|
Last month, I finally paid off my mattress. It took a while, but at $100 a month, I managed to pay it off within the no interest period. So it's kind of like free money. I've been obsessing a tad over money. I feel like I finally mastered saving the stuff, since around 40% of everything I earn goes into savings of one type or another. Now I just need to figure out how to make money money make money money make. My 4.5% APY ING account, while a good place to stash cash for a rainy day, isn't exactly douching me with dividends.
I decided to take that $100 a month that I've freed up and instead of buying beer with it, like my original plan, I thought I'd invest it in the stock market. If I royally fuck up and lose $100 dollars a month, no big deal. So I did some research and decided to go with the advice I read on MSN money. I'm actually investing in 5 different ETFs. I don't know exactly what they are, but they are representative of larger categories of investment strategies, so I think someone is paid around 20 times what I am to decide what stocks to buy and sell each day to make sure my meager slice of the pie grows. So I'm investing in 33% US stocks (VTI), 25% foreign stocks (EFA), 17% US bonds (AGG), 17% real estate (IYR), and 8% commodities (IYM).
It costs me $4 to make a purchase, so to keep my costs down and returns high, instead of splitting my monthly investments five ways, I'm making one $100 purchase each month. And I just try to keep those five categories at that allocation at all times. It forces discipline in not always dumping money into whatever's hot at the moment, but truly diversifying for a long term goal.
I don't totally understand any of this, but all I know is that I put $100 into the Vanguard Total Stock Market VIPER (VTI) (US Stocks). I'm factoring in my broker's charge into my returns, so no net gain yet, but if you think about it as an actual investment of $96, then the current value of $98.63 for my portfolio isn't bad. That's around a 3% return, which if I'm remembering economics correctly equates to a 36% APR. Is that right? If it is that kicks ass. And I need to stop saving so much and start investing more.
If anybody would like to play along, I think you have all the information that I got from MSN Money. Just pop over to sharebuilder.com and get started. I'm really having fun pretending like I'm totally vested in how the market goes every day. It's a good little hobby, and hopefully with a little time, it'll grow to dollar amounts that I feel uncomfortable discussing on a public forum.
| 