I used that rent vs buy calculator and have realized that buying a house for a short term would not be worth it. So all this money I have been saving for a house… I would like to invest it in something aggressive for a 2-3 year gain. I want to put most of it into my IRA so when I take it out to buy a house, the earnings are tax Free.
With my current IRA I can only buy into American Fund Mutual funds. I would like to invest in some stocks as well. Any advice would be helpful. Thanks!
December 2nd, 2007 at 1:06 pm
Keep in mind that your calculation for a home purchase should be based on the mortgage down payment, unless you intend on a full home purchase. A mortgage down payment typically ranges between 0% and 20%, but can be more. Mortgages can be constructed on a set or an adjustable rate. The difference between these types of rates is important to understand and should be researched further to understand which type applies best for you.
An IRA is a terrific way to save for a home because this security has been given the special privilege of a $10,000 payout for first time home purchase. The payout comes tax free, which will not be found in many other securities. A traditional savings fund will be taxed for a capital gain, which is the money that has grown above the original investment (interest over principle).
If you have an interest in stocks, I would recommend researching companies in technology, financial services and healthcare. For a highly risky, but potentially rewarding investment, you may also look in to financial firms that are involved in mortgage backed investments. Companies like Countrywide and Novastar Financial are interesting stocks because of their involvement in stabilizing the sub prime crisis. This crisis has gathered so much attention that those companies with the financial strength to provide aid will either plummit or explode. Such a risky industry has the potential to rebound into extreme earnings; however, the converse is also possible, and this causes most analytical types to be weary of these types of stocks. I anticipate that due to the federal governments active involvement in rehabilitating this crisis, the industry will become stabilized by the end of 2008 and begin moving toward very high earnings. This may not be the ideal time to invest in such companies, but I beleive there is great potential for investors who get involved before the industry does begin to attract investors’ attention.
December 3rd, 2007 at 1:49 pm
Not to be rude but you can’t honestly tell people to look for firms with mortgage exposure? Especially firms that play in the sub prime market. Countrywide is more likely to go out of business then make people any money.
If you are trying to get some market exposure I think the best way for a beginner to accomplish this would be through indexing. You will get the return of the index you select through minimal fees and would limit your risk. Consulting with a financial planer will give you more options.
December 10th, 2007 at 4:53 pm
If I were a day trader and wanted to see quick earnings, there were a few mortgage backed firms that could have done it last week. If I were advising someone to make a long term investment, I would recommend he stay away from individual stocks and look into Blackrock Funds. Then again, if a person wants to invest in stocks, their needs must be evaluated first. For instance, a person who wants to see growth should invest in Tech Stocks, a person interested in income should invest in Pharmaceuticals with dividend payouts, and a person interested in evading US market instability should invest in Internationals. In my opinion, internationals are a better investment than stocks that are based on indices. Sergik12, however, makes a good point in saying that Countrywide is a risk, but what every investor should recognize is that the greatest risk brings the greatest reward and the original question was to determine an agressive investment idea.
A person interested in an agressive investment strategy will be interested in stocks with a high beta (a measure of investment risk). Evaluate Countrywide Financial Group and notice their volatility. In addition, while this company is likely to have difficulty with it’s corporate restructuring, management could turn this company into a powerhouse, whereupon this stock could become very valuable. Indexing will not help an investor interested in an agressive strategy.
January 7th, 2008 at 12:09 pm
Good points but you just lost your investor 32% of their money since Dec 10th.
go Countrywide Financial Group.
What do you think will happen when all the ARMs reset this year?
January 7th, 2008 at 12:21 pm
Well, we will see what it’s like in 2-3 years as that was the timeframe.
January 7th, 2008 at 1:43 pm
Unless you are going to build a complete portfolio consisting of a minimum of 20 different stocks, I would not invest my ‘house fund’ in individual stocks. While we can all ’speculate’ about the current subprime status, none of us can ’speculate’ the chance of a CFC getting whacked with some company specific event. Without diversification you are just gambling and taking unecessary risk, any run of the mill financial advisor can tell you this. If you want an avergae 10% annual growth rate, look for an index fund or enhanced index fund. If you want to find the asset that has dropped the most and attepmt to catch that falling knife hoping for a big rebound, look at the US Dollar or Japanese Yen.
large systematic risk = large potential reward
large unsystematic risk = a bad idea
January 7th, 2008 at 2:13 pm
Good point Gabadoo, a basket would definetly be better.
Also pbucelwicz if you lose 32% in 2 weeks you should be out of that stock. You can’t justfy holding such a huge loser.
January 7th, 2008 at 2:14 pm
Haha. Agreed.
January 7th, 2008 at 11:02 pm
Well, gentlemen, we will see where the mortgage investors go and in the mean time my advice stands… that those who want large rewards must take large risks. Those with a conservative tolerance should consider a portfolio, and those with a moderate tolerance should play the index game. My advice is based on the unsound anticipation that while everyone else is running for the high grounds of security, this industry may prove to do quite well and those who have a stake will be glad they stuck around.
Hot industries for 2008 appear to be Biotech and Telecom. I would advise that those who would like to see some growth this year find themselves some public ownership in either of these two very promising industries… as far as my company specific recommendations, I have learned not to tango with the “over” analysts that have membership on this site. It’s not all science. In fact, the best investing is based on world economics and politics, and an understanding of where people are directing their free time and attention.
January 8th, 2008 at 8:32 am
Sir, I believe you listed yourself earlier as a financial advisor. Well congratulations on passing the Series 7, quite an achievement. Unfortuantely for you, this only licesnses you to ’sell’ those stocks that your company is reccommeding and in the format they reccommend it in. It does not allow you to ’sell’ the same idea you have swallowed in your own portfolio (as I am 100% convinced you own CFC) in order to provide yourself with some reassurance.
In fact, analysis IS all science, a wonderful science I have spent much of my life studying. You want top down approach, ok, we’re heading into an election where the outcome appears to be a mega liberal president and a populist vice president. That is a recipe for financial market meltdown. We are currently in the first quarter of a protracted recession, and while a cut in interest rates might briefly stabilize mortgage rates, the current rampant level of inflation will surely tie the hands of the fed from any real rate cutting. This is definitely NOT the kind of market where one buys what everyone else is selling in hopes that the world soon comes rosy again.
You prefer bottom up? Millions upon millions of investors, traders, advisors and charlatans such as yourself have succumbed to the infamous ‘bottom picking’ strategy. You feel a sense of wholeness and power in being able to ‘call the bottom’ and be the first one in line to say it is all over. Unfortuately for you, 98% of the others lost all their money. This is why we say things like ‘the trend is your friend’ and ‘don’t catch a falling knife’. FACT: Price moves up when there is more buyers than sellers. FACT: the bulk of the market is comprised of institutional money spending millions of dollars on research and I am quite certain that this research has proved to be slightly more correct in NOT buying now than your armchair research with the faintest glimpse of a thought in one hand and a beer in the other. Here’s another little tidbit for you, companies that have been wiped out like Citi and CFC, they rarely if ever have a “V” bottom. In fact, you can be assured that any sharp and quick rallies are just ‘dead cat bounces’ designed to pay shorts and capture sucker bottom pickers. No this stock will flatline for awhile before ever truly rallying again.
Here’s a piece of advice, if you want to risk your own funds and gamble in market, feel free. Don’t delude yourself into thinking it isn’t a science, or that you know more than the thousands of decorated analysts. But when it comes to a message board, and someone elses money, don’t ever talk a person into stupid risk. It’s completely unprofessional and looks amazingly poorly on you and your firm. I’d hate to see what they would say to you if they knew you were on a message board touting for people to dump their house fund into CFC….especially after looking at YOUR portfolio.
December 29th, 2009 at 12:41 pm
Is there any Muscle building supplement that you’d recommend? I wanna try one but I do not know which is best.
April 2nd, 2010 at 7:23 pm
however I’m searching about it very long time and I can not discover any data, and it is important.
September 2nd, 2011 at 8:02 pm
I have observed that online diploma is getting well-known because attaining your college degree online has developed into a popular method for many people. A large number of people have certainly not had a possible opportunity to attend a traditional college or university however seek the increased earning possibilities and career advancement that a Bachelors Degree affords. Still others might have a degree in one course but want to pursue anything they already have an interest in.