[Sonsowey]

So I am in my mid 20s, earning 45k a year, living in NYC. Hard to put away anything and many people making double what I make are still not saving anything. Luckily, I have no debts.

Whatever, where there is a will there is a way, and I am determined to start putting some of my money to work for me starting now. I currently have no investments and no savings. Starting this next paycheck I will put away at least a couple hundred bucks per check and just suck it up and be more frugal.

But what are the bare bones absolute beginner moves I should look into to begin making my money work for me? Index funds, mutual funds? Any absolute beginner resources would be greatly appreciated.

Thanks,
Sonso

[TheFinalEpic]

If you put your time in and aren't afraid of your money dipping and then returning, I would say play stocks on the DOW or NASDAQ. Mutual funds are a more viable option for long term investment (401k) but if you do your research, you will beat the averages of those funds almost unanimously.

That being said, you are living in one of the most expensive cities in the world. So, your options are more limited on 45k a year. Look at getting a side hustle for supplementary income as in my understanding, you almost need a six figure income to live in NYC comfortably.

Read Jim Cramer's Get Rich Carefully for advice on stocks, and read the classic Rich Dad Poor Dad for getting the right mentality and such. You eventually want to reach the point of financial freedom is my understanding, and reading a book that changes your mindset to that of being wealthy before it even happens changes the game.

[sammybiker]

The best value play here is going to be taking advantage of your youth, becoming mobile and going after monies in the energy boom/other hard working, decent paying fields.

If you're absolutely locked into NYC, then sure, sock away what you can and focus on developing a side hustle to try and generate additional income.

But the quickest way to increase your savings (thus potential money working for you) is going to be A) leaving NYC and B) increasing your income.

45k, after taxes, really isn't much in more affordable parts of the country. I cannot imagine trying to make it happen in NYC with that budget while also trying to fund a side hustle.

[Sonsowey]

To be clear I have next to zero knowledge of stocks, so for me to start investing and believing I can "beat" other people at a game so heavily studied by so many seems very arrogant and unrealistic. Am I just being negative here?

With all the millions to be made off the market, and the apparent rampant collusion and rigging that goes on, it seems like a small fish like myself is basically just asking to get burned "playing" the stock market.

[Cattle Rustler]

Read WestCoast's blog, he works in finance and constantly gives out advice.

The best way to "work stocks" is to invest in SPY (S&P 500 index) in chunks of 1000 or 2000 each time. It's better to buy 1000+ because you lose less percentage-wise in each transaction. Lets say there's a $5 fee, $5 of 100 is 5% compared to .5% if you were to invest 1000. It adds up in the long run.

You can't lose investing in corporate america. Shit, just look at how low it was during the recession, and where it is now. I bought 2K of SPY in february for 174, now it's 194.....in four months, 11.49% increase.

Edit: it's actually 195.60 right now, 12.46% increase in 4 months.

[Cattle Rustler]

Also, you're making 45K in NYC? It might be wise to get a second job or move elsewhere. You can earn 45K in Dallas and Houston with an Entry-Level job, and you cost of living will be MUCH lower.

One bedroom apartments for 500 and jobs are plentiful. It's not NYC but you want to make money work.....

[LeBeau]

(06-10-2014 04:08 PM)Sonsowey Wrote:  

To be clear I have next to zero knowledge of stocks, so for me to start investing and believing I can "beat" other people at a game so heavily studied by so many seems very arrogant and unrealistic.

You are very correct, and it's a credit to you that you are humble enough to think this way.

I would absolutely ignore TheFinalEpic's advice, it's clear from his posts that he often make suggestions or comments without much experience or evidence behind them.

[TheFinalEpic]

(06-10-2014 04:56 PM)LeBeau Wrote:  

(06-10-2014 04:08 PM)Sonsowey Wrote:  

To be clear I have next to zero knowledge of stocks, so for me to start investing and believing I can "beat" other people at a game so heavily studied by so many seems very arrogant and unrealistic.

You are very correct, and it's a credit to you that you are humble enough to think this way.

I would absolutely ignore TheFinalEpic's advice, it's clear from his posts that he often make suggestions or comments without much experience or evidence behind them.

LeBeau, I said beat the mutual funds (which on average make somewhere in the ballpark of 5%) not beat the indexes. Mutuals have high fees, and if you diversify your portfolio, you alleviate risk. As Cattle Rustler said, you'd be better off playing indexes, and in my honest opinion, better playing individual stocks, as opposed to going the mutual fund route. It depends on how much research you put into it, and when buying stock research is your best friend. Smart investors will not touch a stock until they have the financials studied to a huge degree, believe in the company, and have put hours and hours of research into the sector, not just the company they are buying.

In regards to your opinion on me, I am young, but I have never tried to make "claims" that I cannot back up.

[WestIndianArchie]

(06-10-2014 04:29 PM)Cattle Rustler Wrote:  

Also, you're making 45K in NYC? It might be wise to get a second job or move elsewhere. You can earn 45K in Dallas and Houston with an Entry-Level job, and you cost of living will be MUCH lower.

One bedroom apartments for 500 and jobs are plentiful. It's not NYC but you want to make money work.....

If he's doing entry level work in NYC @ 45k, they'll pay him 30K in Dallas. 28k in the Midwest.

Costs are lower but so are salaries, and so are opportunities.

If he's managing to make it work in NYC, He's better off sticking in NYC where he can bump into somebody that can show him whatever he's doing right now, someone is doing almost the same thing for 10x.

WIA

[TheBulldozer]

Son,

Let's grab a drink after the 'year' ends.

[Cattle Rustler]

30k jobs are call center positions.

Entry level in Dallas is 40k and 38k if one is being jewed

[Bushido]

NYC has got to be full of single, lonely lawyers. Hook up with one of these cougars and get her to bankroll you.

[paulstein]

NYC will kick your ass financially if you don't keep a really close eye on what you're doing. If you're conscience of money and pay attention to things there is the potential to stack quite a bit here, even on a low salary.

I would say don't even think about 'investing.' Just hoard the cash - you'll want liquidity and it's good to be able to access it without having to worry about market values and tax issues. NYC is expensive, the job market is volatile and a bit of ready cash can really set you up to make plays when it counts. Once you start to think about realistic rates of return (2.5 - 4%) and the capital base you'd need to have that be meaningful it makes a guy ask why bother. What's the point of investing, tying up cash, risking capital and hoping to score $200 annual returns - just stay in one Saturday night and you're already there.

No point in playing small ball.

[kmhour]

45k is not a lot in NYC. what line of work are you in? If there's a high upside in your career path it makes a lot of sense to stay. From your comment about investing you clearly aren't in finance but if you're in something like advertising, creative, that sort of thing that has also has a strong base in the city don't listen to these guys about moving somewhere else. but if it's a basic office job your money will go further in the suburbs.

as for investing, if you don't know about individual stocks (and most of us don't) figure out what you can afford to put into savings and put it into index funds. don't overcomplicate things. you aren't going to make a fortune doing this though. but it's always smart to put money away for a rainy day and an index fund is liquid enough not to feel like it's tied up somewhere.

[The_CEO]

Regarding saving, investing and Index funds, here is a good resource.
You can read it in a couple of hours and the author (a neurologist turned investor) is giving it away (e.g. Kindle) for free: "If you Can". You can download it directly from his site.

http://efficientfrontier.com/ef/0adhoc/2books.htm

Also, check out a compound interest calculator and see what will happen if you save 5k a year (or whatever you can manage in a non-taxable account), at say 5% interest, over 20+ years.

http://www.moneychimp.com/calculator/com...ulator.htm

There are Index Funds (notably at Vanguard) but also at Schwab and Fidelity. They all have comparable "Total Stock Market" or SP500 Index funds with low expense ratios.

I'm not suggesting you do this. It's your 45k and you need to decide that. But these are basic resources to help you begin to research it further.

It'd be an easy decision if you made more and/or were in a less expensive city. Then you could save for your self short term (e.g. investing in yourself - education, entrepreneurial activities, rainy day fund etc.) in a taxable account (money market), AND invest annually in index funds in an ira. But like other posters said, this depends on your circumstances...what your field is and why you're in NY.

With respect to index funds, you're young so time is on your side when it comes to compound interest.

[2014]

Just buy stocks direct from companies you like at a fixed price every month and forget about it for 30 years...

[polymath]

I'm about your age, a trader in NYC. This is something I've thought about quite a bit. I sent you a PM but I'll also post up here for the sake of the thread.

If you don't have any money right now, don't try to put your money to work. Instead, try to save money by minimizing your costs. Eat a cheaper lunch. Live in a cheaper apartment. Don't go out all the time. You have inflow and outflow of money, and the only way to save is if you receive more than you spend.

Eat at subway. Skip the bars. Live in a cheaper apartment. If you want to have money in the bank, you have to make sacrifices somewhere. I spent an entire summer living off of 4k even though I pulled 2k a week before taxes in an internship. I didn't go to a single nightclub during that time. After that summer, I spent what I saved to travel to multiple countries in Europe, South America, and the Caribbean over the course of a year. In your current job, you don't have as much inflow of cash, but you can still save money. To do so, you must dedicate yourself to the idea. Every lunch, you should be saying to yourself, "I will not spend more on food than I need to." When you buy clothes, you should say, "that suit is nice, but I don't need it." Save, save, save.

Have you ever heard of a book called The Millionaire Next Door? One of its central observations is that wealthy people live below their means. No matter what your income, if you spend less than you earn, your wealth will always increase.

Only after you build wealth should you worry about how to put it to work. I believe that your question about putting your money to work is jumping the gun slightly.

[The_CEO]

^^^^^^

In the e-book I posted a link to above ("If You Can"), the author has a suggested reading list. That book (M. Next Door) is the first one he suggests reading.

[Pinocchio]

i would just spend it all and live it up. don't waste you're twenties being frugal to just put away a couple hundred bucks each month. when you get to 40+ you will be on a big boy's salary + bonus.

[pitt]

(06-11-2014 08:48 AM)Pinocchio Wrote:  

i would just spend it all and live it up. don't waste you're twenties being frugal to just put away a couple hundred bucks each month. when you get to 40+ you will be on a big boy's salary + bonus.

And how old are you?

[Pinocchio]

28

[Sonsowey]

Male Defined, I look forward to it.

[unbowed]

Good food for thought in this thread. I'm in a similar situation, Sonso.

Are you trying to pick up more skills or switch jobs for a salary boost at all? I'm at the end of my rope here and need a major lifestyle change.

I generally work and save but have been splurging here and there the past few months. i'm torn between YOLO and feeling guilty at every purchase.

Money can buy peace of mind, wish i had this drilled into my head at 10 years old.

[polymath]

If YOLO were the way to live an above-average life, it wouldn't be the average lowest-common-denominator young person's motto.

[unbowed]

Yes but when you're out in nyc, money gets spent, maybe not on consumer goods, but you gotta grease the grooves at some point.