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Old Nov 30, 2012, 08:00 AM   #1
Hold
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Just got an unexpected income of 2,500$ - How to invest it?

I just got an unexpected income of 2,500$. I don't actually have anything that needs to be payed off and would like to invest the cash somehow. I was thinking of the stock market or maybe some other idea? I have a very small knowledge of the stock market but I would be happy to learn. Keep in mind that I am willing to take some risks. What could I realistically make out of it in say 2-4 years?
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Old Nov 30, 2012, 08:17 AM   #2
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I just got an unexpected income of 2,500$. I don't actually have anything that needs to be payed off and would like to invest the cash somehow. I was thinking of the stock market or maybe some other idea? I have a very small knowledge of the stock market but I would be happy to learn. Keep in mind that I am willing to take some risks. What could I realistically make out of it in say 2-4 years?
What do you mean doesn't need to be paid off? If you have debt it would be best to clear it up first. If you're paying 10% interest on a CC or other loan and pulling 10% return on an investment (assuming the values are equal) then you're basically treading water. Pay the bills first.
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Old Nov 30, 2012, 08:23 AM   #3
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The loan for my home has been paid off already and my car was paid for upfront. I hardly use my credit card and don't have any major bills that need to be paid.
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Old Nov 30, 2012, 08:29 AM   #4
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While I don't have any money invested in stock, I have some money in a CD that gains some interest throughout the years. Technically, it's a "rainy day fund" or "emergency fund", something like that.
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Old Nov 30, 2012, 08:43 AM   #5
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Don't put in a CD, you just lose money that way. Instead look at short term bonds.
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Old Nov 30, 2012, 09:10 AM   #6
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Don't put in a CD, you just lose money that way. Instead look at short term bonds.
How do you lose money from a CD? I never heard of losing money from investing in a CD.
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Old Nov 30, 2012, 10:05 AM   #7
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If it's $2500 and you have savings for a rainy day, I would invest in some high risk stock. High risks, high rewards.

If you invest in something safe and you get a 5-10% return after a year, inflation and taxes will kill the return already.
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Old Nov 30, 2012, 10:20 AM   #8
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I would invest in SPY.
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Old Nov 30, 2012, 10:23 AM   #9
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If you have taxable income, Roth IRA with Vanguard.
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Old Nov 30, 2012, 10:49 AM   #10
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If it's $2500 and you have savings for a rainy day, I would invest in some high risk stock. High risks, high rewards.

If you invest in something safe and you get a 5-10% return after a year, inflation and taxes will kill the return already.
I have my rainy day allowance. I would really like to get into the stock market with this lump of cash and learn.
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Old Nov 30, 2012, 10:54 AM   #11
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How do you lose money from a CD? I never heard of losing money from investing in a CD.
Well for two reasons:

1) There are far better investment opportunities
2) Inflation
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Old Nov 30, 2012, 11:19 AM   #12
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How do you lose money from a CD? I never heard of losing money from investing in a CD.
According to bankrate.com, the best interest rate for a CD of 3 years is 1.340% compounded daily. At the end of 3 years that $2,500 will turn into a whopping... $2,603. CD's are pretty junky. You could make that if every day you asked a random person for $0.10. Of course it's completely safe.

A high risk investment is probably your best bet, but high risk is high risk, not high gain. If you just want to invest to see how the stock market works, I'm sure there are programs out there to simulate what the investment would do. Granted you'll kick yourself if you make it big virtually but conversely you'll be quite happy if you only lose virtual currency too!

You could consider investing it into your house. Some insurance companies offer reduced rates for making upgrades to your home. Or even upgrades that will reduce your heating/cooling bill could potentially pay off for you long term. It could even increase your resale value should you decide to move at some point.

Find a new hobby or take a vacation you've always wanted. $2,500 will get you pretty much anywhere in the world I think. Pull some stuff off your bucket list!

Or make 100 MacRumors members contributors to the site for a year! I'm sure arn won't mind.
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Old Nov 30, 2012, 11:37 AM   #13
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You might consider an ETF. But a word of caution (in general), put it in and don't look at it for a while. As a newbie you'll likely be elated with each marginal gain and devastated with each marginal loss. It is best for your mental health to "set it and forget it." Also, you need to be comfortable with the idea of losing it all.
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Old Nov 30, 2012, 01:36 PM   #14
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I just got an unexpected income of 2,500$. I don't actually have anything that needs to be payed off and would like to invest the cash somehow. I was thinking of the stock market or maybe some other idea? I have a very small knowledge of the stock market but I would be happy to learn. Keep in mind that I am willing to take some risks. What could I realistically make out of it in say 2-4 years?
Taking a longer term view, if you don't have a retirement fund or pension, you could open an IRA.That can be a stock market investment for you. But, you won't be able to get at the money without penalty until you're about 60.
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Old Nov 30, 2012, 03:17 PM   #15
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Taking a longer term view, if you don't have a retirement fund or pension, you could open an IRA.That can be a stock market investment for you. But, you won't be able to get at the money without penalty until you're about 60.
That's why I said Roth IRA...contributions can be taken out tax free.
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Old Nov 30, 2012, 03:33 PM   #16
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with the current Fed situation, and the commitment to low interest rates, i like REITs. it's not a long term 'invest and forget' solution. you need to be in the 'watch and listen' mode for when things flip.

lots of options. i like 'ARR' as a company and for fundementals, and for the 15% return. with your amount, you would see around $35 a month in dividends as of now. REITs will suffer when the interest rate goes up, but the Fed is saying low/safe until 2015 as of now.

other option is something like APPL, you could buy 4 shares as of now and hope for a big holiday season bump. buy low, sell high. downside is the tax rate in the next year could be a problem.

bottom line i guess is buy what you know and use.

as always, past market performance is no guarantee and all that. best of luck.
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Old Nov 30, 2012, 03:59 PM   #17
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with the current Fed situation, and the commitment to low interest rates, i like REITs. it's not a long term 'invest and forget' solution. you need to be in the 'watch and listen' mode for when things flip.

lots of options. i like 'ARR' as a company and for fundementals, and for the 15% return. with your amount, you would see around $35 a month in dividends as of now. REITs will suffer when the interest rate goes up, but the Fed is saying low/safe until 2015 as of now.

other option is something like APPL, you could buy 4 shares as of now and hope for a big holiday season bump. buy low, sell high. downside is the tax rate in the next year could be a problem.

bottom line i guess is buy what you know and use.

as always, past market performance is no guarantee and all that. best of luck.
With a $10 commission you probably would barely make money, if at all.
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Old Nov 30, 2012, 04:26 PM   #18
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How do you lose money from a CD? I never heard of losing money from investing in a CD.
Scenario 1: You buy a widget that costs exactly $2500 today. You have no money but you own the widget.

Scenario 2: You invest the $2500 in a CD. In a year the CD is worth $2603 if you can get 1.34% return. You may lose part of that $103 increase to income taxes. However, inflation has pushed the cost of the widget to $2650 (for example - different things are affected by inflation differently).

You may think you have more money now, but you can't buy the widget anymore. That is the essence of how you "lose" money with some investments.

Of course, if the widget you want is going down in price over time.... then investing in the CD is not such a bad idea. In a year you get the widget, plus now you have some cash left over.

Economics is complicated.
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Old Nov 30, 2012, 05:02 PM   #19
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With a $10 commission you probably would barely make money, if at all.
at the close price of yesterday, ARR was 6.96. divided by $2490 is 357 shares. 357 times the current monthly dividend rate of $.10 is $35.70. so you earn $25ish the first month, and then $35ish plus DRIP for every following month as long as the fed keeps the interest rate low. even if you put the dividend payment in savings instead, based on the low interest through 2015, that's 24 months or $840 at the current level. math, it's not just a good idea, it's the law.

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...Economics is complicated.
quote for truth. even spelled it out and everything because it's for real.
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Last edited by 4JNA; Nov 30, 2012 at 05:09 PM. Reason: damn english language and all it's tricky rules.
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Old Nov 30, 2012, 05:05 PM   #20
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you said you're ok with high-risk... there's no higher risk than taking stock advice from anonymous people on MR!

High-dollar stocks like AAPL would have to skyrocket for you to double your money. A low priced stock like GRPN ($4 today) only has to gain a few points for you to double your money (it was over $11 six months ago, and can certainly recover from the fear-induced plunge it recently took).

I'd definitely gamble someone else's money on Groupon.
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Old Nov 30, 2012, 05:19 PM   #21
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at the close price of yesterday, ARR was 6.96. divided by $2490 is 357 shares. 357 times the current monthly dividend rate of $.10 is $35.70. so you earn $25ish the first month, and then $35ish plus DRIP for every following month as long as the fed keeps the interest rate low. even if you put the dividend payment in savings instead, based on the low interest through 2015, that's 24 months or $840 at the current level. math, it's not just a good idea, it's the law.
4 shares of Apple won't make you any money

I thought I typed it, but I guess that's the beer talking.

lol @ pathetic attempt at trying to be condescending without asking for a clarification or something. Are you having a bad day or something?
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Old Nov 30, 2012, 05:42 PM   #22
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...I guess that's the beer talking.
so it would seem. great day here, making money and everything.

so... AAPL is up $175.88 p/share as of now for the year (1/3-11/30). *4 would be $700ish. seems like a decent return to me. still prefer the less risk trade of a REIT but i'm old and stuff.

not about you dude, only interested in the OP and original question. all the best.
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Old Nov 30, 2012, 08:03 PM   #23
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If you have taxable income, Roth IRA with Vanguard.
ding ding ding.

best investment at the best firm.
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Old Dec 1, 2012, 04:54 PM   #24
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That's why I said Roth IRA...contributions can be taken out tax free.
Ah, I missed your first post I guess. Tax free w/d b/c contributions were already taxed, no? Still a penalty if taken out before you reach a certain age, I think.
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