How can a 16 year old kid invest in the stock market?

Question

I want to start investing in the stock market, but am clueless on how to; where do I begin?

Answer 1

you begin with thinking about from which company you stocks want to buy...then do research where u can buy stocks and then buy them

Answer 2

Why do you want to invest in something you are "clueless" about?  Talk to your parents;  you need to be at least 18 to do it on your own.

Answer 3

You will need to be at least 18 years old to invest on your own.  However, as a minor, you can still open a joint brokerage account with one of your parents.  Because you are only 16 years old, I am going to assume that you do not have that much money.  Therefore, I would suggest that you use an online discount broker because they have cheaper commission rates.

I currently use Firstrade.  They are cheaper than big name brokers such as Etrade, Ameritrade, Schwab, and Scottrade.  They are also very easy to use and friendly for beginners.  I would definitely recommend that you check them out and discuss it with your parents.  Visit their website here: http://www.firstrade.com/.

Answer 4

my friend is 15 he has some investment.

coz his dad is a stock broker.

Answer 5

Okay, at 16 you can open an account but you may need to have the account in the name of a custodian - your parent or their broker. That said, it amounts to the same as going to the race track and telling your dad which horse to bet on. You get the authority, but the idea is that at least you go to someone more seasoned for advice. And if your parents or another family member have a really good broker, they're often happy to talk with you and help you, since you're a prospective future customer.

I lucked out - my Dad has done business with a broker from one of the larger investment houses for more than 20 years, so after college I sat with him for an hour and opened an account and got advice. My broker is now a principal with the investment house - one of the owners. And if I email a question, he still calls me back that day and asks what he can do to help me.

At your age, there are good tax reasons not to just open up an account and start trading. For one, if your state allows it, your parents can put money into one of several education savings and retirement savings accounts, and deduct these amounts from their taxes. So long as your income is declared on your parents' taxes, I don't believe the tax code distinguishes between your income and theirs.

Also, your parents can make a one-time "gift" to you and write that off their taxes. The idea is, if they save money on their taxes, they can give the savings to you and help you open the account.

As far as where to first put your money, you need to make out a plan of when you need the funds and how much you think you'll need. Recognize that if you invest in the short-run as a day-trader, you need to effectively put in only what you're willing to lose and not be surprised if you lose all of it. Day-trading is very high-risk and very competitive.

A more sound strategy is long-term investment. Put funds where you think there will be growth.

You, as the early member of the second-largest consumer demographic, get to see first-hand what products are going to emerge. I wish I had bought Apple stock (APPL) back when iPods first came out. But I wasn't into that scene - I was in grad school and had my nose in academic journals all day.

Same thing with oil prices. I should have put into Exxon (XOM) and BP-Amoco (BP) when I saw prices rising in a consistent trend. I would've made a small fortune.

Where you see successful business brewing, follow up by looking at the underlying elements. On sites such as Yahoo!Finance and several financial news services, you can look at both stock performance (what was the price over the past few months) and company performance (did they make money last year? Was it real profit? How much debt do they have? How much are they making for every dollar they spend?).

Finally, don't be emotional. Over the long-run, expect your investments to drop precipitously and rise astronomically. Don't be tempted to sell low - even when your shares are dropping - unless the company is going bankrupt or being delisted. I bought shares of a very new company two years ago at $1.99. I thought it was a bargain - they had traded recently at $4.28. There was a reason for the dive - it kept going, dropping to $0.48 and there was a threat of delisting from the exchange. I held onto the shares, and they've rebounded to $1.72. Still a loss at this point, but they're the ones developing fuel cells for one of the American auto manufacturers - and I'm optimistic they can pull it off.

Good luck in your investing. A final word of advice - as you grow older and earn more income, balance what you put into risk (stocks, bonds and instruments) with what you put into certainty (CDs, money markets, hold-to-term Treasury debt). Don't invest more than you can afford to lose, and don't save more than you can afford to earn on.

Answer 6

You could invest $5,000 in a small business and earn 20-24% per year ($1,000-1,200/year).

Go to http://get24percent.blogspot.com/2008/06...

Answer 7

Start with your parents.

Answer 8

MMM.......... U JUST DO IT