Chris asks…
College student looking at investing?
I am a 22 year old college student looking at making some investments. To be honest, I have only ever taken one economics class in my life and it was a basic intro class where I really only learned a few terms that have since been forgotten and how to use Microsoft Excel. I am an engineering student so I can read and learn technical stuff pretty quick but I just don’t know where to start.
I have heard of different things such as a Roth IRA, Traditional IRA, 401(k), Mutual fund (loaded and unloaded I think), commodities, stocks, penny stocks, funds, CD’s, Bonds, and ETF’s. I have very limited knowledge to what any of this is or how to even start with any of them. I have been reading and reading and I do know that most peoples advise is to just read and read.
I can’t afford any professional advise and I can really only invest maybe $500 to start. I have a bank savings account which is really safe and backed by the FDIC but, it doesn’t earn hardly anything in interest and I really wouldn’t call it investing. If inflation goes up, then my money is pretty much worthless. Also, I have had to take money out of savings to make up for bills at times. It really is more like a buffer or emergency account. During the summer, I have a little extra money due to my job but during the school semesters, I am “bleeding chips”, in Poker terms.
So with that little bit of knowledge, what would be the best thing to do? People are advising me to start investing even though I don’t even have much money to begin with. I don’t really know what any of the above investments I should even consider, or whether they are considered gambling, which I don’t want to do at this point. Some risk is fine, but not like I am playing a game of craps or something.
Any advise is welcome. Links to websites to read stuff on would be awesome too. Even step by step stuff on how to get started. Thanks
There are certain commodities that I think are good investments and some that are not. From the little I know, Gold and Silver seems to be over hyped and can really fluctuate. If I would have bought gold or silver a few years ago when it was “low”, then it could be a good investment. The way I see it now, it is only a bet that gold will go higher in price. It is a HUGE gamble.
financi4 answers:
I would buy gold
John asks…
What is the best way to save money for my daughter?
My daughter is one. I want to start saving money now so that when she is older I am able to give her some money for something like college or to help her buy her first home.
But I am confused about how to do this for three reasons. First, I think paying for college yourself builds character and makes you feel more independent so I might actually be hurting her by paying for it myself. Same deal with helping her buy her first home. Second, I’m not sure what would be the best thing to save the money for would be. Should I save it for college? Should I save it to help her buy a home? Should I save it for a gift? Should I save it for bail money? Knowing what I am saving for will help me know how much I should save. Finally, I’m not sure what the best investment vehicle is. I know bonds are safe but yield less interest but I understand that there are also relatively safe stocks that have slightly higher interest than bonds. And ideally I would like to have the money in some kind of a thing where I can’t touch it. So 10 years from now I don’t gamble away my daughters money in a poker game.
What do I do?
financi4 answers:
Savings account, that way when she gets a little older you can roll her coins from her piggy bank up and take it to the bank and show her how to deposit it and show her how her bank book works. Of course you can add money to it at anytime yourself and possibly tell her you will match what she saves up to deposit each time. Also dont worry about what its for or when to quit or how much you need, bc all that really doesnt matter just keep on doing it as long as you possibly can for whatever comes up. Another good option is a cd, they have higher interest rates and you can lock it in for 5 or 10 years
Robert asks…
financial help needed?
I need $50,000.00 cause am currently tryna get into the jewelery game and start customizing jewelry especially watches like Hublot, breitlings & jacobs watches and i need some financial help of $50,000.00 and when I start coping me some millions am goin to invest in stock marketing bond & foreign exchange am interested in that also all I need is a start and am good. So if your interest in helping message me at dougie_fresh242@yahoo.com or call 954-318-9706 8pm-12am and am look forward to move to new york to get in jewelery cause I gat some connection over there with Danny from Avianne & co & Big Rob The Jeweler from New Jesery I gat some connection all I need is a start.
financi4 answers:
The checks in the mail..ya right
Richard asks…
33) The nominal interest rate is always ________ than the real interest rate when inflation is positive. A) g?
33) The nominal interest rate is always ________ than the real interest rate when inflation is
positive.
A) greater
B) equal
C) less
D) equal or less
34) If the nominal interest rate is 5 percent and the rate of inflation is 1 percent, then the real
interest rate is:
A) 5 percent.
B) 4 percent.
C) 6 percent.
D) 5.5 percent.
35) If you want to purchase a new sports car in four years for $75,000, how much would you
need to have in your bank account now, so after four years you will have $75,000 to buy the car?
Assume your bank pays 6 percent interest.
A) $51,226
B) $59,408
C) $60,484
D) $70,755
36) At an interest rate of 4 percent, what would be the present value of receiving $4,000 four
years from now?
A) $3,420
B) $3,637
C) $3,704
D) $3,847
37) A rise in the interest rate:
A) decreases the opportunity cost of investing.
B) increases firms’ desires to invest.
C) increases the opportunity cost of investing.
D) none of the above
38) Retained earnings are corporate earnings that are not:
A) paid to owners in the form of dividends.
B) taxed by the government.
C) generated by higher government subsidies.
D) declared to the IRS.
39) Financial intermediaries have more expertise than individual investors in:
A) evaluating investment projects.
B) monitoring investment projects.
C) negotiating the terms of loans to be made to investors.
D) all of the above
40) Which of the following assets is the least liquid?
A) currency
B) checking accounts
C) stocks
D) real estate
41) Mike makes excellent cheesecake and Sue is very good at changing the oil in a car. Sue
agrees to change the oil in Mike’s car if he makes her a cheesecake. This is an example of:
A) legal tender.
B) barter.
C) commodity money.
D) fiat money.
42) Dena won $1,000 at a bingo game. She deposits her $1,000 winnings into a money market
fund so that she can use the money next year to pay for her tuition. This is an example of money
serving as a (an):
A) unit of account.
B) medium of exchange.
C) store of value.
D) investment good.
43) Which of the following assets is the largest component of M1?
A) currency
B) checking deposits
C) money market mutual funds
D) small time deposits
44) Third National Bank has $750 million in deposits. The required reserve ratio is 15%. Third
National Bank must keep ________ in reserves.
A) $150.5 million
B) $60.5 million
C) $112..5 million
D) $160.5 million
45) Suppose the required reserve ratio is 20%. A $5 million deposit allows commercial banks to
create a maximum total of ________ in deposits.
A) $25 million
B) $20 million
C) $10 million
D) $50 million
46) The Federal Reserve System:
A) is a private profit-making commercial banking system.
B) is different than the central bank of the United States.
C) implements fiscal policy.
D) includes 12 district federal reserve banks.
47) When you pay your groceries with money because the supermarket does not accept stocks
and certificates of deposits (CDs), then the reason why you are holding money is the:
A) transactions demand for money.
B) liquidity demand for money.
C) speculative demand for money.
D) All of the above are correct.
48) When inflation increases, the
A) demand for money increases.
B) the quantity demanded for money increases.
C) the demand for money decreases.
D) the quantity demanded for money decreases.
49) An open-market purchase of government bonds by the Fed results in ________ in bank
reserves and ________ in the supply of money.
A) an increase; a decrease
B) a decrease; a decrease
C) an increase; an increase
D) a decrease; an increase
50) Which of the following represents an action by the Federal Reserve that is designed to
increase the money supply?
A) a decrease in the required reserve ratio
B) an increase in the discount rate
C) a decrease in federal tax rates
D) selling government bonds in the open market
financi4 answers:
33a
34b
35b
36a
37c
38d
39d
40d
41b
42d
43a
44c
45a
46d
47a
48a
49c
50a
David asks…
What’s going to happen to America after March, 2006?
The Laboratoire Européen d’Anticipation Politique / Europe 2020 (LEAP), a European think tank with an impressive track record of predicting major world events, estimates there’s an “80% probability that the week of March 20-26, 2006 will be the beginning of the most significant political crisis the world has known since the Fall of the Iron Curtain in 1989, together with an economic and financial crisis of a scope comparable with that of the 1929 Stock Market Crash.”
March 20 is the date set for the opening of the Iran Oil Burse (IOB), an international exchange that will permit oil to be purchased in Euros. Currently, oil can only be purchased in dollars, a condition that has artificially inflated the value of the dollar on world currency markets.
Allowing oil to be purchased in Euros will have a strong negative impact on the dollar’s value, triggering what LEAP calls a 1929 like financial crisis as nations scramble to unload their dollar reserves and Treasury bonds in favor of Euros. (Currently 49% of America’s national debt is held by foreign countries, up from 18% in 1982.)
This could cause the USA to “monetarize” its debt (print enough extra dollars to cover it) flooding the world financial markets with what LEAP calls “monkey money.” It’s roughly equivalent to you or I writing a check to pay a debt, knowing we don’t have any money in our account, but on a much grander scale. When a nation does this, it creates an inflationary spiral that requires the printing of more money, causing more inflation, and could become a vicious game of musical chairs that soon leaves everyone standing.
The Federal Reserve has already announced that beginning March 23 it will stop publishing its regular report on the amount of US currency in circulation, called M3, so that no one will know just how many dollars are in play. Recent reports are already showing a significant increase in M3 leading experts to believe that the printing of monkey money has already begun. It’s known that new Federal Reserve chairman Bernanke favors this approach.
financi4 answers:
Chicken Little is exactly right.
Have you actually read the internet articles?
It starts with:
“its attempt to establish a world empire dominating every nation on the planet, the U.S. Has exhausted its ability to finance the expansion and the country now faces imminent financial collapse. From all indications, it looks like 2006 will spell the end for America.”
Was this article written from a Cabin in Montana, or a second story apartment in France?
Daniel asks…
stock market investing, investing options?
i know about Bonds, CDs, money market, property, the stock market. roughly speaking. my questions are more so of the who,what,when, where, and hows to invest. not such much the when because i want to start now, i know this is a game based off of ” When” but i would like my when to begin so preferably on my next min wage pay check so that should kind of put in perspective how much im working with. i live in spartanburg, sc so any advice on this situation would be great and im only 20 so i’m not afraid of high risk opportunities, simply put ive been throwing money away for a while. any good advice answering the who,what,when,where, why, and how would be great. thankyou. looking for both fast and slow growths as far as returns go.
financi4 answers:
If you take a look at what academia says, it’s not a matter of when but a matter of probabilities, value and risks. The Black Scholes equation has demonstrated how valuable probabilities are, portfolio balance has demonstrated the importance of risks and of course you always want a good price for the value. If you keep thinking it’s about when, you’re likely to paint yourself into a trap.
Ben Graham says that the ideal mix is 45% equity, 55% bonds. Claude Shannon at MIT demonstrated that between a random walk as a “stock” and cash, the optimal balance is always 50 / 50. Markowitz with his efficient frontier and tangential method typically lands you with an optimal balance just shy of 50% equity. So where does this be aggressive when young come from?
When you are young, you will hopefully be contributing something from each paycheck to your investments. This is in fact the same as holding a bond in your investments and you can even calculate the value of the bond if you have a suitable market rate of return. A suitable market rate of return may be your employer’s corporate bond yield as that includes the default risk of your employer in a risk premium. For example, if you are committed to depositing $466 a month at the end of the month for the next 40 years and you use 7% per annum as your market rate, you effectively have the equivalent of a bond worth $466 / 1.07^( 1 / 12 ) * ( 1 – 1 / 1.07^40 ) / ( 1 – 1 / 1.07^( 1 / 12 ) ) = $76,913.54 so you can in fact invest aggressively before reaching the 50 / 50 mark or whatever point you’ve determined as optimal.
Where does the statement “determine your risk tolerance” come from. There’s a battle between mathematicians, physicists and engineers who prefer to use a cardinal utility of wealth like the log utility of wealth to model risk with investments and economists like Samuelson who insist that wealh can not be a cardinal system but must be ordinal therefore risk can only be measured by human judgement. This latter view has been misinterpreted as a degree of personal risk tolerance which has served to sell investment products to people but has nothing to do with the success of your portfolio. Whether or not you are comfortable with the risk, excess risk can still wipe you out.
Donald asks…
Anyone know anything about investing?
Here is the problem.
You have just turned 16 years old and received more money for your birthday than any year in the past. Your parents convince you that instead of spending it on video games, you should invest it in an interest bearing account that will grow to an even larger sum of money. The suggest that you perform some research to find the best investment available so that the money will work to make the most money possible. Find at least two options for investing you $250 for a five year period and determine the value of your money at the end of five years. Represent each option using a table and a graph, and use an equation to help you explain the relationship between the two representations.
All the teacher said was to invest in something, like a savings account, savings bond, or stocks.
I have no idea what to do.
financi4 answers:
As I don’t know what country you live in I can only give you a generic answer.
First, look online or telephone your bank and ask for their interest rate on a savings account. Do they have an online account that pays more interest than the regular account? Does the bank have any other products, like a locked-in account which pays even more interest?
There are several types of bonds, government, corporate, Canada Savings Bonds, etc. Many bonds have a minimum amount that must be bought and that minimum is normally $5,000. Again, go to a bank in your area and ask to speak to an investment advisor. They may be able to suggest a bond in which you can invest. There are also mutual funds which are comprised of bonds but, again, you may be below the minimum.
If you open an online investing account, you may be able to buy a stock. So that you do not lose the money you have invested, choose a reputable stock that pays dividends. Again, you may fall under the minimum dollar requirement.
If you speak to the investment advisor at the bank where you have your money, they can give you information which will be helpful to you. They can give you a variety of ways that you can invest this amount of money. They will be happy to speak to you as they will see you as a current client and a future investor.
Mark asks…
What should a 17 year old girl ask for christmas?
For once, I don’t feel like asking for something that’s not going to benefit me in the future or the soul of my body, such as video games and electronics. I want the money to be well worth spent. now of course I’m not going to have my mother buy big appliances such as microwaves for university next year ha, simply because i haven’t got the room to store it all and that better, more efficient appliances will be out by next year.
I do plan on asking for some art related things, since that’s what I enjoy, so maybe if you have any interesting ideas there. and possibly some sort of homeopathic items as well, makeup that’s good for you, maybe a piercing gift certificate, these items can be put to everyday use. but other then that I have got a clue, do you? things that could benefit myself for the future and be used often instead of collecting dust? I also plan on teaching myself about the stock market and bonds. so perhaps the most well-known introductory book on that? Thank you for the help ~
Merissa x
financi4 answers:
You could consider asking for birthday money if you dont know what to get
Charles asks…
What to ask for christmas? 17 year old girl.?
For once, I don’t feel like asking for something that’s not going to benefit me in the future or the soul of my body, such as video games and electronics. I want the money to be well worth spent. now of course I’m not going to have my mother buy big appliances such as microwaves for university next year ha, simply because i haven’t got the room to store it all and that better, more efficient appliances will be out by next year.
I do plan on asking for some art related things, since thats what I enjoy, so maybe if you have any interesting ideas there. and possibly some sort of homeopathic items as well. but other then that I have got a clue, do you? things that could benefit myself for the better? I also plan on teaching myself about the stock market and bonds. so perhaps the most well-known introductory book on that? Thank you for the help ~
Merissa x
haha, rather funny ;P
My mother likes to get ahead of the ball and start early <img src="https://s.w.org/images/core/emoji/2/72x72/1f642.png" alt="