I guys, I sold my shares in three companies this week as I had to decide between education and money and the obvious choice of education prevailed. So now my question is, what other investment options are you suggesting that I dabble in whenever I decide to resume investing. Also, what is your understanding of mutual fund or unit trust?
So I assume you had to sell in order to finance your studies? In that case, I would just get back to shares whenever you happen to be in a financial position to do so. I'm personally against mutual funds since I can get my hands on most of the instruments they are built out of... so why should I take all the fun out of it and pay someone else to do my investing for me? I understand why people use them, but they just aren't for me. I do use them to gain access to markets (currently south america and India are the ones I'm looking at) where I'm not confident in picking single stocks due to lack of information and understanding of long term government policies.
It seems that Mutual Funds tend to be more on the "boring" side, but hey, sometimes boring is a good thing. I have a few investments in Mutual Funds and think they are a good addition to a diverse portfolio. If you don't have time to constantly keep track of your stock prices, and are scared of the next big drop, then Mutual Funds might be a better investment. This is coming from a relative newbie to the investment scene, so take it with a grain of salt.
I'm not big on mutual funds because they're not part of my overall investment strategy, but I know plenty of people that love them. I don't think any of us can give you a good set of investments to put your money into when you jump back into investing. That's because you don't even know when that's going to be, and we can't possibly know which stocks are going to be poised for growth whenever you come back to the stock market.
Stick with what you know. It's easy to say that but there's a lot to be said for that. I'd also say invest in your financial knowledge as well so that you are better positioned to make empowered decisions. Everyone can have a view but the more understanding that you have the better you will be able to access the suggestions.
Your own risk tolerance, timeframes, liquidity & income needs, etc are always what you should consider.
Education is also a very good investment. Just make sure that the course you are taking is really what you wanted to have to equip you with more knowledge in what you do. I hope you will get a raise in your salary after that.. any excess amount can be invested again in the equity market. Nothing beats the stock market in terms of return, specially if you follow a very good strategy. Mutual fund is good for diversifying your portfolio (as many of these guys here already said), but if you wanted some control of where your mutual fund is going, you may try to invest in ETFs.
When you are ready, you might want to consider ETFs. They are similar to mutual funds but with lower fees as I understand it. They are for the most part passively managed. You have to decide what your goals are. Do you want growth stocks? Do you want dividends? Do you like buying under valued stocks? You need to look at your own goals, when you are ready to jump in again.