Ignoramus18860 <ignoramus18860[at]NOSPAM.18860.invalid> writes:

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it's a large proportion of his assets. Almost 50%.
However, (and there's nothing wrong with this - he's young
and only just getting started), he doesn't have a lot of
assets.

To the OP: I'm assuming that the $12k is your basic savings
and emergency fund. That's great. It's generally recommended
that one keep 3-6 months of one's full living expenses if not
in cash at least easily accessible and safe. Your MMF acct
serves that purpose very well. As you save more and more
in the coming years, you probably don't need to keep all
that much of your future savings in cash (unless it's there
for some short term goal), so your future savings should
probably go into other asset classes (ie. equities).

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I highly recommend Personal Finance for Dummies. Annoying
yellow cover, silly name, excellent book by Eric Tyson.

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Um, no. The difference is mostly in how one purchases one.
ETFs (and closed-end mutual funds) are purchased through a
stock exchange via a broker and their prices vary throughout
the day.

Open ended mutual funds are purchased either directly from
the fund company (or its agent) or through a brokerage, and
the purchase is settled at the closing NAV of the fund
(possibly minus fees, depending on which fund and how purchased).

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Closed-end funds often trade on the exchange at a discount
(and sometimes a premium) to the NAV (Net Asset Value).
ETFs don't really. (there might be a tiny tiny bit of variation,
it's barely in the noise). The premiums/discounts on some
closed-end funds are as high as 10-15%. But sometimes those
premiums/discounts are very persistent, so don't go buying
a CEF expecting the discount to disappear and for you to be
able to resell it at NAV anytime soon.

In all cases - both open and closed end funds and ETFs -
any realized capital gains and any dividends generated
within the holdings (minus expenses paid to the managers, etc)
have to be passed through to the investor at least once
per years.

ETFs are generally set up to track indices and realize
very few, if any, capital gains. So, too, with most well-managed
regular index funds. In fact, there are quite a few ETFs
which are actually just classes of shares in regular funds
(ie. Vanguard's VIPERs).

To the OP: yes, mutual funds are probably the way to go,
especially with your IRA. Individual stocks, while
fascinating and, potentially very worthwhile for an individual
investor, are very likely not worth your time or energy with
the quantity of assets you're talking about at the moment.

One more thing - if you're making regular, smaller contributions
to your investments (ie. with respect to an IRA, adding a
few hundred bucks each month) - you probably want to go with
a regular open-ended mutual fund with no transaction fees.
Buying ETFs that way means paying commissions/fees each time
you make a purchase. That can add up to a lot over time if
it's a lot of smaller purchases.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Sun, 16 Jul 2006 16:37:09 -0500, schopfer[at]gmail.com <schopfer[at]gmail.com> wrote:
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I disagree with the assessment that 12,000 in a money market is a
large amount.

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Yes, you should buy more mutual funds or ETFs. I would devote a year
or so to reading financial books. Some are good, some are bad, you
will hopefully be able to tell the good ones from bad ones.

The difference between mutual funds and ETFs mostly pertains to how
and when gains are taxed. They are both investment vehicles that
invest in various assets by pooling investors' money. ETFs are often
sold at discount to the value of assets minus liabilities, which is a
good thing (to get a dollar for less than a dollar).


i

Allocate, according to your age, risk tolerance, and goals.
Spend a weekend experimenting with the free online
allocation tools listed at
http://home.earthlink.net/~elle_navorski/id8.html , among
other places.

What are your goals for investing, anyway? Want to save for
a house? A spouse (make sure s/he's a savvy investor, too)?
Kids' college education? Early retirement? Just want $5
million by the time you're 45?

Your goals should also guide your allocation choices.

Lastly, remember the only stupid question is an unasked one.
Lurk here and at other financial fora, ask away, and keep
building your knowledge base.

<schopfer[at]gmail.com> wrote
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schopfer[at]gmail.com wrote:
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Do you have any home equity or are you renting?

It's important that you be able to cash out some your investments in
case of an emergency. Money markets will eliminate most stock market
risk, but stocks and ETFs will have the liquidity you need with some
risk from a bad market. I don't think that a 5% max investmetn per
stock is reasonable at the current time for you since a 100 shares can
easily cost $5,000.

--
Ron

schopfer[at]gmail.com wrote:
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At your age, stocks/stock funds are where you want to be, as opposed
to bonds. You shouldn't have more than 4 or 5 percent of your
investments
in any one stock. Ie: you want total market diversification.
We would want to know what your income is like. You should fund your
ROTH to the max, but if your job has a 401k, you would want to invest
there at least until you get any matching funds from the company
program.
Lastly (from me) at your age you may be wanting or needing to spend
money in the future, at a timeframe that is too short to consign the
money to the market. I would keep cash in your quality maney market,
to cover a few months of your normal expenses, and forseeable near-
term purchases.
Your contributions (not the gains) to your ROTH are withdrawable at any
time, but I wouldn't rely on that except in emergencies, because you
can't replenish this long-term investment except up to your yearly
limit.

Hi, I'm 27 and would like to get some advice on what are the best
things for me to be doing at this time. I'll give some background info
into my situation.

Money market acct at ING: 12000
Stocks/ETF's (via Sharebuiler): 6000
Roth IRA (in Vanguard mutual funds): 7000

I obviously have a large amount sitting in a money market account not
doing much and wondering how I should invest it. After contributing
4000/yr to my IRA should I buy more mutual funds or ETF's. I can only
find info for the complete newbie or complicated advice for middle-aged
investors. Any help? Thank you!