Begineer= Investing?

Question

How should i invest my 5000 dollars? I am 16. I don`t have to worry about college i have a schlorships and i have a car.

How should i divide up my money to make more.(??? mutual funds,stocks,and other things) any tips?

Answer 1

Congratulations on getting started. It’ll help you more than you know!

Your first dollars should be spent on getting educated on investing. You don't have to train to trade them professionally, but we are talking about your future here. So the more you learn, the more it'll help you! So let's start there.

You ask a very broad question, so be prepared for a pretty long answer. Just take it in chunks!


How to invest depends on what you already know. We'll assume that you're beginning!

A good primer is How to Make Money in Stocks by William O'Neil. You can get it cheap just about anywhere. It’s widely available new or used.

Another good one is one of Jim Cramer's books like Real Money (he’s got a few).

But books will only get you so far. At some point, you'll also want to get at least a little training. There are some great education companies if you want to make the investment. Investools.com or optionetics.com are both very good companies as is tmitchell.com

For free, you can start by visiting thestreet.com and investopedia.com. That'll get you a pretty good primer so at least you'll understand what the markets are and what a stock is, etc.

If you get a chance, watch Mad Money on CNBC. Don't trade any of his picks until you track many of them over time. Just use the show to get you to understand some basics and get a feel for the market itself.

Next, subscribe to something like Investorsbusiness daily or something like that that can help you identify good stocks.

Once you understand stocks, go to 888options.com. It's a website that'll help you understand options (what they do, how they work, etc). You don't need to trade them, but the more you know, the more you'll see how options can really be the safest way to invest (once you're educated).

For discipline (which is crucial to successful trading), probably Trading in the Zone by Mark Douglas or Mastering the Trade by John Carter

I know that’s a LOT to absorb. Just take it one step at a time for now. Start with a book or two to give you an idea of where to begin. Take your time, and let it seep in.

As you get up to speed, you should papertrade to practice (highly recommended). This should help reduce your losses in the beginning as you get used to buying/selling.

You can practice for free on almost any reputable broker site (optionsxpress, scottrade, thinkorswim, etc). And yes, you can definitely deal easily online.

Start slow, then as you figure things out, you can buy more shares.

Congrats again on getting started. If you have any questions, please let me know.

Hope this helps!

Answer 2

If you put the money into an IRA and grow it tax free at AVERAGE 12% stock market returns (S&P 500 mutual fund). Here year by year is how much you'll have. You have it MADE providing
(1) You START NOW.
(2) You never take any out till you retire

10 15,529
11 17,393
12 19,480
13 21,817
14 24,436
15 27,368
16 30,652
17 34,330
18 38,450
19 43,064
20 48,231
21 54,019
22 60,502
23 67,762
24 75,893
25 85,000
26 95,200
27 106,624
28 119,419
29 133,750
30 149,800
31 167,776
32 187,909
33 210,458
34 235,713
35 263,998
36 295,678
37 331,159
38 370,898
39 415,406
40 465,255
41 521,085
42 583,616
43 653,650
44 732,088
45 819,938
46 918,331
47 1,028,530
48 1,151,954
49 1,290,188
50 1,445,011

Answer 3

It depends on your risk tolerance. If you're willing to take on some risk, toss your cash into the emerging markets through stocks (I personally think they're overpriced in the short run, but if your investment horizon is long enough you should do well). If you want something risk-free, of course you can invest in US debt like bonds and TIPS, and stuff. There's everything in between, so if you want a good answer from someone out here, you should make it more specific and think about the following things: your timeline (when will you need the money), how much risk your willing to take (some investments could lose it all), how liquid you need to be (if you invest in certificate of deposit products you can't have access to your money without penalty), and if you want to play with derivatives products (both in equity and fixed income).

Answer 4

If you want to mess with stocks, read up on Warren Buffet and Benjamin Graham. They are sound investing strategies for the long term, so a few years down the line you'll make a good return on your money. At your age, i'd definitely tie it all up in stocks.

Answer 5

Put into a CD then read every investopedia, fool.com articles you can, then decide.