Ok, I'll bite. How would YOU invest money?

[Phantom Warrior]

I'm going to leave my gold thread open, because I'm still intrigued by the possiblity.  But I've gotten some positive replies and a number of negatives.  Alright, the floor is yours.

Say you are, hypothetically, making a little over a grand a month (after taxes and tithe).  Ten percent of your before tax income is going into the Thrift Savings Plan (in hopes the government will start matching some contributions for the military too).  About 60% of your income is going into a small portfolio of mutual funds including bonds, small and large cap stocks, and technology stocks.  

You have around $100 slack in your monthly budget, plus a tax return coming and an extra $100/month when your MGIB is all paid in June.  

I'm sort of intrigued by the idea of gold.  I'd like to invest a little money directly in stocks.  Our CO told me about a program McDonalds has that allows you to buy their stock directly for a nominal processing fee.  And McDonalds IS a stock I'd really like to own for personal and financial reasons.


What would you do with your money?

[charby]

Build a savings account so you have liquid cash, sounds like you have the rest in order. Cash is King when you need it.

[K Frame]

Exactly what I have done with it...

A broad base of mutual funds.

[Phantom Warrior]

Build a savings account so you have liquid cash, sounds like you have the rest in order. Cash is King when you need it.

Already keep about 10^3 in the savings account where my pay is deposited.  That way it's available for emergencies and I earn about...15 cents a month.  *sigh*  But seriously, I figure that will cover me.  Anything more serious I should have enough heads up to transfer money from other investments.

I'm really looking for another way to invest that extra $100 and diversify a little more.

[charby]

Well you got that, well I do the same as Mike mentioned. $100 a month into a Roth, that way if you need the money you can cash the intial investment out later.

C

[Jamisjockey]

Build a savings account so you have liquid cash, sounds like you have the rest in order. Cash is King when you need it.

Agreed.  You need a cash savings you can access almost immediately.  Emergency plane tickets, car repairs, etc....
ING has savings accounts that are over 3 or 4 %, which is about double a normal bank savings.  
You sound well disciplined with your money, and you're on the right track.  The horror stories of Seniors eating dog-food were generated by people who never saved anything, thinking SS would be enough....ha!

Edit:  I just saw your follow up post.  By having money in your bank savings, you can yank it out immediately in an emergency.  Throw something into ING.  You can DD the money, or just transfer it from your primary account.  Spend that extra $100 on yourself...save up for new guns and toys or a yearly vacation, pay cash, keep yourself happy.

[Brad Johnson]

$100 per month.

First, build up a six month cash reserve in a money market account.

Next - pay down debt. Investing in something that returns you 10% while carrying debt that costs you 12-15% (credit cards, loans, etc) is a net loss. Don't consider ANY type of investment until you have gotten rid of ALL your revolving debt,  and as much long-term debt as is practical.

Next, ROTH IRA, and contribute regular as clockwork. Since the gains are tax-exempt, even a modest rate return results in a pretty healthy real return considering you aren't incurring the 15% hickey on gains.

Buying precious metals or other types of speculative instruments are fine if you have large chunks of money to play with. You don't you have a small, regular contribution. Use it wisely.

Brad

[theCZ]

I'm gonna suggest index funds.  Small cap, mid-cap or the 500s, your choice.  My small caps kicked butt last year, but overall they average a bit better than the market, and a whole lot better than mutual funds.

[280plus]

Find a no load mutual fund that has done 10% or better since inception and write an allotment to it for whatever you can afford per month. I'd shoot for the $100. Then forget all about it. Make a firm commitment to yourself to not touch that money except in extreme emergency or retirement. For example, a Japanese race motorcycle is NOT an extreme emergency.

Oh, make sure it pays dividends and reinvest them into the fund.

By the time you retire you will have a tidy sum.

[Bogie]

Diversification is Good. People that get hurt are folks who invest in one stock, or in one sector. Even if it looks like Acme is gonna jump 30% next year, don't put everything there. Spread it around some.
 
Also, get some credit cards. You don't have to keep a balance on 'em. But if you need to fly somewhere, rent a car, or have another emergency ("Hey, Sarge... I'll pay you back first of the month, but I REALLY need some bail money right now..."), they come in handy. DO NOT use 'em for "luxury" purchases, unless you _will_ pay it down that month. Credit cards also generally offer a degree of buyer protection - check about what they do regarding extended warranties, etc...
 
FWIW, my broker does NOT like IRAs... unless you plan to live minimally upon retirement. You're gonna pay taxes now, or you're gonna pay taxes then. You can gamble that you'll pay less taxes then... Right... He says that it's better to have a bit more freedom than the IRA regs will allow you as far as movement of funds. No penalties, etc., if you need the cash for something _truly_ important.

[Bogie]

Oh yeah... Hindsight is 20/20 - previous returns mean squat. But keep in mind that the money managers do it for a living. Look for funds that have done well in the past, and that aren't likely to change managers.

Another thing to consider, and it may hurt regarding taxes, is land as an investment. Look at the outer areas of growing cities. My area has gone from about 15,000/acre to over 20,000/acre in the past year and a half... And 10 years ago, it was maybe a thou or so...