Is now a good time to invest?

Question

Is now a good time to invest? If so, how should I go about doing it?

I am 18 and would like to start saving/investing in my future, as I fear what the economy is going to be like by the time I finish college and am ready to get a job and find a home. I currently have an investment account left to me by my father currently worth about $22k and has been going up lately, over $2k since April. However, my parents are splitting the costs of college with me, so I will have to use that to pay for tuition this upcoming year.

Are sites like ShareBuilder.com a smart way to invest? Is it a good idea to invest when the economy is headed toward a recession?

Thanks!

Answer 1

If you need this money for college now or within 3-4 years, it should NOT be in the stock market! -- 19 years in the business (see bio).

It should be in US treasuries (Federal tax free), or bank CD's. Any money in the stock market should only be used for investment with 7-10 year time horizon to ride out volatility.

I don't like ShareBuilder.com at all. It is cheaper to buy the shares at a discount broker yourself.

Long term (7-10 years)

1. Open a ROTH IRA (must hold funds in there for a min or 5 years)

2. Invest in the S&P500 Index (no load fund).

3. After 5 years you take take out the principle with no penalty; the gains must stay in their until 59 1/2, then are tax free after that.

http://en.wikipedia.org/wiki/Roth_IRA

http://www2.standardandpoors.com/portal/...

Answer 2

Most important thing to consider is your time horizon.

When do you need the money?

If I were holding for 10 years or more, I would look at Leveraged ETF's such as URE, UYG or QLD.

These are rather aggressive picks but as long as you have time to sit and wait these could make you a lot of money.

In the short term some thing that issues dividends could be safer.  Look at O (realty Income) or DPD.

If you truely fear the ression, I would buy PRPFX, this is a fund that holds a lot of silver and gold.  

These do well when the economy is in recession or when investors get nervous.

Never fear a recession, just find a good angle to make the money.

Sharebuilder seems good, although i just opened an account with Firsttrade.com

Answer 3

Hi,

1st - it is commendable that you are thinking of investing at this age, when most others your age are busy 'trying to find  themselves'. If you are not already, start reading up on financial articles, cnbc.com, investopedia.com, fool.com are a few.

This is a GREAT time to invest for the LONG term. Figure out how much liquidity you need when you graduate. You can broadly break that up into cash you will need in the near future(2 yrs or less) and  cash you think you will not need for 2+ years. Use the cash you will not need in the near future to invest in the market now. This is one of the best times ever to 'go long'. The financials are at their all-time lows and are bound to recover in a few years. But you will need to hold through those years and the returns are bound to be good. I would go for the 'blue-chips' that are currently trading at their 2001-2003 values. I am a newbie investor cause I was busy paying off college loans till date, but from what I see, this is a good time to invest. I do own my home though, again for the long term!

Best of luck, and PLEASE do your own research.

Answer 4

You will hear lots of pessimism about investing but don't let it scare you.  If you can find a safe place to put some money away, and watch it grow, even if at 3% right now, then the best advice is to do it.  "Don't blow your money all in one place" is a phrase meant to be taken seriously.  

Going to a local college to get the basic down and over with is good advice---that way, when its time to take the classes toward the discipline itself, you won't have to worry about those basic classes being funded at a major university.

Answer 5

Yes, it is a good time to invest.

Pessimism and "gloom & doom" are running rampant through the ranks of Wall Street, and with investors.

You have heard the saying " Buy when others are selling", and "buy when the blood is running in the streets".

Well, there's lots of blood in them streets for sure.  And lots of folks selling as if their lives depended on it.

When the folks who have sold realize that they can get only 2% at the bank, and losing buying power annually due to inflation, where else can they go to, except back to the stock market?

I am in the buying mood right now, and doing it in small amounts at a time.