Equities
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Investing in EquitiesLong-term, my opinion is that equities is how a vast majority of people (>90%) should invest. Probably the only exceptions to this are if your real job is related to an asset class so that you can be a professional at it. You're probably better off following the advice in this page than worrying about complex asset classes like real estate. The most important piece of this is to harness the power of compounding! You're young. (Ok, maybe you're not when you're reading this, but I can guarantee one thing, you are not getting younger, so start now!) Take advantage of that long time horizon to make future you love past you.
I don't know what options you might have in your retirement account (i.e. 401k) but there is a pretty good chance it's covered in one of these portfolios.
Finally, watch these videos:
Yes, they're more than a little boring. Sorry about that. But I really believe if you follow these concepts you will be super successful financially and prevent people from taking advantage of you in your financial life (and trust me, plenty of people will try).
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Never Forget!Investing is ALWAYS going to be trade-off of two things (plus another):
- Risk
- Return
The higher the risk, the greater the potential return, and vise-versa. If someone tries to sell you something that is low-risk and high return, walk away.
The third thing that also comes into play is liquidity. In particular think about things like real-estate which can't be quickly sold, versus cash which doesn't need to be sold.
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What should I invest in?You should invest in the assets that aren't going to make you a nervous wreck. Different people have different tolerances for risk, but really there are two that have a bunch of different options that hopefully work for you.
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Index fundsYes. These have low fees and if you choose the standard stock indices (S&P500, Large Cap, etc...) they have historically good returns. For specific recommendations, I'd follow the advice of the three fund portfolios listed above.
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Target dateAlso yes. These work by you setting a date that you expect to want to get the money. They will automatically rebalance the portfolio over time from high return investments to low risk investments so that you get the advantages of growth with planned stability at the end.
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FeesWhen in doubt, choose the options with low fees. Fees come straight off of your return. Thus a fund that is under .25% will perform significantly better than one that is 2% because of math.
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Employee Stock Purchase Plan (ESPP)You should do this! But I cover it in more in-depth in the ESPP documentation.