreciated.

[ASH]

wfsaxton--

For what it's worth, I was recently in the position of being a 'noob' investor -- young, some small amount of capital, and eager to buy housing. That was in 2004, when I was 28. Actually, come to think of it, I started at $70k -- so I was pretty much in your shoes.

I did what Jim Nickerson has suggested to you, which is to start by educating myself. The first book I read was The Intelligent Investor by Benjamin Graham (with commentary by Jason Zweig). That is considered the bible of value investing (as opposed to speculation). However, its approach is more-or-less agnostic about macroeconomics. This has the advantage that you need not speculate correctly about the direction of the economy -- Warren Buffett is the most famous practitioner of this style, and he's done alright for himself. He recently said in an interview that although he has definite ideas about the direction of the economy, he doesn't "invest a cent" based upon his macroeconomic views. (I'm not sure this is so, since he was an early dollar-bear, but I digress.)

I also read "The Economist" magazine (well, they call themselves a newspaper) out of the UK. They strike me as the best of the main-stream financial press. However, you can't read The Economist for very long before you start to wonder about macroeconomics. I'm a physical scientist by trade, and I have a passion for understanding how stuff works. As I read stories from The Economist and other areas of the financial press, I started to get a feel for some basic macroeconomics -- for instance, simple relationships such as inflation, interest rates, the money supply, etc. I also started to form some opinions about what was likely to happen... and it wasn't good. This was before the housing bubble was widely recognized. At this point, I became convinced that I could improve upon pure value investing -- and started to target my investments for macro conditions.

Once I decided to engage in macro investing, it became very important to flesh out my view of the macro picture and find some reliable sources of information. Here there's a problem, because you will find countless conflicting viewpoints out there. I think that my scientific training gives me a nose for rational and objective arguments, and helps me find the holes in weak arguments, so after a few months of reading, I came to some very definite conclusions about who was right, and who was full of rat droppings and sawdust. I got to iTulip somewhat late (I had concluded that the housing market was a bubble before I was exposed to iTulip's arguments in this regard, although iTulip's statement of the bubble predates my own investigation). Anyway, a friend tipped me off to iTulip, and I found the quality of the analysis to be very high.

At that point, maybe two years into my investing career (in 2006, at the age of 30) I had developed a fairly comprehensive macroeconomic world view, and was prepared to invest accordingly. My own trajectory has been from energy in 2004 (originally what I felt was a pure value play) to Canadian and Norwegian indexes in about 2006 (I thought of that as a dollar hedge) to precious metals in 2007. Obviously, my timing hasn't always been perfect, but I've made good returns thus far. For me, the best call was in late August of last year. At this point, it was pretty clear that the problems in the subprime mortgage market were playing out pretty much like iTulip had predicted, yet the markets had staged a rally to new heights (DJIA around 14,000). I bought a bunch of long-dated puts against the DJIA, and doubled my money when the rest of the market caught up to the reality of the crisis. That was the point at which I paid for a premium subscription to iTulip, since that was almost 100% an iTulip-inspired trade.

Bear in mind that my free advice is worth exactly what you pay for it. However, if I were you, I most definitely wouldn't buy the condo -- not with zero down, and not now. In the first place, you shouldn't buy a condo anyway, because that gives you all the luxury of an apartment with all the hastles of home-ownership. (That, and condos are often built in a hurry during housing booms, with inferior craftsmanship, precisely because they are priced such that they are an easy entry point for speculators.) Second, never EVER buy a property with zero down. You need an equity cushion to weather fluctuations in property value, plus the terms of your mortgage will most likely be BAD. Finally, we're nowhere near the bottom of the housing market, so now is still a bad time to buy. My wife and I have been saving up for a house for four years, and we've got a bit over $100k put away (which is 20% of a rather nice house in our area)... yet we still rent. Why? Because the market hasn't bottomed, and because we're able to rent a very nice home with a yard and garden in a good location for about as much as we'd pay in mortgage interest. So long as the rent and the mortgage interest are a wash, renting gives you greater flexibility and lower risk. You can be very comfortable indeed in a rented house, and it should allow you to save up a bigger down payment for when it's a good time to buy. (You may not be able to sock away $100k in four years, but I had some help -- I was lucky enough to marry a good engineer, plus -- as I mentioned -- I've had pretty good returns.)

Again, take this for what it's worth, but I'd suggest you stay out of the stock market for now. The market may or may not drop like a rock later this year -- it all would seem to depend upon whether the recession is short and shallow or long and deep. If it's the latter, then formerly-sanguine people are going to bail out of the market in despair once it becomes obvious that the rosy scenario ain't going to happen. At best, there's no way that earnings are going to rise gang-busters, so if the recession is short and shallow, you will have time to get in later anyway. You might consider parking your investments in Treasury inflation-protected securities (TIPS) -- although I gather they're rather expensive right now, and of course they don't adequately index for inflation. Still, they are the "plain vanilla" way to try to shield your stake from inflation.

Finally... the Roth. I'd say the odds are about 90% or better that income tax rates are going to rise. I could write for days about the federal government's budget problems (including a nice little feedback loop in which it loans money to itself and pays itself interest... which it borrows from itself to do so). Anyway, if you're young, taking the income tax hit now makes a lot of sense... assuming you are planning to use the money much later. (Otherwise, I guess it would be a wash.) In all probability, both the income tax rates, and your own tax bracket, will be higher down the road. Technically, if your tax rate stays the same, and you reduce the amount you invest in a Roth by the tax you have to pay on it, the Roth and Traditional IRAs are supposed to be equivalent. However, my take is that the tax rates won't be the same, so you should come out ahead with a Roth as a young guy. The only question, I think, is whether the federal government actually holds the Roth investments sacrosanct another decade or two from now, when they'll be really strapped for cash. (Jim Jubak of MSN money recently broached this question. I know the iTulip community doesn't like fluff like MSN Money, but Jubak is okay -- he doesn't always get the macroeconomics right, but he's usually a good and sane read.)

Okay -- this was very long, and I don't know how useful it was, but as another (relative) noob to a noob -- good luck!

[phirang]

the most important thing is to understand the role of central banks. once you begin to understand their role, then, and only then, can you responsibly invest.

i recommend going to the ny fed and reading some papers there...

i, too, am a fan of the austrians. check out de sota's book.

[zoog]

I feel "Noob Investor's" pain! The only difference is that I'm NOT young, NOT single, and DON'T have capital. So for me the advice to get smart first makes a great deal of sense as it's my only option currently!;)
I've started, because of the great advise listed above, to check out the MISES site. Can anyone offer a good "reading list." I think all of "us Noobs" (even the lurkers who aren't posting:D), would benefit a lot from it. Thanks in advance, the user's of this site are incredibly supportive and I know it's appreciated.

Along the lines of being patient and not expecting to get rich quickly, I would recommend The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns, by John Bogle, founder and (retired) CEO of Vanguard. It is 250 pages detailing all the reasons why he believes the only way you should invest in the stock market is to buy a broad index fund, such as a fund that tracks the S&P 500. About halfway through you may be saying "ok ok, I get it" but it is sound advice.

That said, stocks, especially US stocks for those of us who operate in dollars, do not seem like the best place to put one's money these days. Many here believe that the stock market will become "cheaper" over the next few months / years. So as others have said, holding cash right now is probably wise, especially if you are unsure about what to invest in.

To the original poster:

I would add my voice to Jim in saying that paying down debts such as car loans, student loans, etc. should take priority over investing in the market. I would not pull money out of a Roth IRA or 401k to pay off the loans, unless there was no other option. Aggressively paying loans down out of paychecks is a good strategy. I paid my car loan off on schedule, but I paid more than the minimum on my school loans whenever I could, and paid them off two years early. Nothing to dance in the streets about, but it helps. I sold my house recently, but while I was still living in it I paid much more than the minimum on my secondary mortgage (which was essentially revolving debt like a credit card). I would have paid it off several years early, and then tackled the primary mortgage and paid that off about a decade early.

As for the Roth IRA vs. 401k, I would say this. Traditional wisdom and advice is to invest in a 401k, where the money comes out of your pay pre-taxes and goes into the 401k tax-free, then you pay taxes in retirement as you extract it. The reasoning is that while you are working all those years, you are making more money and therefore paying higher taxes than when you retire. You no longer have various work-related expenses like gas, clothes, etc., the kids are gone, the house is paid off, etc. So in theory you are spending less, therefore extracting less, and so are in a lower tax bracket. Plus the contributions helped reduce your taxable income along the way.

The money going into a Roth IRA has already been taxed. When you extract it at retirement, you don't pay taxes.

I am a few years older than you. I believe that by the time we retire, our tax rates will be significantly higher than they are now. If this turns out to be true, then paying taxes now and not paying them later would turn out better than not paying taxes now and paying them later.

I started contributing to a 401k when I started working some years ago. I have only recently started a Roth IRA. My plan is to contribute to both, as I do not know what tax rates will be decades from now. I hope to contribute the maximum possible each year to the Roth IRA, in part to play catch-up to what is in my 401k, but also because the Roth gives me far more investment options than the rather limited 401k plan my employer offers (only about ten different funds to invest in).

If the Roth IRA you have does not have very many options, be aware that you can have more than one Roth IRA... you just can't make more than the maximum annual contribution, whether that contribution goes to only one Roth IRA or is divided between multiple plans. So you can leave what you have in that Roth IRA and start a new one with new money, assuming you have not made a maximum contribution to the first one this year. (If so, then wait till next year to start the new plan.)

See if the Roth IRA you have includes the ability to buy a broad index fund, or even a money market fund that returns something better than 1% interest. Given the investment horizon between now and your retirement, even if the stock market goes down more in the relative short-term, over the long term you'll likely come out ahead with the index fund in that Roth IRA. Learn all you can about investing and, if you feel comfortable, try out other investment options in another Roth IRA, to augment the index fund.

[gasull]

In short: Buy gold or commodities. Forget about housing and the stock market until the recession is over.

I'm a newbie investor too, but what I've written above is what I've learned so far reading iTulip and other websites.

[drumminj]

wfsaxton -

I'm in a somewhat similar situation to you, only a year older, but was at about the same financial situation you are in now, about the same income level (an engineer), but I own a house. I'm still getting up to speed and learning about investing, macro-economics, etc, but have come a long way in the past two years. Commentaries on places like iTulip have helped a ton, just hearing different points of views and arguments for different investments, understanding history, and being able to look at the bigger picture rather than focusing on which stocks went up yesterday.

A few comments I would make on the Roth IRA vs 401k...first off, is there's an income cap on being able to contribute to a roth - $95k I believe. So, it's most likely in your interest to contribute while you can. I personally favor the Roth because you can withdraw your contributions w/o any tax penalty (at least that's my understanding) at any time, so it seems like a "safer" instrument to fall back on in hard times than a 401k, which would have tax penalties for taking early distributions. However, the danger is that the gov't will change the laws and the gains will be taxed when it comes time for us to draw on the account.

Another thing to consider is the limited investment options usually offered with 401ks. It's hard to pass up the employer matching, but in a market like things currently are, having access to "alternative" investments, or even being able to truly be in "cash" (vs a money market fund) can make a huge difference. I switched jobs a year ago, and rolled my 401k into an IRA mainly because the brokerage managing the 401k couldn't tell me what their "stable value fund" was really invested in. This bothered me for obvious reasons (especially knowing that the value of MBSs was going to take a huge hit and not wanting to get caught up in that). As a result, I've been able to invest in things like GLD (as mentioned above), foreign currencies (via ETFs), and bet against certain industries and companies with options and inverse funds like SKF. I'm not suggesting you do those things, but it's nice having the flexibility to do that if you're comfortable with it, rather than be restricted to the 5 or 6 options offered by your employer's 401k.

Something else not mentioned above, but was important to me, was having investments outside of tax-advantaged retirement accounts. While it's nice to have your money grow "tax-free", I personally wanted to feel that I had easy access to more than just my emergency savings. To me, the barrier and hassle of tax penalties, etc, just makes it feel like that money's not as freely accessible should I really need it (or, say, want to move out of the country and take all my money with me)

Big picture, I think it's important to have a good cushion, as Jim recommends. A year's worth expenses in cash, as little debt as possible, and then worry about investing. The savings will allow you to not feel bound to your job, and enable you to pursue better opportunities when they come along rather than worrying about how you're going to pay your mortgage next month if things don't work out. I start a new job next week making 25% more than I was at my previous job, and I likely wouldn't have started looking for a new opportunity if I didn't feel I had the freedom and security that buffer provides. Once you have that, you can start aggressively paying down your debt. Personally, I'm working towards having my second mortgage (a 15-year note I took to be able to keep cash on hand to pay for fixing up the house) paid off at the end of this year.

Hope that helps in some way.

J

[wesalexader]

- How does one buy "gold"? I just opened up an ameritrade account but a search on it came up empty on the site.

You can purchase gold and silver by buying shares of CEF. The Central Fund of Canada.

[BlackVoid]

Buy OIL. :D

[c1ue]

WFSaxton,

I'm not a quant, but I do recommend you look at any and all investments as the function of 3 things:

1) Risk undertaken
2) Reward achievable
3) Ability to meet your financial goals with said Risk/Reward ratio

The books and sources talked about previously are very fine, but you need to clearly define what you are looking to achieve.

Over time and experience, you will likely change your goals along with your risk/reward profile, but it is silly to start without the first checkpoint.

With this first checkpoint and the first of many risk/reward profiles, you can start exploring what you can handle vs. what you want to achieve.

[brucec42]

So I'm young, naive, and idealistic. 28 y/o, single, renter, and make decent money ($70k+). I have about $40k in my 401k and about $10k I'd like to play with in the market.

A lot of interesting reads here, both in the articles and on the forums, but seems like I'm doing the exact opposite of what I should. Maybe someone can help me out here.

- I was looking to get into the stock market (my buddy has been making good money following 'tips' which I was hoping to duplicate)
- I was looking to buy a home (0-down on a condo)

It seems like both of these things are the wrong thing to do, according to what I'm reading. Can someone, perhaps, give me some advice? point me to a primer? Help an average joe like myself?

Step 1: Read at least half a dozen books on economics and investing before you "play" with any money or you'll risk losing it.

Step2: read at least half a dozen books on real estate. You're likely to find that condos may not be such a hot investment. This is a pretty good time in history to be a renter, so you have plenty of time to get that reading done.

Step3: Once you understand how economies work, how markets work, and how real estate is valued, then go for it.