Help me figure out how to get started.

[dividend]

All right guys. Help a total newbie out.

Here's my situation. I'm 29. Right now I have a Roth IRA that I max by the month, and will have a 401k in a few months. I have $1k/month available after all my living / fun expenses. It was suggested to me on YM that I should look at taxable investment accounts.

Say that I have $6k to start out, and would then dedicate $750/month for investing. I don't want to end up with $0, but I don't need this money for 10+ years, and I want it to grow. It's not retirement money, per se, because I want to retire early, and will need it to bridge the gap until I can tap my IRAs/401k. I would think at this age I could tolerate aggressive risk now.

What do I do? I looked at Vanguard, since generally people seem happy with them, specifically the 500 Index and the Emerging Markets Stock Index. I'm also interested in investments that track gold and silver. Good ideas? What else should I consider?

[Bluerobin]

dividend, I had the same goal as you, but I put money in the non retirement accounts first. I wanted to make sure I had the money to use for early retirement. At the time, we only had traditional IRA's or 401k's. I put in up to the employer match. The rest was divided between savings, EF, and unofficial retirement funds.
I chose dividend stocks, in mostly conservative companies and local utilities. I had all dividends reinvested. This actually builds the account steadily. If taxes are a concern, look for triple tax free muni's. Bonds from your state, PR, VI and DC. There are still some good ones out there, and most are selling at a discount.
Ok, I told you things contrary to what most others would, but they worked for me. I retired several years ago at 56 and I am still not old enough for SS.
Keep the investments conservative and be sure they produce a dividend that can be reinvested. Re-evaluate every quarter. With the right stocks, a lot of change won't be necessary.

[yclept]

Given your stated goals, the first step should be to establish and account with a discount broker. If you send the money to a fund house like Vanguard, you are stuck with their specific products. If you set up an account at a broker, you can buy a much broader range of instruments -- including mutual funds like Vanguard if that's what you decide you want.
Then start studying. While learning you might want to just park the money in unleveraged ETFs. I'd suggest using a timing signal to get in and out -- something along the lines of the 5-15-50 moving average that I track here on another thread. However many folks disagree with that approach and would advise staying invested (long) through all markets.
After reading and learning for awhile you will begin to know whether you enjoy investment analysis (in which case you want to self-direct your positions) or if you want to make use of a professional adviser. You need to learn basic principals of investment analysis in order to evaluate advisers, if that's the way you want to go. If it's an adviser, you want one who's fee-only; you don't want one who sells you stuff and whose compensation is directly linked to your investments. Personally I believe self-directed investments are the best way to go if you have the time and are willing to do the required analysis. Start with simple instruments and broaden your toolbox as your knowledge increases.
The important thing at your age is to build the portfolio base and learn the investing style best suited to you. You will see many market cycles (both up and down!) to let the market grow your assets.
Being able to tolerate losses from high risk positions and being able to identify the right times and instruments to use are two different things. Don't be too anxious to leap before you know how to look! At your age I'd take a hard look at real estate as an investment. The combination of a depressed market and historically low interest rates have created a once-in-a-lifetime opportunity for anyone with the time, assets, and patience to ride it out -- but that's just my opinion.

[phil5185]

Right now I have a Roth IRA that I max by the month, and will have a 401k in a few months. I have $1k/month available

Say that I have $6k to start out, and would then dedicate $750/month for investing. I don't want to end up with $0, but I don't need this money for 10+ years, and I want it to grow.

1. Continue the Roth $5000 and fund the 401k at least to the 'match'.
2. For the taxable account, I would use one of the no-load 'majors', Fidelity or Vanguard, they are oriented to service core investors, and their costs are less than the specialty brokers. (And they can broker any kind of stock that you need.) Also, a feature of a taxable account is that you can comfortably fund it with 100% - it can be immediately retrieved if an emergency occurs - so you can invest the whole $6k plus $1000/m.

IMO, the SP500 Index Fund or the Target2040 would be the right choices. They grow tax deferred and are subject only to cap gains tax on profit if you sell some.

[yclept]

I just assumed that with Vanguard you would be stuck with only their instruments -- didn't know that they would let you trade anything. If that's the case, then they may be as good a place as any to trade. Compare commissions.

[danshirley]

Vanguard has a more or less full service brokerage (I don't see options anywhere). If you're Vanguarding it is fee free... non Vanguard transactions have a fee structure that discourages a lot of small non-Vanguard transactions for small accounts:
personal.vanguard.com/us/whatweoffer/stocksbondscds/feescommissions

Correction... I do see options.

[dividend]

What are options?

[yclept]

"What are options?"
If you have to ask, you don't want to know yet. You can find a lot of these terms at wikipedia and investopedia.
en.wikipedia.org/wiki/Option_(finance)

[bobosensei]

My twin! Sort of DH and I will be turning 29 this month. We max roth IRAs, but we also max out 401k and TSP for tax reduction purposes. Right now neither one of us get a match. We don't own a home or have kids so it is about the only thing we can deduct. But we don't necessarily have plans to retire early so access to money isn't a factor for us. Still we recognized the need for taxable investments to build wealth. So we opened an account with vanguard (S&P 500 index). I'm very happy we did this. We have an etrade account with a few thousand in it, but I just can't really get into it. I ended up buying coke stock which has done well, but I don't own enough for it to really matter.

[yclept]

D.I.
I don't necessarily agree that options are riskier, in fact, if used conservatively I think they offer less risk, but also limit potential reward. But they are more complicated, and in order to have any chance of investing in options well, one must first know how to value the underlying stock. So stock evaluation has to come first.
dividend and bobosensei,
I almost hate to mention it since right now it's a pit full of vipers, but for people needing to reduce taxable income, state and municipal bonds have to be considered. Back when I was paid money to do things, I carried some of them, but that was a kinder gentler time when the only blow up I remember (though fortunately didn't own) was Orange County CA. It's a lot harder to find safe instruments in tax-exempt bonds nowadays. If the last crash taught us anything, it should be that ratings by Moody's, S&P, and that other one whose name escapes me right now are completely meaningless. Well, not completely meaningless, a triple A rating probably means that the initiator of the instrument paid the rating service a hefty fee to get rated triple A, not that that's of any help to someone trying to find out the quality of the bond. I guess if I were looking for a municipal, I'd drive around and see which cities are still paving their roads, maintaining parks, and such. They're probably much less likely to default. Another way might be to find out which munis or state bonds have credit default swaps available. Again, after the last debacle any financial company writing insurance against bonds has to have been whipped enough in the mortgage crisis that you can pretty well bet they only write against very solid bonds. I wouldn't buy the swaps; just knowing for which entities they are still being written would go a long way in sorting the chaff from the wheat.
Now that I appear to the IRS to be as poor as a church mouse (since the majority of my assets are in a Roth), and nobody pays me money to do stuff because I got old enough to not have to do stuff, I have no further use for tax-exempt bonds. Now, if I could only do something to get rid of the damned property taxes!