If you have extra money, put it in the stock market in an Index Fund.
Multiple studies have shown that most investment managers can't beet the indices on a regular basis, plus investment managers have to cover their higher management fees.
An Index Fund has minimal fees, routinely beats active investments, is expected to beat inflation and is, for the most part, a hands-off approach. Review your allocation on an annual basis and leave it alone.
On average, residential real estate is expected to increase 3%, bonds 4% and stocks 6%.
I really liked your feedback..hope other realjockers got some ideas..but this right here i could not understand for the life of me...im now thinking im gonna run down to barnes and noble and buy "stock market for dummies"
Couple of other things:
1. A "mutual fund" is where a brokerage firm (like Vanguard or Fidelity) will get a bunch of money from individuals, such as you or I, and they will actively manage the money for you. Say you invest $5,000 into the fund and 10,000 other people invest with the brokerage, then they have $50million to go invest.
2. The mutual fund will charge you a fee each year to manage your money, based on your total balance. They more they charge you, the less you get to keep, thus you want to keep fees as low as possible.
3. "Actively managed" mutual funds are where the investment manager is actively buying and trading stocks. They are trying to beat the market and through all their research and buying and selling stocks, they think they are better than the overall market.
4. "Passive" investments, such as index funds, are mutual funds (see my explanation above) and the investment manager mirrors the benchmark (such as the S&P500, total stock market, Dow Jones Industrial Average, etc) that everybody is trying to beat. These benchmarks don't change much, so once the investment manager sets the investments, they don't need to really do any trading of stocks, thus they can charge lower fees.
Research has shown that only about 20% of Active investments beat the index or benchmark, so for the most part, if you put your money into an index fund, you will, on average, beat 80% of all the other investors.
Hope this helps