A little advice...

Well, your 401K can be, and should be, part of your overall investment portfolio. I would pay off debt (what's the interest rate?), max

401K, save for an emergency fund, then think about saving money for investment. A simple rule, don't spend more than you earn.

First piece of advice: What you're describing here is called investing on margin. It is not for beginners. Heck, it's not even for intermediates like me. So I would advise you to stay very far away from investing on margin until you have a lot of experience under your belt.

I think you're a little confused, here. Chances are that at least some of the money that you put in your 401k and/or IRA is going "into the market". How much depends on your fund choices. It could be 0% if you're investing solely in bonds and cash equivalents, but I'm guessing that's not the case.

Without knowing the details of your situation, it's hard to give specific advice. But I can offer you pretty generic advice that works well in many situations. First of all, make sure you contribute enough to your 401k to get your employer's full match. Even if your employer "only" offers a 50% match, that's a return you won't get anywhere else. After that, start paying off any high-interest (> 6%), non-deductible debts you have. This includes credit cards, personal loans and car loans.

If you manage to do all that, you'll be WAY ahead of most of your peers. The next step is to set up an emergency fund. A simple, reasonable goal is 3 months of take-home salary. Stash this in a safe place like a high-yield savings account or a money market fund. Make sure you're getting a reasonable amount of interest (> 3%) so that you don't lose value to inflation.

After that, I would start saving for a house. A house is a fantastic, but expensive, investment. Besides, you have to live somewhere. Ideally, you'll want to have at least a 20% down payment to avoid private mortgage insurance (PMI). Depending on where you live, that may not be reasonable, given the hyper-inflated cost of housing in many areas. With a 10% down payment, you can probably get a 2nd mortgage to avoid PMI. A 5% down payment is pretty much the bare minimum.

Only after you've done all that would I advise getting more heavily in to stocks. I would recommend starting up a Roth IRA before putting more money in to your 401k. If you max out the Roth IRA, then start contributing more to the 401k. If you max out your 401k... well, you'll definitely be in what Kramer calls "Mad Money" territory. :-)

So there's a pretty basic sketch. Like I said, that's pretty much the generic advice I would offer anyone. I will also echo PeterL's rule: Spend less than you make. The most important thing is to save. Only after you accomplish that do you need to start worrying about how and where to invest.

--Bill

BofA Brokerage

I would not leverage debt to invest in the market. A difficult year could wipe out 30%, and some 3 year periods might reduce you by 50%... so watch using leverage. makes you feel good on way up, could make you panic on the way down.

How much (as both % of income and overall amount can you invest each year)? If only 1k, your options might be limited to mutual funds/ ETFs, if more, you can consider stocks and DRIPs (IMO).

For me, it's 11k. ~7k of this goes into 401k (10%) and another 4k goes into my Roth. All in mutual funds.

The rest of discretionary money I have goes to paying down mortgage.

To get started, look at Fidelity, Vanguard and/or T Rowe Price for ideas. Look at your 401k offerings for more ideas. T Rowe allows you to start with $50/month. Not sure on minimums at other places. If you want to invest in taxable accounts, consider a tax efficient mutual fund, DRIPs, discount brokers, ETFs and other possibilities.

The 401k comes out pre-tax, your employer may match, that is a good bang for the buck.

Roth IRA has other features which make it attractive. Tax free withdraws of gains, access to contributions pre retirement and no RMDs to name 3 advantages.

If you only did 401k and Roth, you would be doing a GREAT job.

The first thing I would do is put the Cramer book away.

Thanks guys. I really appreciate the advice. I was really willing to pull the trigger on a line of credit I have to provide me enough capital to start out in the market. I am still a little frustrated at the possibility that I can't play the market, I guess that is the gambler in me, but I guess it is for the better. Maybe I can spend this time gaining more knowledge so when I am ready to go into the market, I will have the wherewithal to do it carefully.

I just converted my rollover Traditional IRA to a Roth with T Rowe Price, so I guess I am ahead of the advice curve there and my money in the now Roth IRA is about $3K from when I used to work at Enterprise Rent-A-Car. I have chosen the Fidelity Contrafund (FCNTX) and I did this before I even knew they were closing it to new investors back in March of 2005. I think that was a fortunate stumble on my part, but that was based on the advice Cramer gave in his "Real Money" book. I am glad because I started out with about $2,800 and now it is around $3,100. Four hundred in a year, not bad, a 14% increase.

Has anyone read "Rich Dad, Poor Dad?" Is money made that quickly as he made on foreclosure deals back in the early 1990's in the Oregon and Phoenix, AZ areas? What would be something, if I had to concentrate on learning that you would give as a recommendation to make money through gaining "financial knowledge" as the book preaches to recognize as an opportunity? Is there a good thing to get into to make money like that, when in my case, I don't have much capital to allocate to a given investment?

Right now, I am in an unpaid internship on Capitol Hill trying to get a job on the Hill so that is my particular situation, and with this situation comes a lot of time to think about my future.

As far as a house is concerned, my fiance and I have made it a part of our wedding registry that we want to save for a down payment on a house in the Washington, DC area. If not much comes in through the wedding, we have been discussing the 80/20 loan options, have any of you had exposure to this? 80% loan and 20% (higher interest rate) loan to cover the PMI. What do you think of this idea?

Sorry to drag this forum discussion out, I am just looking for more opinions on the subject than my own and from what I have read already.

Thank you to PeterL, Bill and Jim for contributing so far.

-Will

My first condo was an 80-10. They work well. I have been told that PMI is tax deductable in 2007. There are income limits to the deduction, and it is not a renewable for 2008 (YET).

My second house was an 80-15-5 (much bigger house). RE prices in your area are obscene (my brother works on the hill and lives in Alexandria). Getting 20% equity will be tough if you save for a down payment...

Concentrate on staying clear of other debt, and best of success with the saving, wedding and house search.

There is no magic to quick money. For every person who buys a foreclosure at a great price and flips it, there are 5 who spend the next few years renovating it themself, and barely making back a minimum wage on their time. But the one success seems to appears at the Rich Dad book signings and public appearances. Few serious investors have anything good to say about this book or its author. JOE

To Jim and JoeTaxPayer:

Thanks for the advice on the home loan situation and for the perception of the book "Rich Dad, Poor Dad."

To All: My question stands then, is there a book of substance that one would recommend to gain "financial intelligence" that isn't from a quack or charlatan in your opinion? I am looking for the proper way to start, but it seems that I am heading in the wrong direction with every attempt at reading something that may help me gain insight into the world of investing/finance.

Here is a run down of the financial type books that I have read in the order of reading through them for your background into my perspective:

*The Money Book for the Young, Broke and Fabulous by Suze Orman

*Real Money by Jim Cramer

*Rich Dad, Poor Dad by Robert Kiyosaki and Sharon L. Lechter

Currently reading:

*Mad Money by Jim Cramer

Keep in mind that I have been reading these at my own will, since graduating college in 2003 to gain insight into the world of investing and finance with an open mind. These aren't the only books I have read and I am not a finance/investing junkie, but it is something I have been dabbling in to potentially prevent any mistakes I may make with money. I have not acted on anything other than opening my

401(k), when I left Enterprise Rent-A-Car (working on the advice of Suze Orman) creating a Rollover IRA through T Rowe Price and ultimately establishing a Roth IRA and investing in the Fidelity Contrafund (FCNTX) through the advice of Jim Cramer. Other than that I have been inactive in the advice furthered from each of these books.

Also, to clear up what my inital intention was with this forum post, I wanted to actively trade/invest in stock vs. buy into a mutual fund and let a fund manager do that for me. I want to learn about it, how to do it, and without making too many mistakes, ultimately act. But from consensus I need to lock down my retirement funds before considering or even thinking about this "active" route discussed here.

Thanks again for keeping this post and thread running, I look forward to more responses.

-Will

Most people (actual investors) think that he is a complete farce.

Steer clear of get rich quick, stay with the "get rich slowly scheme" (investment in the different mutual funds/bonds/cds).

The difference between the fast way and the slow way, is that the slow way works. Not kidding.

Benjamin Graham -- The Intelligent Investor

And once you digest that, Graham's 'Security Analysis'. Also, 'A random walk down wall street' by Burton Malkiel.

I list these and other recommendations in no apparent order on my site

I think Fool.com's Fool's School is a great place to start. As an added bonus, it's free.

Fool.com has LOTS of articles on everything from personal finance to taxes to investing. From what I've read in your posts, I think you'd also find the personal finance section very helpful. There's a link to it in step 2 of Fool School (Settle Your Finances), but here it is:

--Bill

Some of the other investing books are good. You might want to look at some books on option investing particularly with regard to covered calls.

And reading on economics would be a great help to you.

A 401k basically forces you into mutual funds, but IRAs allow you individual stock selection.

-- Ron

Experience is the best teacher. I made many a mistake along the way- investing in high fee mutual funds, tech funds etc... when I started. Being invested thru 2000-2002 and seeing what I did is better than reading a book about what I should do.

I don't read books well... my wife bought me rich dad poor dad, and I barely made it through first chapter.

I found smartmoney magazine to be a much better tool. It discusses mutual funds. it discusses stock picking. It discusses planning, it discusses spending.

Will wrote on [Wed, 14 Mar 2007 17:31:42 -0500]:

I think the Andrew Tobias book "The Only Investment Guide You'll Ever Need" ISBN 0156029634 is a good start

Will, can you state about how much money you have to invest each year, apart from your 401(k) and IRA(s). Knowing this figure might assist others in guiding you to an appropriate, say, brokerage. Also, please give the details of your debt: Its interest rate, years remaining, etc. Putting any spare money you have into paying down this debt might very well be your best investment.

I happen to like joetaxpayer's site's list of investing books.

I also think just working with the free online stock asset allocation tools listed at

is a great introduction to the notion of diversifying so as to reduce risk while maximizing returns. I echo Joe's and others' comments on the character of the author and message of "Rich Dad, Poor Dad." Throw the book out, or google on criticism of the author to learn about charlatans in the financial world.

On how people got started in investing: This came up here not long ago, and it seems most follow the example of relatives' or just take the plunge, having a basic understanding that stock returns beat inflation and then some. For my part, when I graduated from college in 1983 and started working for a Fortune 500 company at a scandalous rate of pay and with a nice employee retirement plan, my father in a rare instance bellowed at me: 'Don't put your money in savings bonds. Put it all in a blue chip mutual fund.' I had the advantage though of starting to invest at the beginning of an amazing bull market. Of course, I lived through the correction of October 1987, too, and this has tempered my experience, if only to be aware that "sneezes" happen and they won't ruin a person invested for the long run. At least, historically speaking.

For investing in individual stocks, I advocate Ben Graham's _Intelligent Investor_ book. Though for you, I really think you should stick with mostly index funds for awhile with maybe a few small stock positions.

Yeah smartmoney is pretty good

I'm curious why you say that. Have you read any and disagree with his advice, or have you seen the show and made a decision from there that he'd likely not have anything worth reading? I've not read it yet, just looking to hear your thoughts. JOE

Thanks to snipped-for-privacy@gmail.com, joetaxpayer, Ron, Justin, Jim and Elle

Elle most of all, thanks for giving me background into how you began. It really is something I have been trying to get out of the contributors here, because that is the hardest part of all of this.

Currently I have 3K in my IRA, I haven't been able to contribute to it since I created it as a roll over because my goal has been to pay down my debt first. I am currently in an internship at the US Senate and not making anything while looking for work on Capitol Hill, so analyzing my income can be a problem currently. (Italics here:) The things you do to start out when chasing your dream...(end italics)

When I was working recently (January), I made about a net of $2K take home each month I spent $630 on debt. I have about $5900 on a 7.99% fixed credit card with its max at $7000, $5700 in student loan debt (originally around 11K) around 4% or so, and $800 on my 14.99% fixed credit card (with a max line of $2500 knocked down from $9000 because I opened a $20,000 line of credit at 14.99% fixed with the same credit company) and I have targeted this one the most, when I was making money, on the higher interest rate with the intent after paying that one off to go to the next credit card with as much as I can and then the minimum payment on the student loan ($139/mo) since it's tax deductible. I learned this tactic from Suze Orman, to pay down the highest interest rate first.

What I am worried about is having to take out of my new line of credit to survive this internship at the Senate to get a job on Capitol Hill. I may do so, but that interest rate is at 14.99% fixed. I can live off of about $1400 per month and each month I usually have about $20 left in my checking account. I am down to the wire. (I think this contributes to my stuck-in-the-mud feeling about money). Elle, I don't think I can contribute much to my IRA or 401(k) until I get a comfortable feeling about my debt. Is this the way it should be, tackling this first before I throw money towards retirement? Or should I attack both simultaneously, and hike less towards the debt each month? I just want to know what to do once I have the option of putting money away, once the political world finally pays something that I have worked hard to earn.

I really like JoeTaxPayer's web page. It is really something I want to explore further. Thank you very much. I will also give a look at smartmoney magazine. I think, also, my next book will be by Mr. Graham based on your advice. I have never heard of it, but if you think it is good I will take a look.

You guys are the best and I thank you for your thoughts. Being young (25 years old) and getting married in July, I don't want to have to learn the hard way, I would rather work the smart way before I jump in and attempt the market.

-Will