Reddit reviews Value Averaging: The Safe and Easy Strategy for Higher Investment Returns

Assuming all debts charging >5% are paid off...

Put it in a Vanguard Roth IRA account if your income is low now. Vangaurd is the only company owned by the users, so the only firm whose goal is not to extract maximum fees from you. They have the lowest fees of any mutual fund company. Start out with 1 stock index fund and one intermediate-term bond fund.

Recommend for 10K

Vanguard 500 Index Fund Investor Shares (VFINX) 75%

Vanguard Intermediate-Term Bond Index Fund Investor Shares (VBIIX) 25%

Read the Intelligent Asset Allocator
http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363

Then read Investor's Manifesto (the update)
http://www.amazon.com/Investors-Manifesto-Prosperity-Armageddon-Everything/dp/0470505141/ref=pd_bxgy_b_img_b

Then read Value Averaging
http://www.amazon.com/Value-Averaging-Strategy-Investment-Classics/dp/0470049774/ref=sr_1_1?s=books&ie=UTF8&qid=1293563274&sr=1-1

As you save more money, allocate it using Value Averaging (yields about 1% greater return in most markets). Once you have sufficient capital, you can consider further diversification. Try to find sectors with minimal correlation.

As you save more money you could then diversify into additional funds with a percentage that looks like below. Pick your percentages and STICK TO THEM regardless of what the market does. That will force you to buy more low and sell high, instead of the natural tendency to buy high and panic sell.

Below is an one example of what you could shoot for in the future. Numbers are percent allocation of total. Using this many funds really requires 100k minimum. Initially stick with the largest percent ones (500 Index and Intermediate Term Bonds in a 75/25 split assuming you are mid 20s) for your 10k start, and add the others as you save more.

Vanguard 500 Index Fund Investor Shares (VFINX) 17
Vanguard Value Index Fund Investor Shares (VIVAX) 8
Vanguard Small-Cap Value Index Fund (VISVX) 8
Vanguard Precious Metals and Mining Fund (VGPMX) 3
Vanguard Energy Fund Investor Shares (VGENX) 3
Vanguard REIT Index Fund Investor Shares (VGSIX) 5
Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX) 5
Vanguard Total International Stock Index Fund Investor Shares 10
Vanguard International Value Fund (VTRIX) 8.5
67.5 Total Equity
Vanguard Intermediate-Term Bond Index Fund Investor Shares (VBIIX) 17.5
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX) 7.5
Vanguard Long-Term Bond Index Fund (VBLTX) 7.5
32.5 Total Bonds

Alternatively you could get an Interactive Brokers account and put it all into stock options, make a boatload of money and then lose it all, teaching you a valuable lesson, so that you will do the prudent strategy above once you have more money... heh heh...

Remember, the goal is not to get rich, but to not die poor.

Good Luck!

Maybe look into Value Averaging.

Hi medstud111, read this book http://www.amazon.it/gp/aw/d/0470049774
and if you know about Excel start using this approach to invest your money. This is the best way when it comes to stock market..low cost, high diversified ETFs where you invest part of your savings every quarter to reduce commission costs - you have to invest money you don't need for at least the next 5 years here. The rest goes in money market and bonds.

I think in this kind of falling markets, some people use value averaging.

Does someone use this technique here? I have not read the book but here is a recommended book.
https://www.amazon.com/Value-Averaging-Strategy-Investment-Returns/dp/0470049774