I presume he means saving in the form of a savings account at the bank, or similar, VS investing in enterprises by buying stock. I could be wrong...

Right, but it's the same. Bank will earn you the risk free rate while stocks have higher opportunity for return but are also more risky.if you want something I'm the middle try a market index. You'll want to consider the tax laws in your country. Specifically since you're a minor you need to make sure attribution won't have your earnings taxed in your parents hands.

Investing. At the moment savings in most banks gives a very low rate of interest and inflation in the Netherlands is between 1.60-2.39% which means that the spending power of your savings is being slowly whittled away. Find some good investments to at least keep pace with inflation.

Do it by priorities: Save first, until you have enough money in the credit union for any reasonably foreseeable circumstances such as that trip you plan to take, having to replace a car, etc. Then save some more to cover about two months of income and you can probably park that in a CD. Then save enough for a down payment on a house or condo, and after that, choose some of the safer investments.

Even banks aren't without risk - you're still giving up the use of your money in order to earn interest, so there's an opportunity cost in putting your money in a savings account.

I tend to disagree...traditional "saving" at a bank is in fact a negative-return adventure, since no bank will pay you rate above the rate of inflation, and thus your "savings" will lose value over time. You might as well just keep it at home and light fire to a dollar bill every day and enjoy the free warmth it offers you.

I tend to think based upon this that steephie is not too knowledgeable about investing, and thus should stick to something like load-free mutual funds or etf's that are tied to an index (which lowers management costs). Find an S&P 500 fund and invest long-term (5 + years at least)...(preferably longer...) S&P will forever go up (if history is any indicator) -- even the massive loses of the Great Recession of recent times have been fully recovered, and gains have been made (in spades if you were smart) since then...so if you are investing long term, index funds are a no brainer way to go.

If you are feeling risky, find a leveraged (3x) S&P etf (like SPXL) with seeks to perform at 3X the return of the S&P 500 (ie market goes up 1%, SPXL goes up 3%)

Democrat President, split legislature, a Fed that has promised to pump free money in to the markets indefinitely...S&P is a Bear market for the foreseeable future, and you should be in it.

BitCoin

krellin: I know about the negative return aspect, but you can also consider it as a discount on keeping your money, and I do add more money myself...

Investing long term, low risk sounds like the way I would go if I invest.

I wonder about a couple of things though. I think the easiest way to work it out is a hypothetical situation.
So, say you have about €10,000 to spend, what would you do with it? All in S&P 500 or something?

Also I'm not sure if I would want to be unable to get my money back when I suddenly need it. Is your money really locked for 5 years, apart from maybe the dividends or however it's called?

I obviously do not have experience in the subject. The situation I'm in right now is that I might not need the money, but I don't need more money either. Of course more is better, but is it worth any risk?

Neither. I'll be deep, deep, in the cold ground before I trust bankers or investors.

My car gets 40 rods to the hogshead and that's the way I likes it!

+1 the Abe Simpson.

Gunfighter06: care to elaborate? And do you just keep your money in a sock, or spend it all?
And you don't have to trust investors if you invest... Do you?

@steephie - negative return is 3x as well. Obvioosuly you have to keep an eye on investments, and there is always risk...that's why I say if you do this, it is long-term investing - plan on keeping it there over an extended period (years). Look at the S&P 500 charts over time...I'm not saying it's a no-brainer - but index investing is, well, a bit of a no-brainer.

As for dispersing large sums - no, never all in one place. Spread over different index funds, up to and including international funds if you feel good about what is happening globally. It really sounds, though, like you ought to seek an actual financial advisor...in which case, only work with an advisor who has a fee based on a percentage of your gains, not one that gets a commission for making trades. If your money grows, he gets paid. if not, he doesn't. That's critical in working with anyone.

Alternate investment strategy: Meth. High risk, high reward, and not matter what happens you'll have interesting stories for the grandkids...

Jesus saves ..... but Judas bangs in the rebound <kaboom>

Krellin's advice isnt that bad streephie, but let me tweak his answers a little.

With investing, you essentially want your money to grow faster than inflation. Depending upon how risk averse you are, there are several options. But I'm going to go with your 10,000 euro assumption. First off, I would keep 4,000 of it in a savings or checking account, to cover rent and necessities for a few months in case you lose your source of income. That is your most liquid asset.

Now for the rest, diversification is the key - both across asset classes and within them. If you're being really risk averse, go for an inflation adjusted government bond. This pays out at the rate of inflation plus a small real return. However, since inflation is expected to be so low, regular bonds are probably a better choice. I would put 1,000 in a AAA corporate bond, and 1,500 in government bonds.

The other 3,500 goes into the stock market. As krellin said, market indexes are a good way to go. I would put money in a Nikkei index fund at the moment, and a s&p index. The index funds give you diversification across sectors, and having a couple gives you diversification across countries

Goldie's advise is solid -- keep liquid emergency funds of a couple month's expenditures. ++++

Unless you're rich already, there's nothing to meaningfully invest in, so save.

Except would be long-term savings that may as well be invested at low return anyway, since nearly any return is better than savings. I'm talking retirement, basically.

@ steephie22

My money is almost entirely in gold and ammunition. The gold is a hedge against economic collapse and the ammunition is a hedge against societal collapse.

krellin advises meth. goldfinger is a tweaker.

"Except would be long-term savings that may as well be invested at low return anyway, since nearly any return is better than savings. I'm talking retirement, basically."

Isn't any investment basically saving up towards retirement? I mean, that's how I think of it. You invest money for greater quality of life down the road.

@THM - I had to look that up, and the Internet says its not a very nice thing to call me.

The fun thing about investing is that whilst "sure things" don't technically exist, you can get damned close. There are occasions when there is essentially free money on offer (usually when governments are involved) such as the Post Office privatisation in the UK a month or so ago. They are few and far between, but when you find them it's great.

Most of the time your best bet is to identify long term trends in the world and invest in companies best placed to take advantage of such trends. Video rental companies, for example, are best avoided. Sadly it is somewhat easier to spot things on their way out than things coming in.

Property in the UK is probably a decent shout. A growing economy and growing population combined with insufficient new construction should mean prices go up. Buy somewhere and rent it out and you'll be looking at a healthy return.

Arbitrage is impossible bro.

Actually, there is an investment company out of Montreal that has captured an advantage by investing in the fastest computer equipment in the world, allowing them to be the first people to trade on pretty much any "news." They make quick money and a lot of it for their clients. Unfortunately for steephie it is probably not feasible.

Arbitrage isn't impossible. There are plenty of arbitrage opportunities in the market every day. The problem is that (in some markets) these appear and disappear within a matter of seconds, and have extremely low margins, so only high frequency traders can really take advantage of them

As others have noted, savings and investing are the same thing; the question is which vehicle to put your $$$ in. This choice is a function of your time horizon and risk tolerance. I don't know anything about Holland but in my country the major banks don't offer savings accounts with interest rates that outpace inflation.

As an individual, you should be looking at index funds and ETFs. Selecting individual securities is a fool's game unless you have the heft, access and resources of an institutional investor (and even then its debatable).

Anyone disagrees with goldfinger?

Investing in anything other than gold or ammunition is asinine.

I've always been partial to this style of investing. (My apologies to people who have PM'd me and are waiting for responses. Those actually require a lick of original thought to answer, which I haven't been able to conjure up the last few days.) http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

Yes, in my opinion he is speaking about arbitrage effects, arbitrage business includes that there must be a change of the marketplace.

Saving vs Investing: saving is investing/consuming in the future.

True Gerry, but that's beside the point.

Gunfighter06: how about silver? Platinum? Why only trust gold?

Both. Save, and put X% amount of that to a low risk fund. Or high risk stocks if you happen to have money just gathering dust.

@Steephie - liquidity issues. Gold is much closer to being a currency (if you go by the economic definitions) than any other metal.

"Or high risk stocks if you happen to have money just gathering dust."

I don't see what it matters what my money is doing when choosing between saving and investing... Am I missing something here?

goldfinger: do you actually keep the gold at home? Because if you just bought it at a bank while they keep it, it's pretty much saving isn't it?

I dont own gold, steephie

Oh, you were referring to how it works. Well, while you can choose to hold it in person, how I believe it's done is you simply get a slip saying you have the right to x ounces of gold.

Index Funds.

@goldfinger: that's exactly what happens when you put money on a bank, except that you have the right to your money + interest. So if you don't trust banks enough to put your savings on there, I don't see why you would trust paper gold from the same bank saying pretty much the same thing. If a bank collapses and there's no one picking up the pieces you're not getting what you should get. Wether that is money or gold is pretty irrelevant.

If you don't trust money, that's a whole different story. For now I can't figure out what you really don't trust though.

At least that's how I understand it. Is there any advantage to paper gold as opposed to a savings account when it comes to things going south for a bank?

@ steephie

Investing in anything other than precious metals and ammunition is asinine.

@steephie - Again, I'm not really sure on how this works, but you don't buy it from a bank, but you buy it off the commodities market. You're relying on people eschewing money in favor of commodities (and lots of inflation) for your bet to work. Essentially, you're hoping gold appreciates faster than your investment would. The "interest" you earn is the market value of gold

I suppose that makes more sense :)