Newbie with $1000 - where do I start and what should I do?
I'm 29 and just starting to invest in the stock market.
I've only got $1,000 to start and have been looking at ETF's.
Frankly at this stage I'm really just trying to figure things out and decide what type of investment strategy to start with.
Should I be more conservative and look at dividend paying blue chips (and reinvest) - ie. a long term "safe" strategy or should I "swing for the fences" and be more aggressive?
Obviously with just $1000, I don't have much room to play with.
Any thoughts, ideas, suggestions and advice is greatly appreciated.
Thanks everyone.
Answers
2183 points
ChaosNantuko answered one year ago …
I would papertrade with a couple months. Then you can try being aggressive, being conservative, etc. I would register at www.investopedia.com for their stock market simulator, and papertrade there. You can open up multiple simulation portfolio's, which allows you to test different ways of investing seperate from eachother, and then you'll know which your better at.
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4085 points
EthanR answered one year ago …
Right now with only $1000, I would be very careful. The current market is brutal, and you could lose a good bit of that money quickly if you are not prudent. One question that I have is, do you have any debts? If so, I would pay them off with that $1000, rather than investing in this market. Your return on debt paid (the interest you save) is bound to be greater than what you can achieve in the market right now. Second question: Do you have an emergency fund of at least $1000, and even better would be 3-6 months of expenses? If not, I would simply put the $1000 into a money market or three month CD.
I know this advice may sound conservative, but those are two things that people should have before they invest any money at all, and particularly at a time when the stock market is incredibly rough, and the economy is on shaky ground.
Assuming that you have done those two things already, then I would dollar cost average that $1000 into the Vanguard 500 fund, which emulates the S&P 500. By dollar cost average, I mean, put $200 a month into the fund over a 5 month period of time. And if you don't need this money any time soon, you are better off setting up a ROTH IRA and putting the money into it, so your money will grow tax free over time. Good luck!
904 points
jillybeansisme answered one year ago …
There's something to be said for being conservative; however, at your age, you are a VERY LONG LONG TERM investor. The market is extremely volatile, yes, but if you have the $1000 to invest (assuming the emergency fund and debts are taken care of), I would be more apt to suggest diversifying into several ETFs and/or dividend paying stocks. Sharebuilder, now owned by ING, allows market trades of as little as one share (remember, there are still commissions that will eat your profits if you trade alot). Personally, I don't reinvest my dividends into the same stock. I have them go into the "cash" so I can buy other investments.
You must have an exit strategy of when you will sell whatever you buy. Not everything goes up -- so decide at what percentage of loss you will sell. If your investment does go up, at what point will you take profits? Remember, paper profits don't put food on the table!
Some funds require you remain in them or incur fees. Make sure you know what your costs will be. Read -- many bokerage firms offer research assistance.
$1,000 is a start, but remember Rome wasn't built in a day either. You have to start somewhere! And at least you are starting! Good for you!
699 points
7million7years answered one year ago …
I agree with everything that Ethan says ... EXCEPT the dollar-cost-averaging bit. Decide where you want to put your money (debt reduction; emergency fund; broad-based Index Fund) then ACT ... put it in ... all in ... now.
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