Expert: Paul Henneman - 6/26/2007

Question
Hey now,

I'm a 26 year old in the banking industry.  I can expect to earn an income in the mid $40k's over the next 2 years (if i decide to stay in retail banking).  I want to invest my money in products that 1)are growth oriented-I can afford a higher degree of risk (I'm single); 2) allow me the ability to learn how to invest wisely and be profitable; 3)again, are growth oriented.  Eventually I want to invest in commercial/multi unit real estate.

Answer
George,
  Thank you for your question! Yes, I completely agree that a young person such as yourself should be fairly aggressive in their investments. As you get older, late forties and early fifties, this changes to more of wealth preservation that wealth growth. But at your young age, there is plenty of time to even out any bad years due to the riskier nature of growth oriented investments, and over the long haul you will do much better.
   Clearly a portfolio of stocks is the best way for a growth oriented investor such as yourself. Perhaps some percentage of your investments could go into mutual funds, such as an index fund that tracks the S&P500. If you work offers a 401k plan, the tax advantages are very significant and should be taken advantage of. Most 401k plans have decent mutual funds in them.
   But you should also begin to form a stock portfolio for more aggressive growth. How you select the stocks is the trick, this takes knowledge and skill. I would suggest reading first "Investing for Dummies". While not a flattering title, it will give you the foundation of knowledge you need for more advanced research. After that is complete, I would suggest reading any of the books by William O'Neil, founder of Investors Business Daily (IBD) to see if his technical analysis approach is of interest.  It can be complicated, but he gives you everything you need to identify attractive stocks based on their earnings and technical analysis.  It is a great place to start.
   Some online sources to investigate are www.motleyfool.com for general topics and chat rooms, and finance.yahoo.com for data on just about any stock that you find an interest in. Some of the best publications are The Economist and The Financial Times.

I hope that this gets you started! Please do not hesitate to follow up with me if I can offer anything additional as you begin to build your investments,

Best Regards,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com