Investing in Stock Market
Figure with this section opening up recently I might as well post this up here :).
Currently I am a college student with some savings that I have collected over the years of working. Luckily I do not have to pay off my debt until I graduate (loan from parents, will be paying them monthly as I get a job) so I figured instead of having the money sit in my bank account, why not put it somewhere?
Well thats the problem, I really have no idea on where to even begin... Not sure if I could do an online site, or if I need to go somewhere and talk with someone. I have about $1000 I could comfortably invest, $2000 if I wanted to (would still have money to function and buy paintball gear of course!). Can anybody lend me some tips or help me get started?
You don't mention what age you are but I'd throw some of it into a Roth IRA.
I use Schwab and like them
Vanguard funds are an easy way to go and have been good performers
When do you need access to the money again is a key question.
Right now I am only a Freshman (so 19). When will I need the money again? I'd like to be able to have some in stocks that I could sell later on (with the hope that they would at least retain value) and am currently not looking as long-term as a Roth IRA (although that is my plan once I get a steady paying job).
So you can open a regular trading acct and throw into a fund that tracks the market. Again, I'd go with a vanguard
Don't try to time the market, stick 100 a month in and it'll even out over time.
Start a Roth now, even if it's only a little bit - I wished I had a long time ago.
Start HERE: Getting Started - Bogleheads
Vanguard is THE company to go with if you're a US-citizen. They offer a free one-time consult as well, though I don't know if that only applies if you're investing a certain amount of money.
It was founded by John C. "Jack" Bogle and the Vanguard approach has received such widespread approval, there's a whole group of investors called "Bogleheads."
More broadly though, don't invest in individual stocks. Buy equity index mutual funds. They track entire markets (S&P500, Dow Jones in the USA, S&P/TSX in Canada, MSCI EAFE for international, etc).
This all assumes you're saving for retirement and won't be touching the money for 20 years. Equity markets bounce up and down over short periods but over the last 100 years have averaged 8.5% per year.
START EARLY. I wish I had. Now, even if I put away a grand a month, it still won't give me the growth I would have had saving a hundred a month when I was your age. Compound interest is powerful. Einstein even said so.
Rule of 72: Divide the number 72 by the expected rate of return to get the number of years it takes to double your money. Let's say "8%" - that means your money doubles in 9 years. The challenge is, some years you'll be up 15%, other years down 5%. You gotta let it ride.
Want a few good books to read, once you've exhausted the above-linked website?
"The Boglehead's Guide to Investing"
...and if you're feeling particularly ambitious: "The Four Pillars of Investing" or "The Investor's Manifesto." (same author, latter is much shorter and somewhat less detailed but covers the same ground)
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