Beginner to the whole investing Shin-dig?

Question

Hi there,

So I'm an 18 year old college sophomore looking to save up for med school. Thing is because of today's crippled economy a steady job isn't really that easy to come by. I have some money saved up and thought I'd put it to work. A friend tells me the best thing to do (other than CDs and savings accounts--which have DREADFUL rates, by the way) is to invest it in the market. So I'm here to take up his offer. However, before I even attempt to pretend that I know what I'm doing, I wanted to read up on "playing the stock market".

So here are my humble requests:

1) Do you know of any good sources for literature on the stock market? Do books outweigh the available online sources? What are your recommendations?

2) I heard there was a stock market "game" online and I think it would be a good way to test my knowledge. Is it worth the effort or should I just "jump in"?

3) If you were me, how would you start investing your money? Where would you put it? And how much of it?

Thanks!

Answer 1

Log on to Scottrade or E*trade...fill out an application..send/transfer something like $600. or $1000. and you'll get an account on-line ...in a few days you can make your first " buy"... I would suiggest an ETF...just a few shares of something in " energy" or " metals" or "agriculture"...

Now, watch your investment and do the reading and web-surfing necessary to get more for your money...when your real money is on the line, you tend to learn MUCH FASTER.

Answer 2

I agree with Mrs. Clean that when you have real money on the line, you learn much faster.  However, most brokerage firms require a minimum deposit.  For example, I believe that ETrade requires you to invest at least $1,000 to open an account.  I'm not sure if you want to throw in that much money in the stock market without any prior experience.  Therefore, I would recommend that you sign up at a broker that does not have any minimums and only invest a couple hundred dollars.  I use Firstrade and they do not have any minimum deposit requirements.  I believe there are a few other brokers out there that don't have minimums either.

Answer 3

About four years ago, I did exactly what " Mrs. Clean" just said in her answer..(.but mine was a $1500. IRA)....and I DID learn, and have some success, and add and add more !

Now I have decent amounts in EEB ( BRIC countries)..XME ( miners), GEX ( alt/energy) and OIH ( oil " services" )

As far as reading goes...get in to investorvillage...a chat board...read the thoughts and opinions of everyday real investors in almost every different kind of investment there is...

Answer 4

Fair enough strategy mentioned so far, but I'll just add the " stock game" you were looking for...log on to :

http://www.top10traders.com/  it's a site where you can trade in a $100,000. portfolio and compare your portfolio to about 4000 other people...and see what they buy and how they do...

just a useful little tool for you.

Good luck

Answer 5

The route of investment depends on a lot of factors and more importantly where your goal lies. Are you looking to generate entire tuition for med school? Are you looking to get a head start on long-term savings? How much will losing all the money affect you?  These are only a few of the questions you have to ask before starting any investment process.

There is no surefire way to get above average returns from any market. So, keep that in mind before you invest.

Having said that, here is what I think..

1. Depending on what your prior education level and the level of competence you want to develop, there are several good reads. At the very basic level you should learn about asset allocation, and the risk-reward characteristics of investments among other topics. So, look for those at your local library. Some online resources are great. Others are full of "noise", where they are trying to push a product(s) onto you. Be smart about your source of information.

2. Stock Market games are great. They help in putting your strategy to practice. Be sure to try out different scenarios and strategies in determining your portfolio. Also, give the game enough time to give you a true return e.g. the results of your portfolio over one week will not be sufficient to know if you are doing anything right or wrong. Give it a little bit of longer time.

3. Where and How, again, depends on what your targets are. If you are looking for building wealth, the portfolio would be allocated with a bias towards growth. If you are looking to spend the money in the recent future, you ensure the purchasing power is maintained. Speak to a financial advisor at your local bank. Initially meeting are generally free, and often contain strong advice. As with any other products, be smart about investing.

Lastly, it is great to start saving and investing early and you should commend yourself on your choice to explore this avenue. Cheers,