What's the best investment idea for a young guy?

[Eulogistics]

Hey guys, just started to get interested in having money that makes money and I found this forum. Got one of those "Don't know nothing, what do I do?" threads.

I'm 19 in the Army. I save 500$ a month which I throw into a low-interest savings account (I'm a single guy in the Army. Lots of discretionary income.) the only debt that I have is a car loan, roughly 10k$. I know I need to start my retirement account early if I don't want to have to put away like 1k a month into it later in life. I also know that soon would probably be a good time to invest in stocks since prices are down (not to say a little patience won't see them go lower...).

Which one of those is priority right now? Obviously the stocks thing is just dabbling and so completely unimportant. I read through "Investing for Dummies" though, and the author talks about how paying down debts is a very good investment (since you're getting rid of the negative interest rate drain on the money owed). He goes on to say that paying off debt is probably the best investment move somebody could make.

Which do you guys think? Should I use my play money to add to my car payments and get rid of the drag on my credit report? Or should I keep that account open a little longer but simultaneously start adding into my IRA? I have some confusion about what I want to do with my IRA, but that's another topic.

[The Zoo]

Does the Army provide anyone to give financial advice? A person, unless they're very well educated in the space, should not dabble in stocks. Index and mutual funds are generally the best way to go. There are so many out there though that it's very difficult to choose what is right for you. Plus what you do depends on so many variables, are you going to be in the Army for life? For only 4 years? Are you going to college afterwards? Getting a job? Will you be able to draw a pension for your service? How much? What you do with your money depends so much on who you are and what your goals are that I would say it's impossible for anyone to generalize. If the Army doesn't provide something like this, find someone recommended by friends or your superior officers - the small fee you pay for a financial plan will be worth it in the end.

[Retire Blogger]

Eulogistics:
Congratulations - you are going to retire young. Every 19 year old should be as smart as you, don't worry if you don't understand the confusing world of investing, you are doing the right thing by parking your money in a money market account while you learn.

What you are talking about, investing in stocks to take advantage of a downturn, is called market timing. I would avoid market timing, and instead think Dollar Cost Averaging, check out wikipedia to learn more.

Here is an article on how college graduates, if they maintain their frugal college habits after graduation and invest properly, can retire by the age of 35. <a href="http://www.iplanretirement.com/retirementblog/graduate-retire-by-35/">Retire by 35</a>

Thank you for your service, stay safe, and retire early!

[jmarti22]

I am 21 and just graduated college and was also looking for advice on where to park my money. I have a savings account, and a couple of cd's and was just looking into the world of stock. I am also thinking about opening a Roth IRA but don't know whether that is a sound option considering the economy is not doing so well. Any advice would be greatly appreciated!

[Retire Blogger]

jmarti22:
Same applies to you, park your savings in a money market account, until you learn more about investing. Take a look at Graduate and Retire by 35, to see how maintaining your frugal college lifestyle after you graduate, will allow you to retire real early!

Keep this in mind if you plan to retire early, any money you place in tax deferred retirement accounts will be penalized heavily, if you take it out before the eligible age.

Quick advice about investing after college.

1.) Create an emergency fund, in an FDIC insured account or money market account, equal to 6 months of your living expenses.

2.) Pay off high interest loans and credit cards before you start investing.

3.) Study investment strategies and options before you begin investing.

Relax, you are doing a great job, you will retire young as well.

[Eulogistics]

Originally Posted by The Zoo

Does the Army provide anyone to give financial advice? A person, unless they're very well educated in the space, should not dabble in stocks. Index and mutual funds are generally the best way to go. There are so many out there though that it's very difficult to choose what is right for you. Plus what you do depends on so many variables, are you going to be in the Army for life? For only 4 years? Are you going to college afterwards? Getting a job? Will you be able to draw a pension for your service? How much? What you do with your money depends so much on who you are and what your goals are that I would say it's impossible for anyone to generalize. If the Army doesn't provide something like this, find someone recommended by friends or your superior officers - the small fee you pay for a financial plan will be worth it in the end.

Good call, Zoo; I forgot that we probably DO have someone who does it.

Please allow me to clarify "dabble". What I meant to say was: " In this situation right now, the stocks thing is something I want to do, while the debt and/or retirement fund is something I NEED to do, so it isn't important to focus on right now".

Retire Blogger- thanks for the response. Again, my language was kind of ambiguous (too much time spent in some of the shadier forums on the internet, bad habit), so allow me to explain: I know enough about to stocks that I am certain I have no idea what I'm looking for in an individual stock. After I throw my necessary money into a mutual fund or my retirement account, maybe I could hunt down a knowledgeable friend or something to pick some stocks for fun or find a broker.

Your second post answered my initial question though; I'll start putting the balance of my money towards my car payment.

Thanks for the answers guys; I think I'll stick around, finance is slightly more interesting than i thought it was (I'm a computer geek).

[HGI08]

Eulogistics - You are exactly right about paying off debts and starting to save for retirement before anything. When you want to start investing into stocks I would start out safe with something like ETFs and then slowly work your way into it so when you are making higher risk investments you can be more comfortable about your decisions… Just a thought.

-HGI
www.feedingwealth.com

[BizBlogged]

I would open an account with share builder, they are very cheap and you do not have to buy tons of stocks. They have good investment tools also. In my opinion, the most important thing is to be consistant and make sure you are putting something away every week or month. It becomes a good habit and the money starts to pile up.

[retiredebtfree01]

Thanks for making the effort and throwing your ideas out there, but you were way too general in your comments and left yourself way open for huge critisizm.

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[SouthShoreGirl]

I'm not really an investment/stock/bond kinda person...........neither is my husband. We put our savings in a money market account though. This works for us.