Someone asked me this question recently, so I thought I’d make a post here.
The most important thing is that you have made the choice to get started investing and taking advantage of compound annual interest returns as soon as possible. Rule number 1) you will want to open up and invest in a tax deferred retirement account. If you are young like me, I would recommend setting up an individual Roth IRA with the Vanguard group. Rule number 2) you will want to invest in an indexed fund since it is almost impossible to beat the market consistently over the number of years until you retire. Since index mutual funds require a higher account minimum level, I would suggest investing in an ETF (Exchange Traded Fund) with Vanguard. Rule number 3) buy a fund that gives you exposure to the entire US stock market to have sufficient diversification. I would recommend the ETF with the ticker symbol VTI. A description of this fund can be found at the link below. Best of luck!
Another great site for investing in ETF’s is Sharebuilder (a subsidiary of ING Direct Bank – Learn about Electric Orange from ING DIRECT USA. Every dollar earns high interest.). They offer automatic investment plan trades for $4 per trade. They even have a very nice portfolio builder software tool. The Sharebuilder homepage link is shown below.
- If you are interested in signing up, email me at firstname.lastname@example.org, and I can send you a link that will enable you to get $25 free just for signing up!
Keep on learning!