Investment Advice

old dude wrote:

you are young and it isn't a lot of money. spend it on having a good time. go on a trip, spend it getting that hot little 18 year old drunk and in the mood. trust me, the compound interest you forfeit is worth less than the memories you will have from the experience. your grandfather was wise. blow it. you have the rest of your life to worry about earning and investing.

if you absolutely must do something responsible with it, pay off credit card debt. no investment on the planet can match the rates you pay on credit cards.

best advice yet. 4g's isnt much but it can pay for a GREEEAT spring break trip with tons of alcohol and hotties! Rent a convertable benz in Cancun, throw the money around, get a hotel suite with a hottub, throw parties in your room late night and bang hotties... and hide a camera in the room too. Then if any of your pals say "you moron, you blew 4 g's..." you can show them the tape and they will think you are the smartest dude in the world.

I love the investment advice earlier that earned the op $500 over like 5 years, what a moron! Seriously, if you could ask your grandfather what should I do: take a great trip or earn $500 over five years? Pretty damn sure anyone would say go on the trip.

stripper wrote:

yeah, 'cause google is SUCH A GREAT DEAL. Dumbass.

Yup, cause everytime a stock is above $100 it is a terrible deal.

Actually, for a growth stock like GOOG, it isn't too expensive. Their earnings per share have been growing incredibly, and the forward P/E ratio isn't too bad at this point. Throw on top of that that they have beat earnings estimates most quarters, and the price isn't unrealistic.

Okay, coupla thoughts (and, yes, I dinna read EVERY other post...):

Yes, $4,000 is not a HUGE amount, but it is $4,000 more than zero. So, kudos to you for wanting your dollars to be fruitful and multiply!

Re: Roth IRA -- you can contribute to a Roth IRA up to the limit that you earned (making a lot of assumptions here, mainly that you didn't earn much and that you are not paying taxes). At your age, you will be VERY happy--20+ years from now--if you follow this path. I suggest Vanguard and somthing like their Global Equities fund or my fave standby, Wellington.

If you want to do as your Grandpa said AND invest AND you are somewhat risk averse, I HIGHLY recommend the following:

http://magicformulainvesting.com/book/about_mfi.jsp

I typically recommend against investing in individual stocks, but given that this is "fun" money, you might consider some of the previous suggestions and look for a cheap brokerage account, study up on the Magic Formula book (free at your library), then learn a lil sum'in sum'in 'bout investing.

Heck, if you are REALLY motivated, you could to the Magic Formula in your Roth IRA, but that might be getting a little ahead of yourself.

Above all: congrats once again on your level-headedness.

(Opposite story: I knew a guy in college who was mistakenly given the proceeds of some sort of grant or loan--I forget--he spent his "windfall" on a weekend at the Waldorf; his parents were *very* upset when the funds were recalled and they had to pay the roughly $4,000 bill...)

Why invest in CD's? I would go old school and invest in records!

I'd recommend opening a Scottrade or Zecco account. Stick with buying ETF's to get started...something simple like the QQQQ's, SPY, or DIA. When you learn the process more, you can invest in more specific sectors. Then move on to stocks.

If you decide to invest in some stocks, do plenty of reading, by a couple books with the money...and expect to lose money. Investing is tough, but the only true way to learn the market is to play the market (no simulation crap--there's no emotion involved with play money). As long as you learn from the mistakes you make, even loses are great education and will help you make money in the future.

Well, clearly, we have different investing philosophies. I rarely, if ever, look at forward P/E. I think it's far too easily manipulated and generally worthless in judging the value of a company.

To the original poster: I think you should set some aside, but like others have said, it's not all that much money. Do something really fun with your friends and enjoy yourself!!

Roth IRA - Mutual Fund like the Vanguard 500

It's simple and you won't have to worry about it.

You should purchase and "global" balanced mutual fund. $2000 is to little to diversify otherwise. At 7% compounding your $2000 will be $42,000 at age 65 and at 10% compounding your $2000 will be $146,000. Good luck.