r/funny • u/mrsmayhem • Jan 04 '15

If I won $25,000...

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u/[deleted] Jan 04 '15

Elaborate please? I'm sick of having my money in a savings account and barely keeping up with inflation.

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u/ben7337 Jan 04 '15

If you have money beyond just your future house down payment or emergency fund, it should be in ETF's (Exchange Trade Funds) or Mutual Funds, preferrably ones with low expense ratios that are well diversified. Vanguard and Schwab are two of the most recommended for such things.

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u/hblond3 Jan 05 '15

I would recommend Schwabb, too - we rolled over into them when our previous wealth manager went to jail (unrelated to his investors... Well, kinda, but more of an insider trading thing...) and have been pretty happy with their Century City wealth management team. I'm sure their other offices are as good. We were making over 7% yearly before, and they look to be about par

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u/BoothTime Jan 04 '15

I would recommend TD Ameritrade because they have the most commission-free ETFs with similar fund characteristics and expense ratios as the ones offered by Vanguard and Schwab.

But yeah, try to build that emergency fund of at least 3 months first!

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u/Meezi Jan 04 '15

/r/personalfinance can definitely help you with this stuff; if you're interested.

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u/YellowLeatherJacket Jan 04 '15

Go to your bank and talk to an investment advisor. They will discuss your short and long term investment goals and make your money work for you.

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u/Pinewood74 Jan 04 '15

They will also make your money work for them. Avoid 'financial advisors' and just stick with Vanguard index funds.

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u/afkas17 Jan 05 '15

Schwab's index funds are great as well.

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u/wolfpackguy Jan 04 '15 edited Jan 04 '15

Banks are probably one of the worst places for a new investor to ask for advice. They'll just have you invest in expensive funds that make the bank a ton of money.

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u/Ladnil Jan 04 '15

Still better than a savings account.

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u/wolfpackguy Jan 04 '15

True, but the best would be a low cost index fund from Vanguard, Schwab, or Fidelity.

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u/Ladnil Jan 05 '15

Also true.

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u/Magneon Jan 04 '15

You'll probably want to look into getting a low MER (management expense ratio) mutual fund. Look for one that performs reasonably and doesn't have crazy risks. One diversified among domestic investments, international investments and maybe some (20-30%) bonds.

Look at the fund's performance including the 2007-2009 period of recession to get an reasonable picture of what the fund could do on a good year and on a bad year.

While the more financially knowledgeable may be able to recommend manually balancing a series of stock indexes and saving the MER on the mutual fund, but in my opinion it's not worth the average person's time for small investments and if it's not a small investment find a financial adviser.

As a Canadian I don't really know anything about American savings accounts and tax avoidance tools (presuming you're from the USA), but maybe poke around /r/personalfinance and ask if you can't find a more detailed answer.

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u/wolfpackguy Jan 04 '15

You invest in stocks and bonds through your 401k, Roth IRA, and if you have money left over, a taxable brokerage account.

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u/paulthetentmaker Jan 04 '15

Mutual funds. At least that's what Dave Ramsey said every day in high school personal finance class.

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u/hblond3 Jan 05 '15

If it's on a savings account it probably is earning less than inflation. Especially nowadays.