Thanks guys, I will be turning 20 this month and figure now is a good time to start to build wealth. A Roth IRA sounds like something I will be interested in. My credit union has advisors and I will talk to one about a Roth IRA. Maybe I will keep the mutual fund and just split my money between them. I don't haver much money to play with at this time but now is a good time to learn. Although I will add a few grand a year to my investments and in a few years will have a couple of bucks in them.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

Yeah I decided not to buy the reel and am putting the money towards this. I will save all of the toys for when I have money!

I figure that reel would probably be costing me a good chunk of an S class 40 years from now.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

Here is an illustration of the powers of compounding and investing earlier rather than later.

Assuming an optimistic 10% compounding rate:

Investor A funds his Roth IRA with $2000 and continues to fund it each year from age 21-28, a net investment of $16,000, and then stops contributing.

Twin brother Investor B can't get it together and starts funding his Roth with $2000/year when he is 29 and continues until he is 60, a total of $64,000 in contributions.

Who ends up with more dough?

Investor B has $378,500.

Investor A has $515,200.

glenmore

Why not buy a house? You can buy with no money out of pocket and have huge returns.

__________________
1994 C 280 117.5k, White (Good as new)
1997 Toyota Camry 149k Miles (Not so pretty anymore)

1990 190e 2.6 95k (Sold-Should not have)
1981 240d Stick ??? Miles...sold

Here is an extreme example of the power of compounding.

Suppose you were offered a job that would last only 30 days. You are offered two types of pay. The first choice you have is $100,000 a day straight pay for each of the 30 days.

The other offer is 0.01 for the first day, then doubling it for each successive day over the 30 day period you would work.

Which would you choose?

Solution:

The first is straight forward. You end up with 30 * 100000 = $3,000,000. You'd be set for life.

The second choice requires brute force to figure if you don't do the exponentiation. Recognize the compounding is at a 100% rate for 30 periods. I'll go the exponentiation route rather than figuring the pay each day and adding it all up.

Earnings = 0.01 * (1 +1) ** 30 = $10,737,418.24

You would do far better with the penny a day doubling each sucessive day.

But there is a lesson here. If you do not work the full 30 days you will get much less. For 28 days work, you would only get $2,684,354.56 which is less.

So to end my post, if you plan on enjoying the significant power of compounding, you must leave the money there. There ain't no free lunch!

__________________
Lawrence Coppari

2002 SLK32 AMG
2005 Acura TL
1987 328GTS
1986 944T

I would but I am in college with no real job. I would never be able to get a loan. I think a car loan is about all I could get at this point in my life.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

Hi again

I think the best you could do is spend the money on a finance education.
A CPA would be a good start.

The one thing that I think many agree on is to know what you are investing in. Buffet is often quoted and he says that he does not invest in technology because he does not understand it. He knows his companies and loves cashflow.
Diversification is important as many have mentioned and I think your investments should be diversified away from your prime source of income.

Market timing?
Sometimes things do get ridiculously overpriced and underpriced. If it looks like a duck...

Spiral