The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: S127849 on December 25, 2014, 11:17:41 AM
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I got 400$ in Christmas gift money and was wondering if you guys had any suggestions. Also on the note of investing I found some terminology that was a bit foreign to me, what is a total return investment objective?
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What is your situation? Income / existing savings / etc.
Total return means you look at the total annual return rather than the concept of "principal" and "interest".
Example - stocks
Say you buy Proctor and gamble, and the price goes up 7% and pays a 3% dividend. Then you have a 10% total return.
On the other hand if you bought Microsoft and the price goes up 10% with no dividend. Then you have a 10% total return.
From a total return perspective, these two companies have the same return.
http://whitecoatinvestor.com/4-ways-income-investors-get-it-wrong/ (http://whitecoatinvestor.com/4-ways-income-investors-get-it-wrong/) does a better job of explaining this.
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What is your situation? Income / existing savings / etc.
Total return means you look at the total annual return rather than the concept of "principal" and "interest".
Example - stocks
Say you buy Proctor and gamble, and the price goes up 7% and pays a 3% dividend. Then you have a 10% total return.
On the other hand if you bought Microsoft and the price goes up 10% with no dividend. Then you have a 10% total return.
From a total return perspective, these two companies have the same return.
http://whitecoatinvestor.com/4-ways-income-investors-get-it-wrong/ (http://whitecoatinvestor.com/4-ways-income-investors-get-it-wrong/) does a better job of explaining this.
Thank You first of all, secondly this is just going to be a one time investment of the 400$ not recurring. I am thinking of a direct purchase plan to buy stocks. This way I don't have to pay brokerage fees.
http://www-us.computershare.com/investor/3x/plans/planslist.asp?bhjs=1&fla=1&stype=all (http://www-us.computershare.com/investor/3x/plans/planslist.asp?bhjs=1&fla=1&stype=all)
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Hookers and blow.
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Many of the DSP plans have fees of various kinds. Also, you are buying only one company. Is this the start of your investing career? Are you intending to buy more over time with other money? Schwab has a $1,000 account minimum but allows you to buy their extremely cheap index funds with no minimums. TD Ameritrade has no account minimum and some commission free exchange traded funds. Both are worth a look.
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Many of the DSP plans have fees of various kinds. Also, you are buying only one company. Is this the start of your investing career? Are you intending to buy more over time with other money? Schwab has a $1,000 account minimum but allows you to buy their extremely cheap index funds with no minimums. TD Ameritrade has no account minimum and some commission free exchange traded funds. Both are worth a look.
Thank you.
I am just looking at buying one company
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Many of the DSP plans have fees of various kinds. Also, you are buying only one company. Is this the start of your investing career? Are you intending to buy more over time with other money? Schwab has a $1,000 account minimum but allows you to buy their extremely cheap index funds with no minimums. TD Ameritrade has no account minimum and some commission free exchange traded funds. Both are worth a look.
Thank you.
I am just looking at buying one company
You might as well take that $400 to Vegas if you want to gamble. While you're looking up investment terminology, do some research on diversification. That's the only "free lunch" of investing. Buying a single company stock is simply a bad idea most of the time, but it's an extremely bad idea when you're new to investing. Buy yourself a some shares of an S&P 500 index fund or a Total Market index fund.