Best investments for 20 year old college student looking to for first 'major investment'?
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Stocks traditionally (over the past century) have had the highest returns of any investment instrument (bonds, money market etc..). People are reluctant to invest in stocks because they are volatile (move around a lot) but there is a way to get those stock like gains without much of the risk of holding an individual stock. Invest in an index fund, which is like a mutual fund except there is no investment manager trading in and out of it constantly charging you ridiculous commissions. An index fund is simply a copy of a group of stocks that investors use to gauge the market. For example you can buy an index fund that matches the S&P 500 etc.. Vanguard has some great funds with probably the lowest costs in the industry and has been around forever basically. I just brought VTSMX (total mkt index fund), its at 35/share and with one purchase I now have companies such as: Exxon , General Electric, Microsoft,Apple etc... For someone who can't afford to lose any investment capital this is by the far the easiest way to diversify risk without comprimsing your returns. Good luck to you!
Small Cap Growth stock mutual fund.
I know more than one 20-year-old who would have done best with an investment in him/herself, eg. degree, even from comm. college if money is tight, or for a vocational school course - say a medical tech or in the computer field.
In the sense you're asking, if you need to use the money within a year or so, CD is ok. For money you can live without - retirement fund such as rOTH IRA (if you had enough income) with no load index mutual funds - eg. S&P 500 index, or better still, at your age, a mix of small cap stocks too, eg. Wilshire 5000 index in a company such as Vanguard that charges low fees.
Over the long term the stock market is likely to outperform bonds or CDs (of course this is the long term--if you need the money for school or other near term expenses you may want to be a bit more conservative with it.)
In general though the easiest way to invest in the stock market is to buy index funds (ie funds that own all of the stocks in a list of stocks). For example the iShares fund (IVV) or the SPDR fund (SPY) own stock in all of the companies in the S&P 500 (a listing of 500 largest US stocks) have low fees and can be purchased just like stocks in a regular brokerage account. Buying either fund would make an excellent long term core holding for a portfolio.
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