BellaOnline Forums Money Investing Load the Basket or Diversify?

There are so many thoughts on how best to invest. Motley Fools believe you should buy into companies you normally do business with. Others recommend Mutual Funds as a "safer" way to stay balanced and diversified. Still others insist that some go into the stock market, some into real estate, and some into starting a business. Some love penny stocks. There are even programs that monitor the ups and downs and claim to be effective. It's enough to make you crazy!

I suppose investing in anything is better than not investing at all...if you were given, let's see...$25,000, how would you invest it? What's your style? How many different answers will I get? Or will everyone be too timid to give this a shot?

Stocks are the real bargain since the market has been on a downturn. I would stick with Dow Jones stocks that are at a low price right now.

What about Nasdaq, S&P, Nikkei, or other International stocks...Moscow, Qatar, or Chile for instance?

It's true that stocks are low, but it could take a while before the market turns around...and some will not make it.

When I volunteered for GeoCities they gave us all 10 free shares when they went public. That instantly turned into over $1,000. So I then used that (on etrade, which is where they gave it) to play with other stocks since I considered it "free money". I had a lot of fun just buying stocks I used.

When the market began to go down, I took it all out. I really thought about trying again when Google was going public but I just didn't want to take that risk with my money. My son is going to college and I need all my spare money to go towards that.

So right now I am going with as high yield savings accounts as I can get - they have some good ones online.

A few years ago, I attended a weekend seminar in Boston on investing in commercial real estate - apartment buildings. The folks who were featured started with nothing, and were highly successful. The main one joined forces with another guy and they borrowed all their investment money to get started. (How many people have the guts and faith in themselves to do that?)

The featured woman flipped houses. She was sick of feeling like her boss was taking advantage of her - (underpaying her, passing her by to promote the guys.) She started by buying the next-door neighbor's house (it was a dog, and a bargain), fixing it up, and making a profit. It was admirable.

The guy who ran the seminar claimed that it didn't matter how bad the real estate market was in some US cities...it was always booming somewhere. He sought out the areas that were about to boom.

I definitely agree that making homes nice for people is always going to be a good thing to do if you have the energy to do it. If you start with a run down home in an area - and make it a better home - it makes sense that it will sell for more, whatever that area's rates are.

A real specific answer would of course depend on your financial goals,risk tolerance,etc. In general,you should always be diversified and always have some 'safe' money along with the riskier stuff. I would stick with equities,but unless you're going to follow the markets on a weekly basis(only 1/2 hr a week is plenty)I would not buy individual stocks. If you do have time every week,then you could go with individual stocks. In many cases,I would just stick with mutual funds and ETFs(they are similar to mutual funds but trade on the exchange like a stock). And please make sure you don't make the mistake many people make--with all their eggs in 1 basket-the US. Most investors should have strong exposure to foreign markets and also to the commodity markets through ETFs. When I hear people complain about the rising prices of fuel and food,I tell them-hey,make the money back by investing in the stuff that is going up!

ETF's? I am not familiar with them. Do you mean commodities? Like pork bellies?

I strongly believe in foreign markets, but many people think they're too risky...and they can be, I suppose. What foreign markets do you see as on the cutting edge?

As for the fuel market, don't you think it's nearly at its saturation point? Philadelphia is already investing in electric buses, and many manufacturers are designing more fuel efficient cars - electric cars, ones that run on biodiesel. And what do you think of investing in corn or sorghum for biodiesel?

Hi Carolyn!
I will hit your points one at a time.
1) ETFs are a newer product.Briefly,most of them own hundreds of stocks just like mutual funds do and like mutual funds they come in all sorts of varities.They are intended for smaller investors like you & me.Unlike many mutual funds where you may need $1000 or more,ETFs trade like a stock so you could buy say 1 share at $20 or $50 and you would own a broad basket of stocks just like a mutual fund.
2) I think most foreign markets are better places to invest right now than the US,especially the emerging markets.Many people don't realize that over the last 9 yrs the s&p 500 index(the main US stock index)actually has had a negative return!! Many overseas stock markets have gone up an average of 20% or more per year.
3) And by commodities,I DO mean either owning companies than mine metals or find oil or grow food OR owning the actual commodities themselves--corn,wheat,soybeans,copper,gold,oil, gasoline,etc. In the past,to do this you had to be rich but now with some of the new variety of ETFs similar to what I described above every investor can own these commodities directly.

Looks like I need to do some research!

Do companies like Vanguard, T. Rowe Price, Wells Fargo, or the Principal offer ETF's or commodities, or are there other companies that specialize in that segment of investing?

As for emerging markets, Mexico is pretty hot right now, is it not? I guess that would fall under Latin America. How do you feel about China? Does the government still control too much for that to be viable? I have read that the housing market in China is on the edge of extraordinary growth. What do you think?