Hi , one of my friend earns like $1800 permonth and she wants to know what is the best way to invest?

and how much she should save each month atleast , in what she should invest which can give her maximum return
For her retirement what would be the best way to save, invest keeping all this thing in mind .
Any schemes which give more interest , any mutual funds anything
As a financial expert what would be your opinion seeing her case
her income is very low so keeping all this what would be the best for her future

Any suggestion will be highly appreciated
Thanks

1. Pay off all credit cards.
2. She needs to figure out what her monthly expenses are.
3. She needs to put enough money in a FDIC insured savings account to handle expenses for 3 - 6 months. (In case she looses her job)
4. Determine the maximum amount of money each month that she can live (comfortably) without.
5. Open a brokerage account through (Scottrade, Share builder, Ameritrade, or Charles Schwab)
6. Wait until you have built up roughly $1500 and purchase 10 shares of ticker symbol SPY. Commission on Scottrade would be $7.00. This is a Index fund that mimics the S & P 500. Over the long run you can expect a 10 - 12 % return on your investment. Also, you would get instant diversification without paying the high commision of a mutual fund.
7. Build up more cash and either invest in more Spiders or other Index funds. (Dow, or Russel)
8. Once you have invested $ 10,000 in Index funds, start looking for Stocks you believe will be around in 50 years.
9. High dividend yields or rising dividends are in most cases lower risk.
10. Do your homework. Get more than one opinion. Learn how to read a balance sheet. Never put all your eggs in on basket. Always keep the safety net in an FDIC insured savings account.

I agree with everything Tiff said above with one exception.

Your friend needs to check with Human Resources wherever she works at and find out how their 401K matching program works.

Employer matching of 401K funds is an INCREDIBLE opportunity for anyone, especially a lower income worker.

One common matching plan has employers fully matching the first 2 percent, then half of contributions up to 5%. Then no matching after that.

I would DEFINITELY set it up to at minimum what they match fully, and try as hard as I could to go to where they stop matching.

Then, as far as where to invest the withholdings, one good theory would be to set it up to where (100 minus her age) percent goes to stock funds... possibly 80% to a value stock fund, 20% to an aggressive growth fund..... then, put (her age) percent into the lowest risk option available.

Give her this website http://www.kiplinger.com/investing/markets/ it was very usefull to us.

try future & invest in balance fund

I would suggest you her to invest in shares. Check the website http://money-review-site.com/shares.html
to learn more on shares and stock trading and how to select the best stocks.
Hope it helps

http://money-review-site.com/shares.html

It's a little hard to answer this without knowing her age, but I'll give it a shot.

First of all, you should never invest money that you can't afford to lose. If her income is "very low" like you said, then stock and even mutual funds are probably too risky.

Honestly, the first investment she should probably make is to a regular savings account. This will earn an EXTREMELY low return, but by making sure she has set aside the amount need for 2-3 months of expenses (rent/mortgage, utilities, car payment, etc..) she can ensure that if she happens to lose her job or fall ill, she won't have to rack up credit card to cover those expenses. Having to pay interest on credit cards because of a lack of accessible savings would be more damaging than only earning the low interest rate on the money in the savings account.

After she has put that money aside, government bonds would probably be the next best investment. Once again, they earn a lower return than high risk stocks or mutual funds might, but if she doesn't have money to spare this is a better bet as she would know going in exactly what her return should be and how long the investment would last. In fact, government bonds can be bought for periods of time as short as 6 months (maybe even shorter, I'm not sure right off). The reason I would recommend gov't bonds is because you get the money at the end of the investment period, and as I said before, that can be a short amount of time.

Another secure way to save would be starting an IRA. A traditional IRA has good tax implications, since the money is contributed before taxes. In other words, your friend would not have to pay taxes on that money until she withdrawals from the fund at retirement. On the other hand, a Roth IRA gets contributions after taxes (you pay taxes on the money first, then contribute it - but you don't pay taxes on the earnings from the IRA until you withdrawal). While the tax advantages aren't as good, you can withdrawal up to $10,000 early to buy a house. A Roth would probably suit her needs better because she will probably be in a higher tax bracket when she retires than she is now. By contributing after taxes, your friend will avoid paying the taxes at the higher statutory rate of the future (assuming she will get raises between now and retirement).

This is where the age factor comes in. Stocks and mutual funds can be a good investment, but it really depends how much time you have to leave them invested. If your friend is young, then she may have enough time between now and retirement to invest in high risk stocks or funds that earn a higher return, but may fluctuate. As she gets closer to retirement age, she could switch the investments to lower risk investment. The disadvantage is that if she would happen to immediately need money, there is a chance she'd be forced to sell the stock at a loss.

In summary, it sounds like either putting money away in a Roth IRA or investing in government bonds would be the best plan for someone with a lower income. Hope this helps!

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