I've never invested before: where should I start with $3,000?
I make almost $90,000 a year and I am 30 years old. I want to invest $3,000 into various funds, but I don't know where to start. I don't mind some risk.
If you are starting with amounts as small as $3,000, you are better off buying index funds. Split the money between large, mid and small cap indices. I am sure the other responders will give you lots of ideas. Once you have a decent nest egg you can build a portfolio of individual stocks. Don't try to trade, or time the market. Just invest constantly and steadily regardless of market conditions.
I am adding a response because the savings rate is so low in this country that I hope I can do my part to improve it by repeating over and over on Investopedia that you've got to put money away. My suggestion to you is to "pay yourself" $1,000 per month. Deposit the money into a brokerage account at the same time you pay your rent, your utilities, etc. Do this in addition to your 401K deposits, if you are making them. (I hope you are.) If you are 30 and have never invested you are late to the game and need to catch up. You need liquid investments of 20 times your living needs by the time you retire. It's sooner than you think. Good luck.
There are many options for you. Here are a few items I would consider if I were in your position. I would want the following:
1. Low cost
The key with investing is starting and staying consistent. Nice work on getting started. Make a goal for yourself each year to save, and grow your investments. Build a diversified investment portfolio. Don’t take too much risk, that you chance losing it all.
Daren Blonski, CFP®
707 938 7414
This is an excellent question and congratulations on thinking about investing.
I think you should think about investing the funds in something that will give you instant diversification. In order to take advantage of diversification and low expenses, I ewould take a look at an Exchange Traded Fund (ETF). There are several out there that will accomplish this for you. Being that you are 30 and not adverse to risk, I would look for a more aggressive allocation. This will be a great place for you to get started.
In adition to exploring and investing this $3000, I would think about going down a planning path to see how you may be in a position to ramp up your savings and investments over time based upon your own fact and circumstance. This will allow you to begin to plan for your retirement and a work optional lifestyle.
Best of luck working through this process!
Thank you for asking the question and it is an important one. I would start with looking at ETF's, or exchange traded funds, which are based on the S&P 500, Dow Jones Industrial Average, and NASDAQ Indexes. They are cheaper alternatives to mutual funds and you get the returns on these indexes, which are hard to beat by specific funds. If you want specific funds, I would try the big fund families like Fidelity, T. Rowe Price, Vanguard, American Funds, or something from a large bank like JP Morgan, or Morgan Stanley. Maybe break the funds into three separate tranches of 1K each, and get some exposure to each of the three major indexes, or have on in an international index like the MSCI. I hope this helps answer your question.
Yale Bock, CFA
Y H & C Investments