As a kid, how and what should I invest in to amass a greater fortune?

Question

Hi, I'm an 11 year old and I'm thinking ahead of the game plan and I got to thinking: what opportunity should I jump on to invest in and make money off of it? I am thinking to invest in stock but from what I've learned, it is a very risky game so I would like a better understanding of what I should take advantage of to invest in and watch as my money grows. Can someone please give me some advice on what I should invest in and what I should be looking out for? Thank you so much.

Answer 1

great its good to see more kids our age wanting to learn how to invest ( im 15)
first off start a business. not a huge one, just like babysitting or lawncare. i mow 4 lawns on my street weekly and at $25 a piece thats 100 a week.

second, figure out what you want to do with your money in the future and how soon you are going to need it.
what i mean is.....
1) if you put it in a bank account you can access that money immediately, the trade off is that you only earn like 2% annually. thats only $20 earned if you have $1,000.
2) with a CD you earn a little more, about 5.5% with ING. I was doing this for a while with 1,000 dollars at a time. the trade off is that it is locked in for a set amount of time. if you choose something like 3 months youll earn 3%, 6 months 4% and a year earns 5.5%.
3) or you can go the risky path and make the big money in the stock market. The market averages 11% every year. that means with 1,000 dollars you make $110 bucks by the end of the year.
there are a few ways to go about the stock market.
one way is to let somebody else handle your money and invest in stocks. this is called a mutual fund. in a mutual fund they choose a whole assortment of different stocks. sounds cool huh. the only problem with this is that you are usually going to only match the market, meaning you earn roughly 11% a year.

if you do stocks on your own theres more risk, but the chance of your making a ton of money goes up. i suggest you bury your head in some books this summer and spend time watching CNBC (the stock channel) every day.
one website i suggest is www.virtualstockexchange.com this website allows you to make a fake portfolio( the stocks you own) without using real money. you can also get into games with other people where you try to make as much money as possible over a year or so.

the best thing i can possibly advise though is to look into a Roth IRA. you cant have one right now because you are only 11 years old. you have to have earned income ( a job) to put money into a Roth IRA. But once you have a job, put your money into it. there are a couple of reasons for this. when you start a Roth IRA you cant touch the money for 5 years. so the earlier you start the better. in a Roth IRA you trade stocks or put the money into a mutual fund just like you normally would. but this money is for retirement.

think about this...... there is a thing called the rule of 72s.
take the number 72 and divide it by whatever percentage of gains you make in a year. so if you earn 11% of your original money every year then you use this formula

72 / 11%( your gains) = 6.5 6.5 will be the amount of years it takes to double your money. so if you have 1,000 dollars then in 6.5 years you will have 2,000. doesnt sound like much.
but think about this
after 6.5 years you have 2,000 dollars
after another 6.5 years you have 4,000
after another 6.5 years you have 8,000
then 16,000
then 32,000
then 64,000
then 128,000
then 256,000
then 512,000
then 1,024,000 so by the time you are 71 you will have a million dollars. and thats only when you start with 1,000 dollars. think about if you add more and more money to it every year. read this over with your parents because im pretty sure you wont understand half of what i was talking about. if you have any more questions just e-mail me at [e-mail]
i will be able to go into more depth about what i am talking about and will make it easier to understand for you.

Answer 2

First your formal education and your informal education. You will want to invest in good growth mutual funds IF you are not going to touch it for over 5 years. If you need it before the end of 5 years- money market accounts or some cds if a great rate.

I suggest you start reading the following books:
The Millionaire Next Door by Stanley
The Total Money Makeover by Ramsey
More than enough by Ramsey
9 Steps to Financial Freedom- Orman
Your Money Counts by Dayton
48 Days to the Work you love by Miller
Think and Grow Rich by Hill
The Traveler's Gift by Andrews

Answer 3

The biggest thing you can invest in right now that will pay off later on is yourself. Focus on education. Make sure that you do well in math. That is one subject that will bring you big dividends in the future. Make a habit of reading the newspaper and magazines.

As for money, learn to save your money. That will mean more to you than advice on what stock is supposedly going to do well tomorrow. When I say save, I mean save as in you are not going to touch it. You have 7 years to save up money for college. You might be able to get scholarships or grants or loans but just to be safe, save up your money. Besides, the habit of saving money will do more for you amassing a fortune than anything else.

Learn more about personal finance. Go and get the "For Dummies" and "The Idiots Guide to" books for personal finance. Read them and learn what options you have. There are several things that if you do at an early age they will lead to you making a lot of money. Time is one of the biggest factors in making money for most people. However, most people do not start early enough in life for their investments to really make money.

Learn to live without going into debt. Don't get older and get a credit card and store account cards and run up the balances. That is a big mistake that will cost you a lot of money. When you are old enough to use credit, use it wisely. Try to not use more credit than what you have saved up unless it is for a house or something that can dependably return you money.

As for investing right now? I kind of doubt that you have a lot of money saved up that will allow you to do much serious investing. Maybe a few hundred. You could buy stocks with that but it might be hard to do since you are a minor. Also, I would suggest spending a bit more time learning more about the stock market before you can do much there. I would suggest making sure you have a savings account at a bank and also purchase CD's and bonds. They are not going to pay much but they are safe investments. You need to play it safe until you have a better idea of what is going on. However, if you bought stock and held onto it, you would be able to sell it in your 30's and more than likely have a very nice return on it. Oh well. Learn more and then decide.


Money is a horrible master, but a wonderful servant. P.T. Barnum.