If you had $10K to invest, how would you invest it?

[Pimp C Deuce]

Ok, heres the deal. My fiance just got an insurance settlement and is investing $10 grand. Neither of us have ever had the chance to invest before and are unsure of how to go about it. Her Dad introduced her to a stock broker who is wanting to invest it in mutual stocks, I had to work during there appointment but I looked over the paperwork and it wasn't very detailed as to where he would put the money. It had a questionaire that asked very general questions basically trying to find out whether you wanted to take big chances and lose or gain large sums or take low risk chances and lose or gain smaller amounts. She is hoping to invest it and have a really nice return after say 10 years when we are near our mid thirties. I was hoping to get a little advice and thought this board would be an excellent place to start. Like I said she wants to invest it in something that is fairly "safe" since this is a lot of money to us, but would also like to make a nice profit later on. I would greatly appreciate any advice anyone may have or if anyone could point us in other places on the web to research.

 

[Razorguns]

I *assume* you already bought and own a house right?

 

[Fajitas]

Can you afford to lose the 10k? If not then look at real estate....

 

[MattTheSkywalker]

I would use the money on a downpayment for a house along. You are getting married, you need it anyway.

Mutual funds are fine if you are not ready for the house now. Stay away from high risk investments - those are typically for highe rnet worth individuals who can sustain a few losses without a lifestyle adjustment.

Further, these losses offest capital gains taxes for higher net worth investors. Your risk profile should be lower.

 

[Synpax]

First, pay off your other debt that is at high rates (namely credit cards).

I'm going to disagree with Matt and say if you are going to invest, consider a riskier profile. The risk profile changes from higher to lower as you age. Odds are at the end of the ten years you will be ahead, and well ahead, despite any temporary downturns.

As a couple nears retirement, they don't really have time to wait out the downturns if it happens to be a downturn when they retire. As a younger couple, you can afford to wait out down turns in exchage for a higher return.

You can also diversify between low and high risk.

A trick I learned when I was getting my finance degree was to make use of risk-free assets to be able to balance much riskier assets than you would be able to assume otherwise. For example, put half in US savings bonds and put the other half in a Vanguard international growth fund.

Thirdly, don't waste your time with the broker. He is a needless middle man who suffers from the agency problem (his interests are not fully in line with yours). Do your homework and buy the mutual fund without a broker.

 

[bran987]

You can buy a house, although you need to check your budget first as owning a house is significantly more costly than renting. you can't just take your mortgage payment and think that's what it costs either. a lot of articles written about how to tell whether you should buy or rent. find some.

If you are going to be a stocks/bonds kinda guy, the general rule of thumb is

take your age, subtract from 100. gives you a stock/bond risk profile

if you are 25,

100-25 = 75% stocks

so you should have 25% bonds

something like that would be pretty simple for you right now.

I also would not pay a stock broker. not these days.

 

[MattTheSkywalker]

First, pay off your other debt that is at high rates (namely credit cards).

Good advice.

If you have any high interest debt, pay that shit off.

Risk tolerance is for you and your fiance to decide I suppose.

 

[wootoom]

i got into some realy nice stock for 25k.

 

[bran987]

i got into some realy nice stock for 25k.

what the hell does that mean???

 

[wootoom]

oh sorry i invested money into some shares that are pretty good.