How should I invest $10k?

Don't gamble with the money - be conservative. If you can show your dad you can generate a decent return, you will earn his trust as a financially responsible individual.

Find a competitive money market account (i.e. ~4% APY) and put 80% of the money in it. Take the rest and buy a broad energy sector ETF, not tied to oil producers exclusively though. These companies are extremely profitable, will continue to be so, but lately have been severely and unfairly punished by the market due to the decline in oil prices.

In the meantime, educate yourself on the markets, what moves them, learn to tell real actionable info from BS and you should do fine in the long run.

 

Go get a job at McDonalds and buy 1/3 position MCD when you start, 1/3 after 6 months and 1/3 after a year. Your job is your hedge. Your time has low value, except for the skills you can build.

 

hahahahaha lmao

 

Despite the gloom associated with a global recession, a widespread bear market and a largely unpredictable war, there exists an investment opportunity that's 100% immune to it all.

These securities feature unlimited upside potential, zero risk to principal and, best of all, guaranteed profit. In other words, they are the Holy Grail of investing…and they form the perfect centerpiece for our Oxford Fortress Portfolio.

These securities are neither obscure nor newfangled. In fact, they were created by one of the largest financial institutions in the world. They're highly liquid and traded on both the NYSE and AMEX.

They're called market index target term securities (MITTS). If you don't already own them, it's probably because you didn't know they exist. But now you do, and here's why MITTS investments should be a part of your portfolio…

 

Would like to hear a bit more about the MITTS. Heard about them years ago and forgot about them.

 

Never mind, I found some info. A simplification - they take the proceeds of $10 buy a $5 bond which will mature to $10 at expiry (thereby guaranteeing the $10 initial cost) and using options with the other $5 to create a synthetic long position in the underlying index.

"Investment firms are constantly looking for creative ways to get their MITTS on people’s cash, and most of these ideas are — to steal a joke from my wise friend Less Antman — NUTS (New and Untested Terrible Strategies). MITTS aren’t the worst idea in the financial universe (selling naked puts is the worst idea), but they are very expensive insurance against a very unlikely scenario.

Briefly, MITTS are derivative securities — a manufactured product like gefilte fish, which is not an actual fish ("I caught a gefilte fish!") but derived from fish. They promise to pay at maturity an amount no less than they were issued for — and no higher than some specified ceiling. Just how well you do within that range depends on the performance of some market index. As an example, Merrill Lynch’s Technology MITTS were issued in August of 1996 at $10 per unit and promise to pay between $10 and $20 to the holder at maturity in August of 2001, depending on the performance of the CBOE Technology Index. No downside risk (ignoring inflation) in exchange for limited upside potential.

So far, so good, but there is more to it. The payoff is not based on the increase (if any) of the index over its price in August 1996, when the securities were issued, but on the increase over 112.5% of the index, so that the buyer gives up the first 12.5% of appreciation. Also, since the index doesn’t reflect dividends (which are admittedly small, but might make up 1% a year over that time), the owner also gives up around 5% more. Thus, you are giving up about 3% per year over the 5-year life of the product. If owning the stocks directly might have earned you 10% a year, now you will earn more like 7%. You will have $1.40 for each dollar you started with instead of $1.61.

And you are limiting your gain to an absolute maximum (in this example) of 14.87% a year, which is what $10 growing to $20 in five years represents.

The insurance MITTS provide is expensive because the stock market rarely loses money over a five-year period. (In fact, notes my friend Less, a mixture of 50% U.S. stocks and 50% international stocks has never done so, even with a start year for the investment of 1929.) Of course, going forward, anything’s possible. ("In the entire history of this city," you can just hear the San Francisco real estate agents reassuring prospective buyers in 1905, "there has never been an earthquake that caused really serious losses.") So there could come a time MITTS buyers have the last laugh.

To play it safe in retirement, consider putting equal amounts into a broadly diversified U.S. stock portfolio or index fund ... a broadly diversified international portfolio or index fund ... and a short-term bond fund."

I recommend buying the SPY, QQQQ, or the XLF if it's long term.

 

Knowing what I know now, I would put it in a small cap index fund.

 

this is a post that should be ignored. People with "secret" information are not something an 18 year old investing 10K should listen to

 

Whatever you do, don't put it all to work in the market at once. For long-term investing, dollar cost averaging is the way to go. Since you have the opportunity to wait just about as long as anyone investing today, I would start to look at some ETFs of the most beaten down sectors, and just start nibbling - maybe 50 shares at first, wait a few months, and buy a little more if they're down. XHB and UYG would be two I'd look at. You may, however, want to hold off a few months before you start, just in case they fall off significantly from here. You could stagger a few CD's until then if you like - maybe a 6mo, 9mo, & 12 mo, for example.

Keep in mind the tech bubble burst resulted in an 80% decline in the Nasdaq over 3 years. It then recovered 300% over 5 years. Right now financials, as measured by XLF, have so far fallen only 55% at the July low, roughly just over a year from it's peak. What I'm saying is, there could be more pain, but if you're in when it recovers, you'll be a happy camper. Indices don't go to zero.

You're young so that's the time to be aggressive, but also patient. Good luck.

 

I don't know why I am about to get involved in this but you don't ask the family doctor to perform surgery and you shouldn't ask for investment advice on a trading forum.

I'm not saying I don't agree with some of what has been posted on this thread but this is not the best place for financial consulting.