What investment is right for me?

What investment is right for me?
I am a sinle, 18 year old college student who saves around $2,000 to $4,500 per year. Current income is about $15,000 with not college tuition to pay. I dont know what type of investment is right for me. I have done some reasearch but I still dont know what to do. I am very young and I have no problem with high risk investing. I would like to save and invest my money to pay a part of a house in the next 5 years. What investment is right for me?

1. Your highest priority should be to invest in your education.
2. If you still have money to save, you should invest in a low-cost index fund or an exchange-traded fund that invests internationally. An example would be iShares MSCI Emerg Mkts Fund (EEM).
a) Why investing in index/ETF? The vast majority of peer-reviewed academic studies indicates that so-called passive strategies outperform active strategies.
b) Why investing internationally? Investing in a broad-based, well-diversified portfolio gives you the best risk-return tradeoff.

Remember the "tech/NASDAQ bubble" of when you were around 10 years old. During March 2000 it burst. It took until the fall of 2007 for the S&P500 to get back to its former high point. The NASDAQ is still only about 1/2 way there, so, for only a 5 year time horizon, go to www.bankrate.com and check for the highest yielding money market, checking account or 2 1/2 to 5 years CDs in the USA.
Stay away from common stocks/mutual funds.

first, you need to save up an emergency fund.. roughly 4-6 months worth of income to cover bills if something should happen. After you do this, then you can begin looking to invest money. Remember it is a gamble so that is why you don't want to do this before your emergency fund is setup.

If you are looking to use the money within 5-years you might not want to do stocks/mutual funds. You might want to look at other short-term types

invest in a money market mutual funds

Hold on a second here.

Going to school and continuing your education is the best investment you can make. Keep it up. Work in some accounting classes, no matter what your major, maybe a macro economics class or two, but do not get to brainwashed by the Keynesian influenced dribble that will come out of your professors, question it all. See if there is anything offered about Mises and/or The Austrian School of Economics.

Get a library card, start reading and learning, leave the money in a money market fund. Don't take any risk at this point, no mutual funds, no stocks. Please do not jump into things, especially if you want to buy a house in five years. That is not a long ways off, real estate keeps going down, cash will remain king for several years to come.

- The Essays of Warren Buffett: Lessons for Corporate America, edited by Lawrence Cunningham
- Stocks for the Long Run, Jeremy J. Siegel
- Jack, Straight from the Gut, Jack Welch (will give you a great perspective on what makes a public company successful, the people it is made up of)
- Analysis for Financial Managment, Robert Higgins

After these go get active in a community like the motley fool, they have plenty of reading lists and a wealth of info in their message boards.

Stay away from Rich dad and that blond lady. Heck, I will sum up the entire Rich Dad series for you for free, right now, ready?

-you can get a job and work for the government and your employers
-you can create a job for yourself,self employed, that requires you to work like a dog for 10 hours a day just to pay the government 40% of what you make
-you can own a business that makes you, the government and your employees money
-you can have investments in a portfolio of tax wise, income producing assets

Don't watch financial shows on TV, don't get hung up in the news headlines, don't get a broker and don't take investment advice from people on yahoo answers. They are all just trying to sell you something, and likely know as little as you, or less. Educate yourself and make your own decisions.

When you feel a bit more comfortable start socking a bit of money away each month in a Roth IRA, but keep a fat sum of emergency cash and don't loose site of the "buy a house in the near future dream".

Well, the first investment you're already making. Your education.

Expand that to include some education about investing.
Here are some books I'd suggest:
Investing for Dummies.
The Richest Man in Babylon
A Random Walk Down Wall Street
Rich Dad, Poor Dad
The Millionaire Mind

That should be a good start. You'll move forward from there on your own.

As for where to put the money now. I'd suggest some mutual funds. They provide a lot of benefits, one of which is you don't have to watch your money every day so that you can focus on your schooling.

Investing for Dummies should give you some insight into how to screen and pick funds. Digest what that book has to say. Then ask yourself this question again.

*****
On the other hand, if you feel you really want to get into it NOW, here's part of an answer I posted for somebody else just this morning.

*****
Now, if you want to get into it right away and try to earn as you learn, here are some basics on how I pick mutual funds.

Ran a screen the other day on funds that returned over 20% for the last 5 years (was answering another personâ€™s question). Came up with 440 of them. Thatâ€™s a lot to chose from. So, start from there and narrow your search.

You can check this all out at Yahoo Finance on their Mutual Fund page or through their Mutual Fund Screener.

1. So, you want to look at the 3 yr and 5 yr returns.
2. Then, look at the Morningstar ratings. Go for funds in the 4 â€“ 5 star range.
3. Then you need to look at the loads and service fees each fund charges and look for funds that have low fees, and preferably are No Load.
4. Youâ€™ll also want to look at the risk ratings of the funds and find a range youâ€™re comfortable with.
5. You also want to look at minimum investment amounts. You donâ€™t want to pick funds that have 25K minimums if you only have 30K to invest. Shoot for funds with mins between 1 â€“ 5K.

Then, once youâ€™ve eyeballed 8 â€“ 10 prospective funds, narrow that down to the 3 â€“ 4 funds that you like the best and are the most comfortable with. Then, open an account at a brokerage, move the money over there, and split it between the funds youâ€™ve chosen. (If you have any questions at that point the brokerage will be more than glad to assist.)

Also, some funds may not be available at your brokerage. So check into that before you make a move. This is also why you want to have more prospective funds than you really need. You can find this info under the Purchase Info link on the funds summary page on Yahoo. (Same place you find the min investment infoâ€¦.) Also, some funds may be closed to new money. So, you need to be prepared for that possibility and have those fallback choices.

When picking your funds you might want to pick a couple with more conservative returns in the, say, 10% - 15% range, and spice it up with something thatâ€™s really been cruising like the ones listed on Yahooâ€™s Top Performers.

This approach will give you a simply way to set up a diversified, starter portfolio which should get you some decent returns while you further develop your knowledge and expertise in the field of investing.

Hope that helps.

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