Help getting into stocks and investments?

Question

I want to purchase stocks and start building a portfolio. I'm 20 years old, work full time making around $20hr. I would like to know what percentage I should invest a year. How to get started and any tips for starting out with purchasing and holding stocks. Also I have a 401k plan and was told to invest it?

Thanks

Answer 1

David K said it.  Invest in individual stocks.  Do your research.  SEC filings are a great source of information.

Summaries of these can be found here:

http://secnotes.talkspot.com

Answer 2

Your top priority should be to only invest in what you're comfortable with and understand. Mutual funds tend to be poor performers over the long run due to high operating fees, an index fund would be a much better decision for you if you are looking for some type of fund. Personally, I enjoy investing in individual businesses. In this area, a good way to start is to find companies you like or who have products that you like (something like Apple, Chipotle, etc.). From there, analyzing the fundamentals is key.

The money you invest should be money that you will not need for at least ten years. Given that you are young, this is an ideal time to start and it would be an excellent move to put whatever you can afford into stocks or other investments. Even a monthly plan of $50 stashed into an index fund or other stocks can go a long, long way over the long run. Bottom line is to understand what you invest in and be absolutely comfortable with it. You can check out my web site www.pencils2.com for more of my thoughts on these types of things. I would also recommend checking out www.fool.com and www.investopedia.com to increase your knowledge on stocks and investing. Peter Lynch's books are highly recommended (One Up on Wall Street, Beating the Street, and Learn to Earn) and anything by Warren Buffett is also a great way to learn.

Hope this helps and good luck!

Answer 3

Excellent for you!  Time is on your side; you're only 20.  NOW is the time to start though.   How much to invest is entirely up to you; but for the sake of argument...try 10% of your income should be set aside.

This is only an opinion; but If I were starting out I'd put my money in some sort of an index mutual fund.  This way, you don't put all your eggs to speak, in one basket.  Your risk is spread through out many stocks.  In time the stock market will rebound and you'll be fine.