Please help this clueless guy...

[jgrif08]

First post here, I'm hoping someone can simply point me in the right direction. My situation:
Im 25 years old, I make $34,000 a year workin' a pretty standard fourty hour a week job. I'm currently contributing 6% (the max my employer will match) of my paycheck to a 401k and plan on putting roughly $1000 into an IRA in '07.

I apologize in advance for this being such a general question but here goes: I'd like to start earning a little 'passive income'. I just don't even know the first thing about investing. Can anyone suggest some books for me to read? Websites (other than this one) for me to visit?

How much do I need to get started?

I really appreciate any thoughts whatsoever.

Again, sorry so general, I just don't really know where to start.

[Lou]

you could always look at a fixed income fund, like a muni bond fund or any bond fund, also, any money market would be good, for example hsbc is 5.05%paid each month

[TonyM]

While you are researching this, you might want to consider the tax implications in your calculations. You could for example figure your taxes from last year with a projected investment gain added in as though you had started investing last year. This will enable you to more accurately predict the risk/reward ratio.

[jgrif08]

While you are researching this, you might want to consider the tax implications in your calculations. You could for example figure your taxes from last year with a projected investment gain added in as though you had started investing last year. This will enable you to more accurately predict the risk/reward ratio.

While I completely grasp the jist of what you're saying, I wouldn't really know exactly how to do this. Could you possibly be more specific? Is the risk/reward ratio an 'exact' sort of calculation? or is it more a subjective calculation?

[jgrif08]

you could always look at a fixed income fund, like a muni bond fund or any bond fund, also, any money market would be good, for example hsbc is 5.05%paid each month

Something like that sounds good? What I'm really looking for is a starting point? eventually I want to 'make my money work for me'. I know this is much easier said then done. But I'm an intelligent guy, and a very quick learner. I'm willing to do my homework but I just need somewhere to start

[bahroor]

Hi, and welcome!!

this really isn't O/T but hopefully many see it and help.
you can also scan the main forum for similar topics.
I've put together a list here to help you out... GL and welcome aboard.

http://www.cramersmadmoney.com/showthread.php?t=8044
http://www.cramersmadmoney.com/showthread.php?t=8093
http://www.cramersmadmoney.com/showthread.php?t=8016
http://www.cramersmadmoney.com/showthread.php?t=7225
http://www.cramersmadmoney.com/showthread.php?t=7888
http://www.cramersmadmoney.com/showthread.php?t=7879
http://www.cramersmadmoney.com/showthread.php?t=7657

[TonyM]

While I completely grasp the jist of what you're saying, I wouldn't really know exactly how to do this. Could you possibly be more specific? Is the risk/reward ratio an 'exact' sort of calculation? or is it more a subjective calculation?

Let's say you invest in stock xyz and you gain x% in investment income and dividends. When you enter this into the tax program you can see how much you got to keep, and see if the amount of money put at risk was worth the net gain. I wouldn't call it an exact calculation, it is imo subjective to each individual. I'm not sure, so don't take this as anything other than something to investigate, but I believe you are at an income level bordering on being considered quite well off by Democratic standards of taxation, meaning that any further income gains might increase taxes exponentially, so a higher investment yield may be necessary to offset this.

[jgrif08]

Hi, and welcome!!

this really isn't O/T but hopefully many see it and help.
you can also scan the main forum for similar topics.
I've put together a list here to help you out... GL and welcome aboard.

http://www.cramersmadmoney.com/showthread.php?t=8044
http://www.cramersmadmoney.com/showthread.php?t=8093
http://www.cramersmadmoney.com/showthread.php?t=8016
http://www.cramersmadmoney.com/showthread.php?t=7225
http://www.cramersmadmoney.com/showthread.php?t=7888
http://www.cramersmadmoney.com/showthread.php?t=7879
http://www.cramersmadmoney.com/showthread.php?t=7657

VERY much appreciated!

[Lou]

i dont think you should worry to much about taxes issues right now if your just getting started. do you have a traditional or roth ira? i prefer roth over traditional. honestly just go online to hsbc or ing and sign up. put $100 bucks in there and get started. im getting something like $400 per month from my money market

[jgrif08]

i dont think you should worry to much about taxes issues right now if your just getting started. do you have a traditional or roth ira? i prefer roth over traditional. honestly just go online to hsbc or ing and sign up. put $100 bucks in there and get started. im getting something like $400 per month from my money market

I have a Roth IRA. I'm primarily focused on my 401k right now since my employer matches. So as far as long term, I'm putting more into the 401k.

I looked at an HSBC money market. Do I have to have a checking account with them as well to get that? Not a huge deal if I do I suppose. Just wondering.

[Lou]

My money market is with ING. A lower, my bad for not switching over. But, I deposit funds into my US Bank checking and then online to transfer funds over. It usually takes two days for funds to be taken out of my US Bank account. Vice versa to withdrawls to hit into my US account. I'd think checking or savings with any local bank works. I do believe it takes about a week or so for the whole process to take place once you sign up. For example: ING deposited like two cents into my account to make sure it was the correct info.

[optimus25]

I have a Roth IRA. I'm primarily focused on my 401k right now since my employer matches. So as far as long term, I'm putting more into the 401k.

I looked at an HSBC money market. Do I have to have a checking account with them as well to get that? Not a huge deal if I do I suppose. Just wondering.

I didn't read this post before I replied to the other one on the main section. Its great that you have a Roth IRA...max it out. At your age and annual income, you won't get the full benefit of the tax deferred status of a 401K. Its good that you put in as much as they'll match...don't put in a penny more. You'll have an opportunity to take advantage of your 401K once you're at a higher tax bracket. For now, max out the Roth as it is a more flexible account.

If you're a do-it-yourself investor make an investment in a magazine like Kiplingers or Business Week. I get a lot of specific investment ideas from those magazines. Its a little expensive but I also have a subscription to Investors Business Daily. Kiplingers will have a lot of great mutual fund/stock ideas.

In your particular case, invest in a mutual fund for now until you have a good foundation.

[optimus25]

As it looks now, given everything stays the same, and you max out the IRA, you'll have this in your accounts after three years (not factoring in gains/losses):

Roth IRA - $14,000
401K - $12,240

That's a good chunk of change right?