MSN Money article: Start investing with just $100

[elainevdw]

I apologize if this repeats any information already posted in this forum... feel free to refer me to other posts if necessary.

Basically, I've got the financial IQ of an eggplant, and I decided last week to change that. (I read Rich Dad Poor Dad over the weekend, and I'm your quintissential Poor Dad progency.) My issue currently is that I'm living completely paycheck to paycheck, with no credit card debt but a small student loan and a small consumer loan, and I need/want to start saving and investing as soon as I can. Browsing MSN Money, I ran across this article: Start investing with just $100.

It certainly fits my budget. Question is, is it sound advice? And if I follow through on what the author suggests now as a newbie, when I become more financially sophisticated, will I kick myself for doing it?

[joanmhe]

Hi -
I have only invested in 401ks and IRAs, and kick myself that I never did anything like this!
(I'm 50).
The advice this guy gives is similar to other articles that I have read recently.
However, if you have the chance to invest in a 401k, or do not plan to use the money any time soon - try a Roth IRA. You can invest in similar funds.

I recently reviewed the options my company offers and saw that any of the fund choices would have been better than the money market fund I had camped some money in. The point here is that these funds did do quite well in their respective categories, so some intelligence has gone into the choice of offerings, and they were much better than the 2% quoted in the article.
Good luck!
Joan

[ahimel]

Si. It's very sound advice, although you can usually start an account for much less than the stated minimum investment -- often as little as $0 -- if you sign up for autopayment to invest on a monthly basis.

Also, as Joan says, don't invest in a plain old individual account until you've maxed out your contribution to a retirement plan -- it creates HUGE tax benefits. If you're in the US and under about 50 years old, your best bet is almost certainly a roth IRA.

Also, see the thread on Managed Funds.

[elainevdw]

Thanks, you two. I was doing pretty well contributing to a 401K until I switched to a company that doesn't have a profit-sharing plan... I've actually been wondering what sort of retirement plan I should put my 401K money into. I'll check out those Roth IRAs, and keep this MSN Money article in mind, too.

Oooh, I'm so excited to learn more about all this stuff. My business-whiz BF has got to be getting tired of my kindergarten questions by now.

[ahimel]

Originally Posted by elainevdw

I've actually been wondering what sort of retirement plan I should put my 401K money into. I'll check out those Roth IRAs, and keep this MSN Money article in mind, too.

Be careful putting 401K money into a Roth IRA -- you'll owe taxes on it. Sometimes still worth it (mostly depending on your age), but check with a qualfied CPA before you do.

Oooh, I'm so excited to learn more about all this stuff. My business-whiz BF has got to be getting tired of my kindergarten questions by now.

Welcome to the club.

[thef0x]

This money is gone until you're 65!

REMEMBER THIS!!!

You might try investing in a CD or something first because, as you're living check to check, you can get that cash much faster (9-12 months).

Yes, IRAs are awesome but no, they are not liquid.

[Camilla]

"Basically, I've got the financial IQ of an eggplant" - I can relate to that!

What I learned from "Rich Dad, Poor Dad" was basically that poor people think "I can't afford it" and rich people think "How can I afford it?". And even though it might seem silly to the more financially skilled, it was a fundamental change in belief for me.

My husband and I had a firm belief that we couldn't afford to buy a home. After reading "Rich Dad, Poor Dad" I spend two days going through our expenses and establish a budget that showed me, that only minor adjustement had to be made to be able to buy a house. And 6 months ago we became the proud owners of our first little piece of real estate!

The book contains absolutely no practical guidelines or tools to do that, so I figured out a lot of things myself. The important is, that it inspired me to take action, and that's basically the only way to create results.

- Camilla

[copla]

Originally Posted by Camilla

"Basically, I've got the financial IQ of an eggplant" - I can relate to that!

What I learned from "Rich Dad, Poor Dad" was basically that poor people think "I can't afford it" and rich people think "How can I afford it?". And even though it might seem silly to the more financially skilled, it was a fundamental change in belief for me.

My husband and I had a firm belief that we couldn't afford to buy a home. After reading "Rich Dad, Poor Dad" I spend two days going through our expenses and establish a budget that showed me, that only minor adjustement had to be made to be able to buy a house. And 6 months ago we became the proud owners of our first little piece of real estate!

The book contains absolutely no practical guidelines or tools to do that, so I figured out a lot of things myself. The important is, that it inspired me to take action, and that's basically the only way to create results.

- Camilla

Yeah, I suppose that's the upside of Rich Dad, Poor Dad... it's just too bad you don't hear about Richest Man in the news and on the best seller lists, since it includes the same principles, is better written, and has a concrete plan for saving. In the end, though, what matters is results, so even if Kiyosaki is a dispicable piece of human waste, I guess he does help people get results, even if those results are from him copying other peoples' work and making up supposedly real events. Guess it evens out in the end for the most part.

[The Probabilist]

On the MSN Money article:
To me that article is yet another one of the typical diversify, diversify, diversify articles. (Just eight appearances of the word) Also, I can't help but wonder how much this author gets paid to write an article like that. I can sense the foxes grinning as the chicken are once again gaining courage to start eating the stuff the foxes are feeding them inside their chicken coop. Millions of people did lose 7-9 trillion dollars in the market crash of 2001 and it was mostly the small mutual fund investors that didn't know what hit them until the financial experts were suddenly unreachable and their life savings were belly up.

By all means, do invest $100 and go for the long-term. That's very cheap in comparison to the people who simply couldn't afford retiring. The benefit is that you'll have all the time in the world to start investing in yourself and your financial literacy and intelligence. In the information age, you're more or less forced to start investing, even if you don't like this fact.

On Kiyosaki:
I've read six or seven of his books and have nothing to complain about, on contrary I strongly recommend all of them since RDPD is more like a starting book in gaining financial information. But it's just like most of you are stating. They are books on why-to and not on how-to. There is no point in delving into financial books if you don't have a good enough reason why to start reading them. Or browsing through any other investment sources either.

I'd like to make one aspect very clear though. The stories might be made up and rich dad may not exist. But so what? Are the stories in the Richest Man in Babylon real? Who knows. The point is always in the information you can acquire and what good it can do in your life! Watch the movie Big Fish and you get my point. Did Steve Pavlina single-handedly squeeze all his article information out of his own deep thinking? Hardly, it's just about making more good in the world by passing on knowledge from one to another, to another. What difference does it make who initially figured out something extraordinary in life? I want to hear it all and figure out for myself what's useful for me and what's not, no matter what the source is. I aim to do the exact same thing to others. We're all part of helping the world evolve so stop bashing others unless that's what you want others to do to you.

Originally Posted by copla

In the end, though, what matters is results, so even if Kiyosaki is a dispicable piece of human waste, I guess he does help people get results, even if those results are from him copying other peoples' work and making up supposedly real events. Guess it evens out in the end for the most part.

[copla]

Originally Posted by The Probabilist

Did Steve Pavlina single-handedly squeeze all his article information out of his own deep thinking? Hardly, it's just about making more good in the world by passing on knowledge from one to another, to another. What difference does it make who initially figured out something extraordinary in life? I want to hear it all and figure out for myself what's useful for me and what's not, no matter what the source is. I aim to do the exact same thing to others. We're all part of helping the world evolve so stop bashing others unless that's what you want others to do to you.

Well, I'd put forth that there's a difference between exploiting the works of others for personal gain and exposing people to important topics while offering your own unique outlook on the topic from personal experience, bringing value to the market place in the process. Regardless, I'm beating a dead horse and I'll refrain from talking about Rich Man from here on out on this forum, and I realize that I'm beginning to come across as a bit of a anti-Kiyosaki troll, and that's sincerely not what I meant to do.

[elainevdw]

Holy cow!! I just had an epiphany five seconds ago. I can pay off my consumer loan in its entirety... today.

I've been trying to force myself to save up for tax season next year. I'm horrible at putting aside 1/3 of my check willingly. On top of that, moving to Reno ate up ALL my savings and accrued credit card debt, which I've since paid off. And my job here is 100% freelance, whereas in San Francisco I was only doing maybe 10% freelance work.

So anyway, I've been putting off paying off my debt. But if I take advantage of my tax situation, I can blast through my credit card and consumer loan, and instead of paying five months of interest on those debts, I can put that money into saving for taxes.

Duh. Everybody says to just pay those babies off before doing anything else, but I never really took that advice to heart before. I was too worried about saving, and thus, I never had any savings... for some reason...

Anyway, sorry to ramble. I'm going to go deposit this thing and brag to my family about it!