I want to invest my money but I don’t know where to. Can you guys and gals give me some suggestions. I don’t want to just leave it in my bank account not enough interest. I want some serious bang for my buck. What should I do?
How much do you have (the nearest order of magnitude is enough info)? How much of it are you willing to lose?
Since you’re still in your 20s or 30s, investment counselors usually suggest most of your money should be invested in the stock market. You’re looking to buy market index stocks. Over five years you should be getting a good return on your investment.
I agree with twocs.
The stockmarket, but not any stockmarket, and not all eggs in one basket.
Try investment funds that spread their risks around, say over different countries and/or different types of companies. Also consider over what kind of period you want to invest. Countries’s economies can go from boom to bust - and vice-versa - within a very short period.
Before the Indian election this year, I bought an India stockmarket fund. When Sonia Gandhi’s Congress Party unexpectedly won the election, my fund went down the tubes, but I’m still confident in India’s economy in the long term, so I’m staying in.
I’ve also considered investing money in “projects” - read restaurants, pubs, stores, websites - but that is very dangerous. Just look at new restaurants in Taipei, and then go back one year after. Many of them will have vanished.
Well, but the other consideration is to keep enough cash around to live on, and to have in case of an emergency. You don’t want to get sick, lose your job, and have to start dumping stocks.
I am not a professional and the following represents my personal opinion only; any investment is at your own risk.
- Never put more money into risky investments (and here I would include stocks) than you can afford to loose.
- Never put all the money into one risky investment, i.e. split it
- Stay away from investment advisers that “hunt” expatriates
- Secure some money into non-risky investments, preferrably with guaranteed returns
Stocks and the like can bring greater return but are very volatile and put the entire investment at risk; they might suit as a long time investment though.
I prefer investmenting in safe® investments like fixed deposits, CDs, building loans (as savings, not as loan) and similar.
Of course the returns are lower but mostly guaranteed and there is no risk to the capital (unless the e.g. bank itself goes broke).
Most into Vanguard’s S&P 500 index fund, if you don’t need the monies for the next 25 years. You can also buy S&P 500 index tracking shares. Remember, that S&P 500 has on average returned 11% since second world war. By spreading your participiation over quite a few years, odds are that you will have a realistic chance to get at least some of that performance, which will beat all other investments by a rather wide margin.
It’s an index fund, so there are no expensive and underperforming fund managers to pay. Therefore, you are looking at very low fees to the management company, if you go with the index fund.
Managed funds are a waste of your money, as most underferform relatively and quite a few in absolute terms.
Also, a few into bonds, but pick a good fixed income fund concentrating on shorter US govt bonds, and one which is good at laddering (Getting outof older series and into new in a way, so the interest income is maximised). They don’t return much, but your money are safe.
Over time (starting from some 15-20 years before you retire), you should increase the part of your cash going into the bonds. Some 5-10 years before you retire, you should start to sell the index fund and increase your bond holdings, so at least 3/4 of your monies are in bonds by the time you move to Florida and start honing your golf skills.
I live in Taichung City and would like to know if there are any good investment advisers here.
Also is it difficult to invest in stocks in other countries? I am interested in purchasing some Canadian and European stocks, would I be able to do this with an investment adviser here in Taichung City?
Like Mr. Her said, index funds are a good place to start if you don’t know much about playing stocks and might not be up to the challenge of tracking a bunch of stocks individually. Over a reasonable period of time (10-25 years), your investment will likely appreciate considerably.
The eggs in one basket rule also applies, as mentioned: diversify, diversify, diversify!
Good luck,
CK
Hmmm, if you buy index funds in a broad index (S&P 500), you are diversifying over the whole US economy, which is better than you can do on your own. long term stocks outperform any other widely available investment, which is why I personally would not worry about having bonds in my investment portfolio for the next decade. I might even put a bit into a Nasdaq index fund, as its long term returns will be OK as well. (Unless you bought into it in march 2000, that is)
There are also other reasons to that I don’t like investing in individual stocks. It’s simply because keeping track of 10 stocks is a full time job, if you are to understand them well enough to make informed decisions.
It is not difficult to buy/trade in other countries. There are a number of on-line banks and brokerage firms that will give you access to the markets you mentioned and more. Look up HSBC and Toronto Dominion/Banque General de Luxembourg for two examples of such accounts. They’re as easy to open as filling out the forms and sending them a cheque.
Good luck,
CK
what is the amount you should keep around it case of emergencies? MaPoSquid
I would keep 6-12 months of living costs in easily accessible form. It gives you time to get another income stream going, and you will have time to make a more orderly withdrawal of your invested funds, if any.
I agree with Mr. He that an index fund is a good idea and other funds that try harder to pick winners are more likely to end up losing money and costing you more in administrative costs.
Mr. He recommends a VAnguard S&P 500 index fund. Coincidentally, I’ve had Vanguard Index Growth Fund (VIGRX) for a few years and it performed very well until 2000, when virtually everything lost money for a couple of years. I think it’ll be good over the long-term, but Vanguard has lots of funds to choose from:
Here’s what I own:
And here’s Mr. He’s choice:
Well in that case I am about 12 months shy of enough for emergency funds…so I guess I don’t need to read any more post on this thread. 
Be back in about two years!!! 
Instead of an “index fund”, you could also get an ETF. Some advantages and disadvantages are mentioned here:
biz.yahoo.com/pfg/e09etf/
SPY is the ETF for the S&P 500; QQQ is the ETF for the Nas; DIA is for the Dow-Jones Industrial Average. There’s also EWT for Taiwan, and EWJ for Japan’s Nikkei.
Yahoo has a fairly large section devoted to them:
finance.yahoo.com/etf
Well, that’s easier still.
And the author is right when stating that managed mutual funds should be avoided.
So what would you guys rekon if I had USD10,000 to invest, long term? Index fund?
Yup, and then sit on that investment, add to it until you retire. Buying US ETF’s is also a good idea, as Maposquid just mentioned.
Since I am pretty stupid in matters that go beyond a fixed deposit - can someone explain me the difference in the two index funds mentioned? Is it possible to say if one is better than the other?
Thanks,
Rascal