Lilia Beta

When I first turned 18, the first thing I did was open my very own savings account at ING Direct. (What did other children do? Buy cigarettes? What are you supposed to do? People don't even smoke much these days...) I was so excited at the 4.5% interest rate I was going to get! An I got more excited when I got emails ever so often about the interest rate increases (usually after the Fed bumped up their rates).

Now I'm 22, and ING's rates have dropped to somewhere around 2-3%, due to to the economy, of course. I've always hoarded my cash in my tiny savings and checking accounts during school because I felt like I was going to spend it all every month- and for the most part I did. I'm out of college and have been thinking about what to do.

Time to try my hand at investments!

Now, I am not, and probably will never be a risk taker. I would have bought treasury certificates if the yield wasn't so horribly low for what a poor college student had to spare. In finance class, we learned that on average, the stock markets well outperforms "risk free" investments in the long run. I am convinced this is true, but in practice was still unwilling to try it.

Recently, I've been reading tons of investment books, and have decided a small amount invested in a few well-diversified mutual funds could help me test the waters. Also, ING has been spamming me with these emails about their new investment service.

I took a look, and was pretty excited! ING's service is called ShareBuilder, and you can buy and sell stocks for only $4, which is really low. Most importantly, they have no load mutual funds (basically meaning there is no fee for buying/ selling since there is no middleman) from some of the top mutual fund companies! I did a little bit of research and found a list of 25 best no-load mutual funds for 2009 from Kiplingers.com. ING offers mutual funds from some of these top companies, including T Rowe Price and Vanguard.

Im pretty excited! My investment plan will be something like:
$300-500 to start, $50-100 added in every month.
I probably won't sell anything, and will just not invest if I feel it is a bad month (which is unlikely)
In at least a year, I may start taking money out, because I need it for school. This way, I avoid the short term capital-gains tax ( I must hold investments for at least a year and a day).

Consider ShareBuilder by ING! If nothing else, possibly losing $500 (with the chance of gaining a lot more) in mutual funds is probably better than two pairs of designer jeans that only get worn out, in my opinion!

Remember, the stock market returns average 15% in the long term : this could be years or even decades! This assumes also that your investments are well diversified- meaning diversity across industry, nationality, and company size, etc.

And a lot of the funds have lost value during this recession. Mutual funds are NOT FDIC insured, so only invest what you think you can afford to lose (or is not better spent elsewhere, like on tuition).


I'll keep you posted as I do more research and decide on what to do!