a friend recently asked me for some investment advice. i replied to her with the below. I'm copying it here so that I have a copy. plus, some of these links are pretty good.
from what limited stuff I know, there are a few pretty stable things you invest in: bonds, mutual funds, and index funds. bonds are probably too safe (maybe 6%), index funds are in the middle (10%), and mutual funds should make the most (12%). they're all considered very safe investments. obviously, the more risk, the more reward.
I don't think you can individually invest in mutual funds? you may need to hire an advisor for mutual funds. I have mutual funds thru my financial advisor (whom I pay a fee to every year).
there are ETFs which are kind of like mutual funds, but can be sold like stocks. I don't remember much about them anymore because I decided that index funds had a better return for the risk.
index funds are next on my "to invest in" list. I was looking at using the Vanguard app when I do. index funds are called a "set and forget" investment cause you're unlikely to want to do anything with the money for a few years. last I checked, there wasn't a fee when using the Vanguard app. I've had a lot of friends (who understand my hesitancy of risk) recommend index funds over any other kind of market investing.
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I invested in one share and it's gone nothing but up. slowly but surely. I'm at about an 18% return right now which is AMAZING. it's the "parent company of S&P Global Ratings, S&P Global Market Intelligence, and S&P Global Platts, CRISIL, and is the majority owner of the S&P Dow Jones Indices joint venture." so it's basically buying stocks in the stock market company itself. of course, there are capitol gains taxes (I think 15% right now) which kick in at one year of holding. and, of course, stocks are inherently risky. when I put my $1000 I told myself that I was not to think of it as a money making investment, but as an educational investment, you know?
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the safest things you can do at a bank: high yield savings account, CD accounts, and signing bonuses when opening a bank account.
savings accounts right now are about a 0.3% interest. a high yield savings account is like the same thing, but with almost double the interest: a lot of these are online only. and a few purport to be green (aspiration is a big one)
The 6 Best High-yield Savings Accounts of 2021 | Money
with a CD you can get up to double that BUT you have to lock in your money for a set period. let's say you choose a 1 year CD. at the end of the year they give you your let's say 0.7% return. BUT if you withdraw the money before the one year you lose all in the interest, and sometimes there's an additional penalty. generally, the longer the CD, the better the return. but not always: CD account comparison website:
12 Best CD Rates for September 2021 - NerdWallet
something to remember about interest tho, is that the govt kind of sets the rates. so right now interest rates are pretty low, which means that if you decide to put your money in a 5-year CD, you're risking that the interest rates won't get higher (and they probably will).
signing bonuses offer WAY MORE money than interest percentages, plus you also earn interest! usually there are a couple caveats: 1. it has to be "new" money (if you already have an account at Chase you can't get a signing bonus at Chase), and 2. you need to keep the money in the account for some period. and generally you may need a higher minimum.
9 Best Bank Bonuses and Promotions of September 2021 - NerdWallet
the MORAL downside of this is that generally the biggest banks offer the best signing bonuses, and the biggest banks invest in shit like petro-chemical, big pharma, arms, etc.
all you really need is to set up a direct deposit and they'll just give you $225. there's not even a minimum opening amount.
BUT there is a $12 monthly fee UNLESS you set up a direct deposit of over $500, maintain $1500 in that account at all times, or some other exception I didn't totally understand.
so it's like your regular bank, but you get $225 for setting up direct deposit, which you might want if you got a new job anyway?
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what's best: divvy up your assets. invest a little here, a little there. do the minimum on a CD account with a great interest rate (or even a couple CD accounts with different terms), get a nice signing bonus with the lowest minimum you can, AND put the rest into a high interest savings account. once you've set all that up, look into investing the rest into bonds or index funds. diversifying is safe. plus, you won't be as affected by the ups and downs of the market.
