Stocks or just plain savings acct?

Discussion in Savings & Investments Plans started by Earthmama1 • Mar 12, 2014.

  1. Earthmama1

    Earthmama1Member

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    I am looking to put some money away for my daughter. I am stuck between eatheir opening a saving account and letting the money earn interest but Im not sure if that is even worth it. Or opening a stock and bonds thru merril edge. The thing with that is I could loose every penny I have out in over night. Or it could go the other way I could earn thousands for her. I so lost on what to do. Some help please!!
     
  2. crimsonghost747

    crimsonghost747Active Member

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    YOU CANNOT LOSE ALL YOUR MONEY ON THE STOCK MARKET IN A SINGLE NIGHT! (sorry, but caps really were necessary)
    That is, unless you are a complete and utter idiot, which obviously you are not since you have already shown quite a bit of intelligence by searching for advice. Many people have this misconception but it really isn't possible unless the world ends, in which case you probably won't be missing your money either. That or you investing 100% of your money into a single high risk instrument, which is something you don't want to do.

    Seeing as we are talking about money for your daughter, I assume the lenght of time we are talking about here is 5 years+ ? In that case, I'd definitely go with the stock market. Say we are talking about $10k, you could split that into 5 x $2k and use that to invest into 3 stable companies paying out a reliable and affordable dividend (take a look at dividend aristorcrats) and the 2x $2k could be used for example to buy a low risk ETF, maybe something that is directly tied to an index.
     
  3. GottDeals

    GottDealsNew Member

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    I have been looking at investing in the stock market too. I did a little bit in the late nineties when it was pretty easy to do well. I did pretty good in a penny stock back then and I thought I'd try again but admittedly there is a lot that I don't know. Once again I'm pretty new at this and I was looking at a micro-cap stock (The ticker is "BFLX") that keeps going up and down between 0.0005 and 0.0003.

    I've already read up on penny stocks enough to know that "liquidity" (daily trade of more than 100,000 shares) is important. But "what gets me" is if I am reading this right, I could buy 300,000 shares for only a $150 bucks. And if that's true then that would max out trading of that stock for the day. And what if I want to sell all of it on another day. That's got to be a recipe for disaster. Again, that's only if I am reading this right. It'd be great if a more seasoned trader would take a quick look at it and tell me whether I am looking at these number wrong or not.
     
  4. Sly14Cat

    Sly14CatActive Member

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    If you plan on investing in stocks, just remember that a mix is good. Investing multiple stocks will reduce your losses if you happen to have any, and stashing some of your money in a savings account instead of all of it in stocks will ensure you have a backup in case something goes wrong.
     
  5. ExpertAdvice

    ExpertAdviceActive Member

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    Good job on looking out for your child, I respect that, a savings account is not as risky as a stock portfolio, bear that in mind, with a savings account, you cannot and will not lose money, the only time you lose, is if you withdraw the money and spend it. But with a stock portfolio, it is much more risky and you will either see significant gain or significant loses. I believe that the reason savings accounts are not ones from with you can lose money, is because savings accounts aren't really investments. They are more like a piggy bank but with interest, as opposed to stocks which is genuinely like operating a business, so you should expect gains and loses. I would go with choosing stocks, but the moment you see things beginning to slip, pull out, because it's all you've got, I hope you make gains and not loses and I hope you help your child well, regards!
     
  6. owesem75

    owesem75Active Member

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    I respect parents thinking about savings or investing for their children's future. Savings is good - although it will give you some income through interest, you also have to watch out for inflation rate. You may think that getting interests adds value to your money - but the inflation rate will eat your income. Investing on the stock market is a little risky.. so you may want to study it first before buying your first share. If you are still confused - but your real intention is to save for their education (or any other reason), you may want to get your child an educational plan that is linked to an investment.
     
  7. Denis Hard

    Denis HardWell-Known Member

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    For someone who is into long term investment then the stock market could be a great place to invest your money and earn a lot more than you would if your money was lying in a bank account earning almost no interest.

    Find undervalued stock and buy. Hold. Wait for the stock prices to start rising. Be patient. When you think the stock has hit it's peak, sell.

    Repeat the process.
     
  8. Onionman

    OnionmanActive Member

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    If you are looking at saving over the long term then leaving the money in your savings account is a very weak option. Inflation alone will eat away its value over time and you'll only get sucked into the money illusion of your savings - i.e. you think that you've saved a lot because of the face value of what you put in but in real terms it will be worth a whole lot less in 20 years time.

    Obviously, there's always going to be a degree of risk if you invest elsewhere, which is why the idea is to have a diversified portfolio of investments and to play the long game. There are no guarantees in terms of returns but cash alone is a very poor option when you are thinking long term.
     
  9. xTinx

    xTinxWell-Known Member

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    If you want a safer option, then go for a savings account. Your daughter may be able to comprehend the rules behind a bank savings than investing in the stock market. It may take some time for your money to grow through this option but it's a good start-up saving option. Stocks require a great deal of study and if you can't get the ins and outs of it, you'll likely experience great losses. Also, be prepared to save a large capital.