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[dragdeler]

Another major question is: How much time do you want to spend to manage your money?

So... personally I'd only ever have invested when "everything" was really low, like in a real crisis, (something I can afford to loose but a good chunk, in moments when it's like: "yeah obviously they'll be back up if we don't manage to end the world, and if we do I don't need money") I try to have the lowest possible cost of living, put allmost all my money on the side, but then I don't work for years (effectively) and when I'm not I often don't even get any other benefits. If I find a good job I tend to work myself up like 5 or 10k, then just live a few years xD, not exactly everybody's cup of tea. Heavily reliant on my region being super rural, and my family super helpful. In the city I'd be pretty much a homeless person.


But there is a very good chance I'll be sorts of groundkeeper at the local recyclingpark, a job I could even see myself holding, well then I'll have my selfbuilt little computer  on the window perch in my little cabin... and about 6h 6days a week for praxis, or checking stonks every 10 minutes.

I could see myself putting in like 200€ and just watching a bunch of pennystock horseraces during worktimes  for as long as I can make it last... I think were I ever to truely invest towards retirement, probably I'd just dedicate a tiny fraction of my income into regularely buying some staple stock, like coca-cola, or well, index funds.

[gimlet]

The accounts that did the best at one brokerage were the ones where the owners forgot they owned them:
https://www.businessinsider.com/forgetful-investors-performed-best-2014-9

The overwhelming majority of people are terrible at picking stocks and timing investments.   The most reliable way to make money has been to buy and hold long  term something like index funds that mirror major market indexes.   Keep investing money over time to smooth out dips, don't jump in and out to time the market or catch trends.   It's almost never worth paying any fees for "professional investment advice" or access to "special mutual funds" or funds with high management fees.

The risk with individual stocks, no matter how safe or solid they seem is that something sudden can crash it with little warning.   And if you diversify enough to mitigate that, well, you're pretty much just doing the same thing as an index fund but with a lot more effort.

And yeah making a small "play account" to satisfy the  active trading  urges is a reasonable idea.

[anewaname]

Do a google of "nasdaq chart" and you should see a market summary chart for the Nasdaq composite
- click the button labeled Max and take a look at the form of the curve
- click the button labeled 5 Years and take another look at the curve
    - compare the margin of potential profit if you had bought in on Feb 21, 2020 and sold yesterday
    - compare the margin of potential profit if you had bought in on Mar 20, 2020 and sold yesterday

The point of this exercise is to show that if you are currently not vested in the market, it might be beneficial to wait for a significant drop.

There are also other indices worth watching, at google's finance or marketwatch.

[Aoi]

Okay, the 5-10k then taking a break thing... probably not the greatest idea, if you're looking for stability, but also bad if you're looking for growth. Straight up, gains are typically looked at in terms of percentage, but there's a world of a difference in real world usability between 1% of 100$ and 1% of 1m$. The other thing is that you have a much wider range of options as the amount of money you can put on the table increases.1

In terms of stocks, I'd suggest a (conceptual) mix between stock picking and index funds... the former is a good way to end up supremely twitchy about everything, the latter is a great idea, if you live statistically... which very few of us do. Instead, fall back on the adage of 'Invest in what you know.'2 and temper it with something that's only really come into the limelight in the last 15 years or so: The ETF. Without getting into the specifics, they're like mutual funds in that they're a collection of other investments, but they're easier to work with and more dynamic for the entry-level investor. You can probably find an ETF that fits whatever purposes you want, whether you think there's going to be a return to oil, or frozen orange juice futures are going to spike. A slight word of caution: Know WHY you're investing, and keep that in mind. I know a few people who refuse to touch anything involving marijuana, no matter how lucrative it may be.

Definitely avoid anything with fees if you're doing a managed fund, as gimlet noted. ETFs have their fees baked into how they operate (which does technically mean it's constantly in a race to zero), but they're usually something like .25% a year... as opposed to 1%+ for managed mutual funds. In today's world, there's no reason for a retail investor to be calling up a person and asking for info and having them direct trades at a commission each time.

If you have access to options, those are... interesting. I tend to run godawful boring conservative plays with them that really only run into problems when the bottom drops out of the market without warning3, but they also only generate like 1-2% a week... not sexy, but compare that to a savings account.4 You can also treat them like lottery tickets, if you run them a different way: If you were in on Gamestop on the 22nd, you could've made upwards of 20x on that day alone.5

Spoiler: Footnotes (click to show/hide)

1. Here's a stupid niche example, because the common ones are, well, mundane: I can legally secure effectively unlimited amounts of free manufactured spending on a credit card that gives 1% back, leading to potentially several thousand a year from this, depending on how much I want to flog it.
2. This is a gaming-based forum, right? I admit it, I had positions against CD Projekt over Cyberpunk... I figured that, no matter what, it had to be PERFECT for it to not go down, given how high it was hyped. And, well, yeeeeah.
3. Yes, COVID had a warning, albeit minor... I was also in SEA when it hit, so I pulled my positions and hunkered down earlier than a lot of the US because they were taking it much more seriously. My portfolio mostly survived.
4. Something like 65% to 300% over the course of a year. More realistically, about 50-100% historically. Can't win every time. See also: The first paragraph.
5. One guy turned 50k into, last I checked, 50m, over the course of a year or so.

Update: Well, that's kind of a surprise. Webull rejected me.

[dragdeler]

Okay, the 5-10k then taking a break thing... probably not the greatest idea, if you're looking for stability

Ok total derail. I'm not. Stability is an illusion but time is invaluable since impossible to reimburse. So you guys are giving out great advice but it's kind of ironic it took a crayon eater like me to hear the more strategic stuff. That being said I understand how well I would be off had I just bought normal stuff 20-30 years ago, not to mention what happens when you pick winner tech companies, like buying microsoft in the 80's, apple in the 90's, qualcomm in the early 2000's or even AMD like only 10 years ago.


That being said I might stick "forever" with the job I'm interviewing for tomorrow... It doesn't get much better than that: strong unionisation, public private partnership that can't tank because 55 municipalities want their garbage taken away, automatic pay raises, the customer are not king -> I am the groundkeeper, loads of physical space for social distancing, and I might get stationed 4-5 km from home the best case scenario is super close.
From an ethical standpoint it's a good no capitalististististic bullshit job because garbage needs to be taken away (even though I don't doubt there could be many improvements as to how we recycle).




As I said I might reconsider one day and aim towards some sort of self-retirement with the kind of conservative investment strategies that have been discussed. But I just noticed that by being liquid I'm capable of buying in crisis, when prices are really low. That's different from when I say horseraces I mean conceptually stupid experiments, but didn't monkey investors outperform by picking stocks randomly in that one experiment? Like here is a silly idea I had: pick a hundred different pennystocks at the lowest possible price, I'm talking 0,001-0,1, bet 2 bucks each, never quit unless at 100% profit, take out the double put it in another pennystock -> you have 100 pokemon, they die if a pennystock goes bust, they evolve in spikes, every evolution equals to times two, so let's see how far one could go up the ²  by landing consecutive heads in a figurative coin throw, with a hundred attempts. It definitly is more interesting as a short YT documentary than a real investment strategy, but that's the kind of silly stuff I could see myself micromanaging when bored at work.

[gimlet]

This is why you have a small amount of money in a "gambling" account, to use up that "I need to pick stocks" energy.   And put the bulk of your money, steadily, over time, into something boring safe and slowly profitable like market index mutual funds.   Trying to time the market even with contrarian "this is a bottom because of a crisis" kind of plays is a limited strategy - what are you doing with your money the rest of time?   The 95% of the time there's not an obvious crisis looming?   Keep it in a ridiculously low yield savings account or cd?  And don't underestimate the amount of energy it takes just to keep up active trading over time, let alone the mental energy to go against current sentiment when you're bombarded from all angles day after day.

I had exactly the same "omg look at the charts, stocks are so overvalued right now" feelings, and kept a lot of money on the sidelines through one of the biggest bull markets of all time when prices kept going up and up from there.   Also you do need to adjust your willingness to take risk for your age - there's a lot more time for a 25 year old to recover from setbacks than if you're about to retire and will probably want to use that money within 10 years.

Read things like "the Millionaire Next Door".  Try to set up something like automatic withdrawls from the account you deposit your pay into into automatic invesments - the thought being if you don't feel it you won't miss it.  If you can actively add to that by saving more money, even better, but it's a huge help to have inertia and "out of sight out of mind" on your side.   The best time to start steady savings/investing is 30 years ago, the next best time is now...

[Blue_Dwarf]

How much profit do things like ETFs normally generate, for small investments?

Current events made me notice how easy it is to get into trading, but I wonder if it's actually worth it. If I invest like $5000, and only get like 50 bucks per year out of it, meh.

[Aoi]

How much profit do things like ETFs normally generate, for small investments?

Current events made me notice how easy it is to get into trading, but I wonder if it's actually worth it. If I invest like $5000, and only get like 50 bucks per year out of it, meh.

Depends on the ETF. Index ETFs tend to be fairly boring, but since they're such a large basket, fairly stable. My choice would be an industry ETF in an area you think will see growth. For extra fun and excitement, you can go with a leveraged ETF, which will amplify your gains from a baseline one... or your losses. You can see a list of five-year returns here: https://etfdb.com/compare/highest-5-year-returns/ (The current funds du jour are those by ARK... I can't really comment on them, other than I've seen them discussed a lot, and their yields seem to be better than most.)

Well, what else are you doing with that 5k? It'd be getting about 0.01% in a bank account these days, or about... 50 cents. 1% is also a pretty low return for a 'normal' year; 5% is something more common for conservative investments, so 250$. (When not faffing about with something specific, I hopefully aim for 5% a week... and usually whiff and land around 2%.) A lot of the newer brokerages can get your money in or out in less than a week, so liquidity's not too big a problem... low friction is what a lot of them are counting on to pull in new clients.

[Blue_Dwarf]

Well, something like $250 per year is only $20 per month. It's just a few hours of regular work. Or you could simply spend less to save an equivalent amount. Investing would actually take some effort that would negate some of the gain. Plus taxes.

If it's possible to get that kind of return in a week, that's definitely interesting.

[Maximum Spin]

If it's possible to get that kind of return in a week, that's definitely interesting.

It is absolutely possible, but you mostly have to not do dumb things (which is often hard), and you will not get the same returns *consistently* because of volatility.