Beginner Investing/Oil Commodities

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Question
Hi Steve-

I don't know much about investing.  I have about 100K in VFINX and think I should move 20K or more QUICKLY in an oil commodity and sell in June.  Have no clue how to go about this.  Any information will be appreciated. Thank you so much for your kind time and help.  Have a wonderful day.

Answer
Susie,

typically holding large portions of a portfolio in an index fund like the VFINX Vanguard SP500 is the right way to go as long as there is some diversification with other foreign and domestic indices--large cap, small cap, emerging markets, etc.

In addition, some bond funds are held, with the portfolio allocated according to your age, years to retirement, and risk preferences.

I am not sure why you think it is a good idea to liquidate 20% or more of your Vanguard holding and put it into oil right now, only to sell by June. If this is based on some get rich quick scheme or tip, then I would urge you to exercise extreme caution.

I note that the oil market has been in chaos for months now, with many stock share prices way down.

Typically individual investors possess neither the information nor the market savvy to trade commodities like oil--which are extremely risky, volatile, and can quickly wipe out your retirement savings. Professionals LOVE people like you, it's how they make big money because in essence YOU are the person sitting at the poker table who has no idea what they are doing.

The fact that you are asking me about a trade which "must be done quickly" and must also be sold quickly--within four months, and yet you have no knowledge about how to execute such a trade, indicates to me that the risk here is too much for you and this is not a good idea.

I would advise against this and any similar activity now and into the future--unless of course you are wealthy and quite comfortable losing $20k or more of your current portfolio/savings. If you have the money to lose and really don't care and it would have no effect on your life, then that is a different situation. However, in my experience, people able to lose $20k without worry have stock brokers and investment advisers who are quite happy to do their trades for them.

You would be better served by making sure your current portfolio is properly diversified. If it is not, and you want some sort of commodity exposure and/or to dabble in oil stocks, then I recommend a small amount in an ETF or other low cost fund which tracks the oil industry. I would only do this AFTER the other areas are covered--small cap, foreign markets, bond fund--and you have no personal debt, your mortgage is covered, etc.

And, NEVER think you are going to make a killing in just a few short months. Typically slow and steady wins the race, especially when it comes to retirement savings and individual investor portfolios.

Best,
Steve  

Beginner Investing

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Steve Hach

Expertise

I can field general questions about the stock market and investing. The best ways to analyze stocks for investing, general financial questions about the markets, and questions about companies.

Experience

I am a research analyst for a quantitative stock market research firm. I also have extensive research, writing, and teaching experience in the field of US history with an emphasis on US foreign policy and international relations.

Publications
Various newspaper Op-Eds "Cold War in South Florida Historic Research Study" US Park Service, 2004

Education/Credentials
BA in US History and French MA in US History PhD ABD in US History

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