So I've only got a checking account, 20 years old. But I want to start investing wisely. Anyone been there?

Question

I hear great stuff about compound interest at like 6% but where do you actually GET this - this sounds suspect of exaggeration... Is there typically a huge minimum amount in these or a large fee or withdrawl fee or even a fee for putting money in (I know I'll have to check specifics I'm only wondering the usual situation...) Can simple interest beat compound interest by better rates or lower fees usually?

By the way, I'm terrified of stock market and don't have that sort of cash anyway (IN MY OPINION I KNOW SOME SAY IT WON"T MATTER) so I'm not looking for that sort of thing...

Any great books on this subject or other ways of finding things about this and taxes associated with it and so on? All the ones on B&N shelves are pretty dumbed down and don't have DETAILS just give reccomendations without saying how to GET the accounts or reasonable rates, etc...

THANKS!

Answer 1

"Investing For Dummies" is where you should start.  But don't start "investing" until you have some good old cash saved up for emergencies.

Answer 2

good for you here is a book that will change your life it has us /my wife and myself  wish we heard about this guy when we were your age

rick Ramsey .com

the book money management

good luck kid

Answer 3

I have been in the stock market since I was 18 and this year I have started trading forex with fantastic results, so it is very do-able if you have the right knowledge.

6% is not exaggeration at all. If you leave your money in a savings account at the bank, yes you are going to only make maybe 3-4% at best, but this money is guaranteed.

To make more money, you have to take more risk. This is called the risk-return tradeoff in finance. You could invest in bonds for a little more money, but slightly more risk.

Or you could start investing in stocks where it is easy to make 12% per year IF you know what you are doing. Also this amount is ON AVERAGE. You might be up 100% one year and down 20% the next, that is why it pays higher. Stocks take a bit of work, you need to learn how they work before you even think of trying to invest, or yes you will lose money if you are just gambling.

Even more complex than that, you can start trading forex (which I have now gotten into), stock options, real estate, etc.

If you are interested in the stock market, check out the beginner articles on www.investopedia.com and open up a free virtual trading account just to play around with. If you are interested in forex (foreign exchange... trading currencies) check out www.babypips.com. Feel free to contact me if you want some more information or good beginner links.

If you are afraid of the stock market, you could always put your money in a mutual fund and let an expert manage it for you. But if you are not willing to take a little bit of risk in your investments, you will never get anywhere.

And no, simple interest can not come anywhere close to compound interest, even if there were additional fees. I took 2 finance courses as part of my accounting degree.