I'm 15 years old. I have $1000 that i want to invest in stocks. What should I do?

Question

I'm tired of spending my money on useless things. I'm tired of watching my friends blow their money. I want to be financially secure one day.

I know $1000 isn't much, especially to have a strong portfolio, but if i learn how to work the market and at least make a little return i'll be happy.

I was considering starting an account with etrade, but i know they charge about $12-14 a trade, so after i buy and sell a stock thats about $24-28 of my money gone, plus capital gains tax.

If i sell a stock, and then buy another, do I have to pay capital gains on the return of the stock I sold?

What industry/how would you invest $1000?

Any advice would be great.

IM OPENING A CUSTODIAL ACCOUNT

Answer 1

You are not too young to invest, but you will have to have one of your parents open an account for you under the uniform gift to minors act. Once it is open you can do what you wish. If you sell a security and make a profit, yes, you have to pay capital gains tax. The trick is to buy good investments and not sell them. Then there is very little tax burden.

I would invest in China. CHL is 5 points off its high. Largest cell phone company in the world. No self respecting Chinese will be without a cell phone. There are also closed end funds investing in China. CHL and TDF are two. Both have just gone ex dividend so they are good buys just now.

Then there is India. A little more pricy than China, but growing very fast. IIF is a closed end fund investing in India.

Note: mutual funds have to distribute realised captial gains each year, so there is a tax burden associated with them.

If you invest in an open ended mutual fund, there is not transaction cost at all provided it is a no load fund. There is however, an annual expense charged, about 1.5% more or less.

Answer 2

You can have your parents start a brokerage account at Scottrade for you.

$1,000 is not much to start investing in the stock market with. Scottrade will allow limit trades for only $7, which is pretty good.

You can also have a Coverdell Education Savings Account, and put up to $2,000 per year into it for education, and invest it into stocks, bonds and/or mutual funds. The gains are tax free when used for education.

I recommend you try real estate mutual funds such as my favorite UMREX which gains about 20% per year. Make certain that you only get funds with no load and no transaction fees, and very low management fees.

I believe that in a custodial account, your parents have to pay the capital gains tax at their rate when you sell a stock at a profit. It depends on the type of account. There might be some exceptions on UGMA/UTMA accounts. In the Coverdell ESA Account, it is all tax free so it doesn't matter.

Also, you can get an INGDirect savings account and deposit $250, and they will give you $25 for openning an account, that you hold for at least 30 days. That's 10% for 1 month and they are paying 4.4% interest per year right now. If you want to do that contact me because I will get $10 for a referral.

Good investing to you!

Mr. V.

Answer 3

Investing in a stock is fine, but don't over-trade. People blow a lot of money by making too many trades. They gain a little on one and then lose on another. Just get in a winner that pays dividends and leave it. Look at ticker symbol UHT for instance. It pays about 6% dividends and its stock price continually grows. Look at its chart for the last 10 or 15 years. 6% of $1000 is $60, so obviously your fee to e*trade is easily covered.

Answer 4

As others have mentioned you will need your parents to open a custodial account of some sort.

You might want to look at a site like sharebuilder.com

You have a nice start to investing, but at your age it may not be easy to have large sums of money at hand all the time. And you have some time to build that portfolio.

Sharebuilder allows you to take advantage of "dollar cost averaging" as it's main method is to purchase stocks once or twice a month on a regular basis.

What is different about sharebuilder is that you don't have to buy whole shares of any given stock. you can buy pieces of stock.

You pay a monthly fee and then you get a certain number of automatic investments. you say ... I want to invest $10/month in this stock. $20 in this one and $5 in this one. They will make those investments for you. You may only have .0034 of some stock (I own Berkshire Hathaway B stock just for fun... to say I have it) but it will grow every month.

You can also make real time trades for a low fee and do options...

It is a good way to start small. I use sharebuilder because I do not have alot of money to invest (kids, school, expenses, etc.) so it allows me to invest in several companies. I try to stick with dividend paying companies because those will provide a little more income. But I also have some that don't and some of those have split...

Start with the companies with products that you know and your friends know and what you like. Or good companies from your own state you know. I live in Minnesota so I have some Target, 3M, Select Comfort, Medtronic ....

Then move into learning about ratios, and other information which will help you.

You might also want to subscribe to the Motley Fool website. They will send emails which can give you ideas about possibilities for your portfolio. I can't afford all their newsletter, but I still find the emails useful.

With sharebuilder, at your age your capital gains will be smaller (less stocks), ......

Hope this is helpful.

best,

cez

ps. There was an ad in todays paper about the stock market game. It allows 4th through 12th graders the chance to use a $100,000.00 virtual account to invest. It also gives you access to professional investing information. I was going to sign up my kids to help them learn about stuff like this early

Answer 5

Congrats on getting started while you are young. Custodial accounts are a great way to save for college. My stock for you would be Florida Power and Light, symbol FPL. This is a solid electric utility stock, that is also the largest operator of wind farms. They pay a solid dividend too. If you want someone a little more risky, take a look at Energy Conversion Devices, ENER. Here is a link about their business:

http://www.top10traders.com/ViewPost.aspx?postID=197

If you want to see what some great investors are buying and selling, go to http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Good luck.

Answer 6

You have a great attitude for a 15 yr old. the secret to ANYTHING you start in life is to commit to it, dedicate time & effort to your cause, and don't look back.
At $1000 you don't have much room to trade,and i'm sure you need a little more insight than you think you have now,but your mindset is right.If I were 15 again,I'd be working my tail off.I'd stick that money in a good money market acc't or short term CD at my local bank,and look for ways to make more.while i'm doing that,I would do a little research into what I think may make money for me.There are literally thousands of options,so you won't know all of them.Get some advice from your banker,he'll be impressed with your attitude as well.

Answer 7

stocks are tricky. your best bet is to start an online business that will generate a nice source of constant income.

With stocks you make anywhere between $.23-$2.00 on a REALLY good stock. If you open up your own consumer electronics company online or do myspace promotions for your product...you will be looking at a return of $25-$200/sale.

You just have to find the right product.

If you need any help, let me know.

Answer 8

i understand that you hope to see your money grow, but with your age and experience, investing in stocks would be very risky for you, especially that you must know how to analyse the market consistently. besides, $1000 would not be enough for playing stocks. perhaps you should look out for other ways of investing. there are many others out there.

u can contact me at [e-mail] and we can have a chat about it coz i'm also a young investor. :)

Answer 9

Find a company that you personally buy products from on a consistent basis. A company that you believe is growing or doing very well due to a large number of customers (being busy). Know the company. Then invest in it.

Answer 10

Though you can't buy stocks right now you can invest in something else. I would suggest that you find out what you can sell around your town and try to supply that want/need.

However do your research before doing anything. $1,000 is not much for now but it can grow.