For most people who want to invest they set up an IRA in a mutual fund either through their employer or own their own. You probably have heard your parents say this is the way to make you a millionaire by the time you retire. If you earn 8-10% of compound interest while adding the maximum of $5,000 a year you will have at least one million dollars at the age of 65. This was told to me starting out because historically that is the way the market has performed. In reality it has been much different. If you started investing in the S&P 500 at the start of the dot com bubble in 2000 which is now ten years ago your investment would have negative returns. From January 1 2000 to January 1, 2010 the S&P 500 is down 22.65%. Not to mention if your IRA investment does not meet the “minimum amount” according to your financial institution you might have to pay $10-20 fees per quarter. So now you’re losing the hard earned money you thought was going to make you a millionaire when you retire and you’re probably paying some fund manager to do this for you.
The bottom line is your friends and parents investment advice may not be the best for you. They have good intentions, but you could have put your money into a risk free online savings account earning 1.5-4.5% during those 10 years. The most important thing is to stay on top of your money and savings for the future. Don’t give your money to someone who is earning an above average return simply because they are earning that return. They may turn out to be a criminal and you could lose everything. Only you and you alone can determine what the best option is for your money. So be smart, take time to research good options, and don’t let others gamble away your future.