School Me on Investing

[Senko lover]

I'd love to hear some advice about investing.

 

I've been doing a little bit of research about options and also learning about investing and financial choices through a personal finance course. Here's my situation: I'm 16, and I've managed to put a decent chunk of change (for me, at least) in the bank over the last two years. It's not much, I'll just say around 7k, but looking ahead, every bit of it is going to be sucked up in the near future unless I do something about it. I'm going to be paying for a car, insurance, and gas money in the next few months. I'm also 100% responsible for funding my college education. That's all coming up fairly quickly, and what I've worked hard to save is going to go down the toilet in the next year or so. Typically, the advice I've seen is to pay for your college education before starting any kind of investments. However, my thinking is that once I graduate college, I'll likely have some form of debt and a life to pay for - life out of college isn't necessarily financially easy. I won't have money sitting in the bank then like I do now, and I don't want to have to borrow money to invest.

 

So, my thinking is it would be advantageous to start something right now while I can still make the investment. It would be a small amount, sure, but it would be a snowball type of mentality. I'm thinking about investing a small sum, say $1,000, into something that (1) prioritizes diversification, (2) is a low risk, long-term type of deal, and (3) something that I'll be adding to for decades to come. This is not something I'm thinking about as a get-rich-quick strategy. I'm seeing it as an investment in my future.

 

Am I a complete idiot for wanting to do this at 16? Is that even a workable plan? Will investing companies laugh at a thousand dollar deposit? What advice from your personal experience would you have for me as far as going down this route? I know next to nothing about where I would go to invest this or what all my options are. The last thing I want to do is waste my money. I've talked to my parents about this, but they've had bad experiences with investing in the past and could give me very little guidance.

 

I appreciate any help y'all can give me.

[flyfisher]

You are far from an idiot, I wish i had starting saving and investing at your age.  Talk to a financial advisor at your bank and get yourself into some sort of IRA and just let it sit there.  I read a statistic somewhere that basically said if you put 1k away a year from 18-22 and let it sit and compound interest and then do the same from 40 till you retire, you will ahem more money from those first 4 years.  

 

Look at mutual funds that fit your long term investment desires and have minimal fees as they can impact your overall return.  Go to the bank where you have your 7k and see if they have an advisor you can talk to and at least get you started down the right path.

[Team9nine]

Brilliant - the earlier you start, the better off you'll be. Just do it

 

Find a large brokerage firm like Fidelity that will let you open an account with just a minimal investment (your $1,000 is fine).

Tell them you want to open a Roth IRA.

Then, set up regular auto deposits (say monthly, just $50 or $100 is great).

Invest/place all the funds into a simple Index fund within the IRA and just let them be.

 

Done 

 

-T9

 

[Angry John]

Look seriously at funds that are not managed.  Nothing over time does better than the market average after fees.  Put that 1k in a s&p Index fund and just toss in what you can.  The market is high now so at some point we will have a correction normally about 5-10 percent.  I have been out for a while waiting for the correction that never seems to come.  Find a point you feel comfortable jumping in and never look back.  If you see it go down and sell all you have done is lock in your loss.

[RoLo]

 

By all means Kyle, give financial investing more than lip service, get the ball rolling NOW!

I've spent many years studying technical and fundamental analysis which is not only rewarding, 

but very engrossing (10x angling). I've been exposed to IPOs, bonds, precious metals,

currencies, options, warrants, you name it.

 

You mentioned 'options' Kyle, and I feel obligated to respond. A stock option is a wasting asset!

I've played options for many years, and as enticing as their leverage may appear to a beginner,

playing an option is merely placing a bet, it is NOT investing.

 

In my opinion, an excellent vehicle for the beginning investor is an ETF (exchange-traded fund),

which unlike a mutual fund is a no-load fund (no front, interim or back load) that charges

an expense ratio typically under 1%. U.S. stock index ETFs sport the lowest beta

and the best historic performance over the long-term.

 

Roger

[roadwarrior]

http://www.investopedia.com/articles/exchangetradedfunds/09/spdr-etfs.asp

 

Fees are nominal and you don't pick individual stocks. The investment performance

will match very closely to the S&P 500.

 

http://performance.morningstar.com/funds/etf/total-returns.action?t=spy

 

 

[Hez]

Good job young man

[curtis9]

I'd recommend talking with a college financial aid adviser before setting up any type of long term investments.  I believe any money in your name will impact how much financial aid you may get for college.  

[Dwight Hottle]

Congrats on being so responsible Kyle you're on the right track.  

[Chris at Tech]

Wait - you guys seriously trying to tell me that buying a bunch of rods and reels is NOT investing?  Crap!

 

[RoLo]

On 4/18/2017 at 8:40 PM, Chris at Tech said:

Wait - you guys seriously trying to tell me that buying a bunch of rods and reels is NOT investing?  Crap!

 

 

Their net worth will slowly waste away over the first 50 years,

but over the next 50 years when they're deemed antiques, their net worth will begin inching back up.

I would hold for the long haul 

 

Roger

[lonnie g]

great advice given her young man. my wife used to just keep my pocket change from each day. that was our kids Christmas.point being. that one soda or coffee you might buy each day can really add up. self control ! 

[DogBone_384]

My Grandfather worked for a stock brokerage most of his life and preached two things.

 

The first was dividends and steady growth.

 

The second was whatever you have left over at the end of the month when the bills are paid, keep half for yourself because you have to have a life, and save the other half.

 

Best of luck to you.

[flyfisher]

32 minutes ago, DogBone_384 said:

My Grandfather worked for a stock brokerage most of his life and preached two things.

 

The first was dividends and steady growth.

 

The second was whatever you have left over at the end of the month when the bills are paid, keep half for yourself because you have to have a life, and save the other half.

 

Best of luck to you.

Dividends are a huge thing for sure.  It is something i look for in specific stocks that may or may not even increase substantially over time but having a large dividend makes up for that pretty quickly.  

[Gundog]

[Buckeye Ron]

You have a great attitude and wisdom beyond your years. Since you are a hands on kind of guy I recommend you read the investment materials for beginners on Clarkhoward.com.

 

I just retired six months ago after a 45 year working career and I can tell you for certainty that a key point to any plan is to pay yourself first. Meaning, develop the discipline to save for your retirement right now. Don't put it off, and don't bale when the markets swing back and forth. Once you get out of school and get a job, start saving even more. 

 

You can still buy that new rod and reel,and an occasional pizza isn't going to derail you. Remember, you want to enjoy life while you're preparing for a secure future. And for heavens sake...stay out of debt!

 

Be patient, continue to learn, and you will be able to retire with an enviable portfolio. I know people who were factory workers that never made what I call big money, yet because of living within their means and investing wisely they were able to retire with more money than they will spend,barring a catastrophic event. 

 

All the best to you!

[buzzed bait]

kyle, invest your money into the Xcalibur one knockers or pre-rap wiggle warts that everybody is so hot for right now and then hoard them and wait until you're hard up for money and then get the $25-$100 each that people are asking for them!

[J._Bricker]

Kyle, you're asking the right questions and getting a lot of sound advice. Here's my .02 on the matter. A wise man once said when asked about investments, "buy land, they're not making any more of it". I know a guy, who was very focused on being successful and saved all the money he earned when he was your age. When he turned 18, he bought his first house. He fixed it up, sold it, and bought another house. He ended up running a property management firm for his properties and those of others, retiring at an enviable age...

 

Best of luck to you, JB 

[Redlinerobert]

Real estate.  Whether residential or commercial, you can't go wrong.

[CTBassin860]

Please send me a check,money order or paypal in the amount of 5,000 USD and i will tell you all you need to know about risky investments.

[5Keepers]

You are definitely on the right track.. Invest... there are many ways..  most are covered here. 

 

The best advice is to sacrifice at an early age and CONTINUE to sacrifice until you are ready to retire.. at your age, unfortunately there will NOT BE ANY SOCIAL SECURITY FOR YOUR GENERATION!

 When you go to college - take MATH & MATH,..numbers are what makes the DOLLARS go round!! Learn how money works.. its a LOT more complicated than most people know (ALOT MORE)... take all money management and economics courses you can!! NEVER EVER FORGET - Its YOUR money.. YOU EARNED IT!! KEEP IT!!

  Prepare for taking care of yourself!!!! NO ONE ELSE WILL!!!

Reinvest all dividends, watch for trends..

 

I retired at 51 years old... I fish 3-5 days a week. SAVE for later in life.. you will NEVER regret it!!