Hey,
I sold a website that, when combing revenue and the sale price, yielded around 30,000. How would you invest these funds if you wanted to try to make the most of it? I am fairly young (I just graduated from college) if that helps give you some perspective.
I am very new to investing/etc so play nice 
Thanks
anyone? 
Hookers and coke. 
Advice have I none, but bump.
I’m not a financial advisor, so my layman’s advice is worth what you pay for it, but:
Stock Broker. If you’re comfortable with doing it yourself, pick one of the on-line ones, they’re easy to sign up for and give you access 24/7. The commission rate won’t matter if you follow my next advice:
Invest 60% in 2 index funds, tracking the Dow, S&P 500, or NASDAQ, whichever two appeal to you (or all three if you like). This is as close to a guarantee of 10%/year return as the market can offer.
Invest 30% in a higher-risk international fund. Developing countries are where the major growth is likely to be over the next three decades. India and China will surpass the US as economic superpowers in that time, too – get in on it now.
Invest 10% in the highest-risk, highest-return fund or small set of stocks you’re comfortable with. You might get lucky, and you’re limiting your losses.
At this point in your life, I’d ignore the bond market altogether. When you hit 45, start rebalancing a little bit into it as the years go by – 2-3%/year, maybe. Bonds are safer, but carry much lower returns generally.
Vanguard index funds. Wait for a good dip and buy (of course they’re long term investments… but if buying for the first time, I say buy when it’s in a dip for sure as the next dip won’t go below your principal, ya know?)
If interested in this route, read up on asset allocation too (you’re young, 80/20 or 90/10 is acceptable risk for stocks/bonds). Diehards.org is also a good resource for Vanguard related investments…
It would help if you stated what your future goals are (buying property soon? do you currently have any IRA’s, 401k’s? things like that…) Investing is different for everybody, so there is no one way to do it. Can you afford to dump it all in investments, or do you need some spare cash for unexpected things?
I posted a thread specifically for this purpose early this year when I was new to fund investing… I’m glad I did, they’re doing great now.
The safest investment you can do temporarily is a CD from any financial institution that’s FDIC insured, or an online savings account yeilding well above 5% per year (make sure it too is FDIC). If interested in this, IMHO, I’d go the savings account way - it’s more liquid, and no penalties for withdrawls. And the rates compete with CD’s too. Some Brick and Morters offer high yeilding savings accounts as well (Citi I know for one, WAMU may be another…). Fatwallet.com (finance forum) is a great resource for rates and institutions offering great rates, check the stickies.
Others will post soon, I’m sure, with other ideas… be patient.
The first question is what do you plan to do with the money. If you plan to use the money next year for college tuition you’ll need to invest it differently than if you plan to save it for retirement decades from now.
Given your inexperience, I’d suggest you look around for a good financial advisor. My own preference is someone who isn’t tied to one product - I found my advisor by asking acquaintances (who have more money than I do) for recommendations. I prefer doing business this way because I don’t know enough to choose funds wisely and I’m not inclined to do the research that would be necessary to do so.
If you’re feeling secure enough to do your own investing, the formula TimeWinder suggests looks very good for someone of your age. Remember, investment is best done with an eye toward the long term. If you make sensible investments now and resist the temptation to “play the market”, you’re going to end up with a whole lot more money than if you hadn’t.
Congratulations! That $30,000 is a fantastic way to begin planning for a secure future.
TimeWinder’s advice, with Dewey Finn’s warning, sounds best to me. Any money you think you may need in the next five years, put into relatively short-term CDs (say 3-month to 1-year) so you can get a better interest rate than a savings account, but still be able to get at it if you need it.
Like Dewey said, the main question IS “what do you want to invest for?”
If you’re thinking that you might want to buy a house when you’re 30, you’re probably going to want a lot more in bonds than if you just want it there for for retirement.
If planning for retirement, I too, am a proponent of low cost index funds.
You’re going to have to pay taxes on it next April so don’t blow it all.
That’s more than enough to open up an account at one of the big investment banks. There, you’ll get a financial advisor who’ll work with you to figure out your goals and the best way to reach them.
I’d be careful about that. First, $30K is nothing. Second, you’ll likely get steered into mutual funds with loads.
For the time being, park it in a money market mutual fund. Fidelity and Vanguard have good ones. After that, we really need to know more about you. Any debt? Do you have a job? Own a house? Plan on staying in the same town? Have an IRA or other retirement vehicle? Have a family?
I think the best thing the money can do for you is to start you off on the right foot for a lifetime of smart money management - staying out of consumer debt, being able to contribute to your retirement plan, being able to buy real estate at decent terms, regular savings, etc… The $30K will help get you started, but most of your wealth is probably going to come from your future paychecks and not the $30K.
I’d do this. Vanguard money market funds (e.g. VMFXX, VMMXX) are currently returning over 5%, and money market funds are pretty stable/low-risk.
If you have a higher tolerance for risk and/or are planning to keep the money invested for a long time, I’d go with a mix of no-load index funds. Something like 40% bond fund (e.g. VBMFX), 20% S&P 500 index (e.g. VFINX), 20% small-cap index (e.g. NAESX) and 20% international index (e.g. VGTSX) to give a reasonable level of diversification. Don’t invest in actively managed mutual funds or individual stocks.
What’s your other income?
Have you already maxed out your IRA or 401K yet? Hopw about planning ahead for next year?
What is your marginal tax rate?
What are your plans for retirement?
Do you have plans to buy a home soon?
Where do you live?
hey,
Thanks for the replies guys, here is some more info that you requested about me:
[ul][li]I live in Buffalo NY (low cost of living)[/li]
[li]I just graduated so I am looking for a job (I currently have a part-time job where I make around 28k/yr)[/li]
[li]I have no debt[/li]
[li]I think a home would be a wise investment eventually but I am also concerned about getting ready for retirement (even though I’m 22) since pensions/social security do not really exist.[/li]
I currently have all of the money in a money-market account yielding 5.05%[/ul]
bump because the people I talked to were on in the evening 
What kind of website was it?
Can I make one like it?
Advice, I got nothing. I put my money in ING Direct, a GIC and an RRSP. I don’t have enough to do “investments”.
I got websites, though…
Index funds are my personal favorite, and I highly recommend Vanguard. They’re a great company and have a very diverse set of products.
In a couple years when the real estate market tanks a bit more you can sell your fund shares and make a nice down-payment on a home.
[QUOTE=seatho]
hey,
Thanks for the replies guys, here is some more info that you requested about me:
[ul][li]I live in Buffalo NY (low cost of living)[/li]
[li]I just graduated so I am looking for a job (I currently have a part-time job where I make around 28k/yr)[/li]
[li]I have no debt[/li]
[li]I think a home would be a wise investment eventually but I am also concerned about getting ready for retirement (even though I’m 22) since pensions/social security do not really exist.[/li]
[li]I currently have all of the money in a money-market account yielding 5.05%[/ul][/li][/QUOTE]
In that case, I’d definitely look into some low cost index funds.
This is what I’d do:
For starters, max out your IRA contributions. You can take 4,000 of that 30,000 and put it in a traditional IRA or a Roth IRA.
If you do “traditional”, you won’t have to pay taxes on the $4000 next year. If you do “Roth”, you won’t have to pay taxes on the $100,000 that $4000 will be worth 40 years from now when you withdraw it. The catch is that you can’t touch it without penalty until you’re 60. Since you have this other chunk sitting out there, you shouldn’t have to worry about that.
Figure out roughly what you’ll need for taxes and keep it in that money market, or buy a 3 month government bond.
Put the rest in an index fund. . .
THEY SAY that small-cap funds outperform the market as a whole over longer periods of time, even though they’re more variable. Since your horizon is like 40 years, I’d purchase something like VISVX and reinvest the dividends in the fund, and just ignore it for a long time. You can set up automatic reinvestment at Ameritrade (and probably any other broker). If you need to use that money for a house in 5-10 years, it should have grown (no guarantees) and there’s no penalty for withdrawal.
Also, you will have the choice to invest what you put in an IRA. You can follow that same advice.
I have all my accounts at Ameritrade. You can set up 2 accounts, one that’s an IRA, one that’s a normal account. It’s a little confusing at first, but you’ll figure it out.
Send all your money via Cashier’s Check in care of:
Shirley Ujest, Investment Handler/wrangler/something
Fancy Schmancy Investment company
123 Glenbourne Drive
Shang-ri-La Trailer Park
BFE, MI 48123
Whatever you choose to do, you should max out a retirement plan (IRA or Roth IRA) for the current year, then in January do it again for 2007. This will give you great benefit from reducing your current tax liability and compounding tax free for the next 40+ years. With your age, it should be mostly stocks; index funds tracking major indices (S&P 500 <Large Cap Domestic> / MSCI EAFE <Large Cap International> / Russell 3000 <Small Cap>) with a small sales load, such as those from Fidelity, Vanguard or T. Rowe Price, are good long term investments.
Bah, had this thread open too long before responding. Trunk said the same thing before me. Still, it’s the best option for any young person sitting on a chunk of change. The earlier you start saving for retirement, the better!