How much money should I put in stocks?

Question

I'm a 20 year old and I work at a restraunant. I was thinking of putting some money in the stock market and I was wondering how much money should I save? And what stocks should I put my money in??

Answer 1

Put as much money in as you can comfortably afford to.  Find out how much money you make a month and subtract out your bills.  At this point this is your money left over.  Set aside some to have fun with and then invest what is left.  Typically $100 a month is a good start, but you can change that based on your income.

As for investing in stocks, you have to gauge what type of risk you want to take.  You can go high risk were you can make a ton of money, but also lose it, or go conservative where you make a lot of cash, but also you won't lose your butt.

Personally at your age I would recommend Allocation Mutual Funds.  These type of funds invest money into other mutual funds which means you are pretty well protected against loss, however you still may lose money.  Stock investing requires a lot of money in order to get any number of shares to notice the difference, however if you were set on investing in stocks I would start off in established companies that paid dividends and had a positive price to earnings ratio.

Lastly if this is your first time investing, go out and buy some books so that you can read up and learn the terminology about investing.  That way when you are looking at a particular stock and it lists all its info you can understand it.  A good book I read was "The Complete Idiots Guide to Investing."  This book keeps it simple and is a great starter book to learn the basics.  From there you can expand into more indepth books.