Investments, Savings, Mutual Funds-Help

Discussion in 'Teacher Time Out' started by VANewbie, Dec 28, 2010.

  1. VANewbie

    VANewbie Devotee

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    Dec 28, 2010

    Teaching is my first career. I am still pretty young, single with no kids or house. I feel like I will be renting forever. I have no savings and tons left to pay on student loans. I know my retirement package is pretty good but I am always hearing about young people getting mutual funds and things that they can not touch.
    I want to save money for my future kids and to buy a house etc. I have a normal savings account but anytime I put money in there its gone when I need it just because I know its there and I can touch it.

    Any suggestions to a younger teacher on how to save money or what types of things I should invest in. I have an appointment scheduled to talk with someone about a mutual fund but I want to have some ideas before I go in there.

    What do you have or what would you suggest? I also do not have a lot of money to put down. I like in a cd you need about 3,000 to start. I surely do not have that. :blush:
     
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  3. swansong1

    swansong1 Virtuoso

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    Dec 28, 2010

    I'm not much help because I just threw all my retirement into the stock market and left it there.

    But, I think you are absolutely doing the right thing talking to a professional while you are young. Does your school district have any financial advisers you can speak with?
     
  4. VANewbie

    VANewbie Devotee

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    Hmm..Not sure. Actually I had no idea schools had financial advisers. I guess I should look into that.
    But what if I do not stay in teaching...down the road like 10-15 years. Maybe it would be best to talk to someone outside of teaching.
     
  5. gigi

    gigi Groupie

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    Dec 28, 2010

    How about looking into a Roth account at your local bank, or checking with Edward Jones, etc.
     
  6. VANewbie

    VANewbie Devotee

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    Ill check with both. Thanks
     
  7. Ima Teacher

    Ima Teacher Maven

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    Dec 28, 2010

    We have a financial person who comes to our district every summer to offer us everything from life insurance to disability coverage to mutual funds.

    When I first got my job, I opened an IRA. I put $2000 per year into it. Years later I found out that I could take out $10,000 of it penalty free to purchase a first home. I chose to do that so that I could add it to my down payment and pay off my house faster.

    For the past few years I have had $150 per month taken from my paycheck (pre-tax) and invested in the stock market. Since the money is gone before I ever see it, I don't feel like it's "gone". Historically they have paid off well over long-term investments. So far I'm averaging significantly more money than I'd make in interest from traditional savings and CD's.

    I always liked to spread out my money in different things. I'm not sure why. At one point I had long-term CD's, short-term CD's, a traditional IRA, mutual funds, an interest-earning checking account, and savings bonds. Now, it wasn't like I had a lot of money in any one thing. Something made me feel better to have my money spread out. I do like having my money in places where I can't get to it easily.
     
  8. ku_alum

    ku_alum Aficionado

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    Dec 28, 2010

    I'd check into a Roth IRA.
     
  9. smalltowngal

    smalltowngal Multitudinous

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    I was just thinking about this exact thing. I'm going to check with Edward Jones soon!
     
  10. VANewbie

    VANewbie Devotee

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    So roth ira is better than a mutual fund? I wonder how much you have to put down to start one?

    Someone told me last year to start getting more info on stocks. I know NOTHING about stocks at all. Plus I do not have that much money to spread out.
    Sounds sad but I can only afford to put away like 150 a month if that.
     
  11. paperheart

    paperheart Groupie

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    Dec 28, 2010

    I used to work in financial services (for 4 years). I did not have my securities (investing) license, but had a lot of training on them anyways. Be aware that your professional is earning a commission on your accounts--nothing wrong with that, however some products give them a better commission than others. There are plenty of financial professionals that will give good advice, but others will give advice that best fits their wallets so go in with some knowledge and awareness that he or she is not your best friend.

    The WORST thing you can do is get advice from friends, family, and even this thread. We are not experts and even our own personal stories should not have a strong bearing on your decision. This includes me ;) Let me illustrate why using a product you are probably a little more familiar about-auto insurance. Your neighbor has the same exact car as you and tells you he researches all the auto insurance companies and got the best rate from xyz car insurance. You call xyz and set up a policy for yourself. Problem is xyz has a business model in which the ideal policy holder has a perfect driving record and they do not car about your credit score or age as much. You, however, have a lead foot and 27 speeding tickets in the last year and a recent accident. XYZ doesn't really want you as a policy holder, at least not the same way they want your neighbor so your rate is pretty undesirable. You could have saved $300 going with ABC Car insurance company because they give the best rates to the policy holders with the best credit. Car insurance Companies really do base their rates on different factors (mostly age, driving record and credit)

    I recommend you google the following so you can read up and get a few of the recent Money magazine issues or a book or two.
    -Dollar Cost Averaging
    -Roth IRA vs. Traditional IRA
    -Overcoming inflation by investing
    -Investing in your 20s/30s

    AVOID/JUST SAY NO to:
    --Cash Value Life Insurance (biggest scam!!)
    --Return of Premium Insurance (second biggest scam!!)
    IN fact, if your financial professional pushes or makes one of these products as his first suggestion--RUN and find another advisor. They are the type seeking the higher commission I mentioned before.
    --Guaranteed % return (They only guarantee you a certain percent because they will invest in a better investment choice that they know they will definitely get a return higher than the percent they told you. So, at a young age where investment risk is acceptable, why not invest in the choice that will get higher?

    Good luck!
     
  12. VANewbie

    VANewbie Devotee

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    Dec 29, 2010

    Paperheart thanks for all your advice. Would you say its safe to trust someone at my bank or Edward Jones. I really know nothing and everything I read makes no sense to me. So I really am going in this naive young girl.

    I'm leaning toward a Roth IRA or mutual fund.
     
  13. smalltowngal

    smalltowngal Multitudinous

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    My mom did mutual funds that paid well. And thanks again for starting this thread. I think I'm going to make an appt at Edward Jones to get a game plan together.
     
  14. KinderCowgirl

    KinderCowgirl Phenom

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    Dec 29, 2010

    Very interesting Paperheart, thank you!

    I have an IRA that was about $2,000 to start-I have some money with RS Investments and some with Fidelity. It took a hit like everything did with the market the way it's been the past few years, but it's still a nice little nest egg for the future.

    My father does the whole stock market thing. I look at it like gambling, unless you have the time and energy to really follow the trends. I keep telling him every year around August/September to buy stock in the aspirin companies-because that's when teachers go back to school! ;)
     
  15. McKennaL

    McKennaL Groupie

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    Dec 29, 2010

    A little background: I have three jobs. Teaching (only an aide, dang it), a grocery store on weekends, and selling on ebay. None of those will make me rich. They just help me get by. But what i DO have going for me is that my father has taught me how to work with investments. (He is so smart when it comes to that.) I don't want to get into amounts - but this last year, my investments have grown more than my income from the other three combined. I HAVE to be smart with those. 1-I'm single and can't rely on a spouse's income and 2-they are my savings, my future, my retirement, and my health care (I was hit by a drunk driver 5 years ago and complications due to that will have my health care/future upkeep of my body costing a pretty penny for the rest of my life).

    You are VERY smart to be concerned about your investments and retirement NOW. Here is a little advice for the beginner:

    1) YES, look into Roth IRAs! Add to your IRA to the maximum amount EVERY YEAR. If you have a side job that offers a 401K, take advantage of it especially if the company offers a match. But do your research!

    2) Try to live as much of your life debt-free as possible. Don't charge more than you can pay off each month. Pay off your debts as QUICKLY as you can. Buy MAJOR purchases in cash whenEVER possible - or look for payment bargains (ex: buying appliances at no interest for 18 months..and then spread out your payments in order that they end in FEWER than 18 months). Get used to saying, "That's beautiful. How lovely. I can admire it...but i DON'T need to own it!" <-Some of the best advise I ever heard!!

    3) Pay yourself first (meaning save some EVERY month)!! A good example of a living budget is 80-10-10. 80% - is what you live on, 10% is what you give away (charity, offerings), and 10% savings. If you can save more than 10% - yeah for YOU! DO IT!! Stock up as you are young and without the responsibility of family and house payments. Living PAST 80%? Consider that the danger zone.

    4) Work with a no-load investment house. That means that they aren't charging you a commission or fee to make buys or sales. Examples: Fidelity and Vangard. Though some have mentioned Edward Jones... I look them up and the first thing I read is: "Edward Jones financial advisors sell commission-based and fee-based financial products" and I go... hmmm, no thanks. I, personally, really like to work with Fidelity Investments. My Roth IRA is with Vangard. (which goes to another point - don't put all your eggs in one basket). The ones I avoid is investment houses that charge often..ex: Merrill Lynch.

    5) Start to LEARN about investing. If you don't know about how things work you are buying a pig in a poke. You can trust others-but check into THEM and learn for yourself. For me - I am wary about others of whom i don't REALLY know their long-term success rates. the market will rise and fall (and you should take a test - found on line- to understand what sort of an investor you are. can you tolerate a certain level of risk? can you only sleep when your money is in a low interest/very safe savings account?) but if you are smart (investment-wise) you can stay on the topside of the wave.

    I once was told that if you only read the first page of the Wall Street Journal - or Money magazine (investing advice 101) then you are smarter than the average Joe-and that can't HELP but be a good thing. I started by watching Suze Orman on TV. Though I didn't understand EVERYTHING she spoke about... I DID start to learn somethings. Then I listened to a few finance shows on the radio (one on a Christian station - finances believing that your income IS a gift from God and your aren't the OWNER of this money, but a steward of the gift) or a talk radio station with a commentator who (wasn't SELLING things for himself and) was recommended by successful investors. These, if nothing else taught me the LINGO and gave me a decent sense for budgeting, living within my means, and again CHECKING OUT EVERYTHING before investing.

    My dad started by showing me HIS investment record and I asked... if this is possible, how is it that OTHERS aren't having this success? And he said - this IS out there in plain site...but you have to UNDERSTAND it and know where to look to succeed to this level. (I want to add at this point.. considering the Bernie Madoffs of this world - and if you don't know that name or that story, go NOW and look it up! There ARE cold-blooded creeps out there looking to cheat ANYONE and EVERYONE. - you have to keep this up front in your thoughts: If it sounds too good to be true, it usually IS! ALWAYS check it out!) My father started me using a newsletter called "The Don Dion's Fidelity Independent Advisor". He taught me how to read it (Investment reports can be really tough to read) and the stock market/investment pages of the newspaper, and I have found that the advice I get from that newsletter is QUITE sound. You might also want to look into investment clubs in your area. Not people looking to sell you things - but people LEARNING to invest together.

    Do not follow ANYONE or ANYTHING blindly. CHECK IT OUT!

    ***

    Hope this gives you things to think about - and to check into!
     
  16. smalltowngal

    smalltowngal Multitudinous

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    Dec 29, 2010

    For those that use Fidelity, what investments would you suggest as being good ones?
     
  17. moneyprofessor

    moneyprofessor Rookie

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    Dec 29, 2010

    I spent several years working as a financial adviser. My advice to you is to find an independent financial broker - one that has access to many product providers - sit down with him/her and work out a plan.

    My gut feeling is that if you are married and/or have major debt (mortgage, student loan, etc) you should invest in life insurance to cover this debt should you die before your significant other. DO NOT buy life insurance or critical illness insurance from banks; their underwriting process is not as robust as that of insurance companies and they will find almost any excuse not to pay out when a claim is put forward.

    I hope that helps.

    Cheers,
    Steve
     
  18. VANewbie

    VANewbie Devotee

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    Dec 30, 2010

    Thank you everyone for all the information. I am meeting with someone from Edward Jones today. I will listen to what he says and then I am going to head over to my bank and see what they say. I think a Roth IRA fits what I want but I do not have 2,000 to put in to start with.

    This is making me dizzy.
     
  19. VANewbie

    VANewbie Devotee

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    Well I'm back I have a roth ira. The guy was talking a bunch of jargon that I did not understand but I feel pretty good about it.

    It sounds good....i guess.
     
  20. moneyprofessor

    moneyprofessor Rookie

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    Rule #1 of investing - if you don't understand the product don't buy it.
     
  21. VANewbie

    VANewbie Devotee

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    Yea your right but its too late now.
     
  22. McKennaL

    McKennaL Groupie

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    No, don't feel that. It's never too late to make choices. It's YOUR money.

    Even though you might think you are in something - and it was jargon - study up on what it IS. You probably heard (at the end of the year) a lot of talk about transfering IRAs. IF you find that you really aren't happy with something (once you TRULY understand what it is you have) - then you CAN transfer. You could even cancel. Now mind you - sometimes there ARE fees or a small fine for changing/canceling. But that is better than being in something you find out you don't like - or didn't understand. Not only ask this agent to explain it again - but do your OWN research (like getting a second, unbiased opinion).

    After more research about something that my ex and I got into - but I had (well, it was something I just had a strange feeling about MANY years ago - but my ex was totoally bought into) I discovered that it truly was NOT the best thing for me to be into. I have now gotten out of it. It cost me a service fee and a small fine - but I recovered quite a bit. Now I have it in funds that I KNOW what they are all about.

    It's not too late - keep researching and asking questions. Your money is something you SHOULD understand about!
     

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