How should I invest?

[Seth]

I'm 21 and want to start contributing some more of my salary towards retirement. I work for a school district right now and right now it figures up that I will get a little over $2000 a month if I stay there and retire after 30 years of service.

I got a letter the other day saying they have a 403B tax sheltered annuity plan available to contribute too. Should I start putting a portion of my check into this every month or would I be better off investing in the stock market?

I would like to have a big chunk of money available when I retire to go along with the pension I would also have coming.

If one was to invest in the stock market, how do you go about doing this? Do you research stocks on your own and buy or get help from somebody such as an Edward Jones Investor?

[davekeim]

Seth,

#1. Your very smart at your age for thinking about this. You'll be well ahead of the majority if you follow through.

#2. Any thing you invest in runs by the stock market for the most part.

#3. Playing the stock market on your own is not good. Trust me on this one! If you like the Casino take your chances there. Professionals are always better.

#4. If ypu have a 401K option take that. Put all funds, at your age, in the progressive program. As you age move it to moderate at 50, then conervative at 60.

Great advice for myself if I were as smart as you!

Oh! And put 15% of your salary in if you can. Much less taxes. Your saving 30% on taxes on gross income on you invest. Do your best not to give your money to the man!

Again, your very smart for thinking this early in your life!

Signed,

Cardiac

[Quillback]

Yes Seth you are making a good decision to begin investing at such a young age. Does your employer offer a 401K plan? If so, take advantage of it as you can contribute money pre tax and your gains will not be taxed until you retire and start withdrawing money. You can probablty also contribute pre tax money to an regular IRA or a Roth IRA. I would recommend mutual funds where your money is pooled with other investors and invested in the stock market.

Money magazine has a lot of basic investment information, get a subscription or go to your local library and read some back issues. A lot of mutual fund companies have info on their web sites also, google Fidelity, Vanguard, T Rowe Price for starters.

Usually if you go to a place like Edward Jones they'll charge you to invest your money. That works for some people, but doing it yourself is not that complicated and you'll save a lot of money over the long term.

[snagged in outlet 3]

A 403B is a 401K for puplic employees. Yes, invest the most they will allow. It will be in the stock market and your employer will give you the option in how much risk you want. I think Davekeim meant aggressive at age 21 til your mid 40 and he is correct.

SIO3

[Seth]

Thanks a lot guys. I will be sure and get this stuff taken care of next week. Just curious, what kind of interest rates does one normally get in a 401k or, for m?e, the 403b since I'm a public employee

[snagged in outlet 3]

Your employer should give you rules of the plan. Typically you are in stocks and bonds all the time. Rarely will you have cash sitting, but if so, it probably rolls into an overnight money market. But like I said it will be invested most of the time. The overnight rate is negligible but it's something.

SIO3

[Quillback]

If you're investing in stock mutual funds you don't get an interest rate, your investment will grow (or shrink) depending on how the market does. You can contact your 403B plan adminstrator and see what choices they give you for investing your money in. If they are mutual funds ask for a prospectus, the prospectus will list past performance, check out the past 10 year performance which will include the bad years 2000-2003. You can also Google the fund and probably find past performance. However a big caveat that you will always see: "Past performance does not guarantee future results." Morningstar.com is a reputable mutual fund rating service, you can go to their site and see how they rate your funds.

[Thom]

Seth:

Put away as much as you can through an IRA (tax deferred check off) of some sort. I did it and didn't miss the 10 to 15 per cent. It has grown beyond my wildest belief.

A word of advice. Go with a conservative broker such as Edward Jones. They will diversify your investment and it will grow each year incremently. Remembe that time in the market always has worked....trying to time the market usually gets you burned. I have stuck it out during this recent drop and my broker bought from my plus side when others were selling. Wow what a strtegy.

The flim flam investment agencies that claim to make money fast usually make more for themselves than you. Unless you are knowledgeable and follow the market daily maybe even hourly you will eventually get burned trying to do it yourself or through irreputable independent brokers.

My investments have grown 8 to 15 percent yearly troughout the good and bad times even after the broker fees.

Smart move on your part. Starting early and sticking with it is the way to go.

[crappiefisherman]

But,,,,,,,,,,,,,,,,,,,,,,,,,,,,,If you plan on marrying, having children, buying a home in taney county missouri, remember one thing.Savings and investments are good, but live for the day, invest in your children, take them fishing, keep them occupied and in church.Your money that you would put aside will bring you more returns then you can even imagine.I do have investments but I could put more into if I didnt have what I have , I wouldnt trade my family for anything., well poss a nice buick.................a green one with fancy wheels

[gonefishin]

Seth: At your age you should really consider putting some money in a Roth. Taxes will not be cheaper when you are ready to retire.