How do I invest when I am only 19? I want to put my money away somewhere every now and then so I can build in

Question

How do I invest when I am only 19? I want to put my money away somewhere every now and then so I can build interest. I want to invest in stocks, iras, mutual funds, cds, and things of that nature. The problem is I am only 19 and I do not know where to go. I live in a small town. I don't know how the process works to start doing this and I really want to start investing now so I can try to make it rich in the future. I hear if you invest early, you make more money. If anyone could help me by telling me what the first few steps are and what I should do, and if there will be any charges, I would greatly appreciate it.

Answer 1

Educate yourself first - don't just follow the advice of others. Get hold of the book "Investing For Dummies." Its a great introduction to the basics of investing and easy to read.

Answer 2

I do everything online--banks that have physical offices often can't offer the best interest rates because they have expenses associated with keeping those offices open.

Here's what I think you should do:

1) Open an online money market or savings account to establish an emergency fund. Etrade has a good one that pays 5.05% interest, but it requires a minimum balance of $1,000. Capital One has one that pays 5% and requires no minimum balance. I just opened a Capital One account to get a $25 new account bonus (a lot of companies offer this--search online). Don't settle for any account that pays less than 4%. An emergency fund should ideally cover 3-6 months worth of living expenses. You might not have any now, but if you start your fund now, you will be prepared for when you do. I would say $1,000-$5,000 would be good.

2) Open a Roth IRA online. I have one through TDAmeritrade, but you could also get this at ETrade, Scotttrade, etc. A Roth IRA is better for you than a traditional IRA right now because you are in a lower tax bracket now than you will be in the future, so you can afford to pay taxes on the money you put into your Roth IRA now and withdraw that money tax free at retirement. When you start making more money and are in a higher tax bracket, it might make sense for you to put money in a traditional IRA (you don't pay taxes on the money you put in but will pay taxes on the money you withdraw at retirement age).

You can do all the investing you want in your Roth IRA. I recommend mutual funds--they are boring but have more consistent returns than individual stocks. TDAmeritrade has a bunch of mutual funds you can buy and sell with no transaction fees.

Answer 3

A Roth IRA is great...but you gotta have income. You can't invest more than your annual income up to $4000 in an IRA.

First of all, pick a mutual fund company. Fidelity, Vanguard, Janus...all good ones. Call them and set up a money market fund. Place all of your savings in the money market fund...you will at least earn good interest at that point. Then slowly transfer it into their funds. Place as much as you are allowed in a Roth IRA account...it's not hard. Place the rest in a regular mutual fund account.

Don't jump into stocks...you need more investing experience. Don't invest in CDs...they tie up your money and make little interest above inflation.

Answer 4

A lot of these answers tell you what to and not to invest in but you wanted to know "how", the mechanics and coming from a small town.

STEP 1 you will need a bank account. Go to the smallest local bank and open the cheapest checking account you can if you don't already have one. This will give you local access to your funds and a place for all funds to start and electronic transfers to originate from and to.

STEP 2 Open a High Interest online savings account like www.emigrantdirect.com, or Ing or what ever you like but it should be one of the highest returns you can get. Follow the directions on their web site to set it up linking it to you local bank account you have already set up. This is a place to keep money while you are deciding on an investment(s). If you have cash sitting for a couple months (or even weeks) while you are researching it should be earning 4% interest a least.

STEP 3 Actual investing:

~CD's from your bank, walk in with the money, they do the work. Online banks too, log on follow the directions. UP side, safe better interest than typical savings. Downside, money is tied up and interest is not much better than a high yield on line savings, you aren't going to get rich from a CD.

~Stocks, mutual funds (many stocks), ETF (many stocks and trade like a stock), IRA's, Roth Ira's.
Many options:
1 direct investing DRIPs, etc for single stocks. Many companies let you buy stock direct in a dividend reinvestment program or a direct investment program. Here is an example, (the web sites have the links and directions for setting up an account)
http://www.exxonmobil.com/corporate/investor_dividend_reinvestment.aspx
This is a very easy and inexpensive way to start, no broker’s fees and usually very few fees if any to buy, some even let you buy at a small discount. Many companies don't have DRIP programs so you will be limited but many great companies are available.

2 Brokers. Brokerage firm (or bank should have a financial "guy" with any number of titles with some form finance in it.) Here you can buy single stocks, mutual funds, ETFs, Bonds, open an IRA, Roth IRA, etc. They will set up and open an account for you, just show up with your money and info. Very easy to do and they offer advice. .
HOWEVER the downside, they work on commission and their paychecks are their number one priority, not you! You come after their commissions and their boss and everything else. So if you have little money, you are not worth much of their time and the commissions will eat up a good portion of your money. Second the thing(s) they put you in might be the banks bread and butter. They are not "bad" you just need to understand how and where they are making their money, be always watch full of everything they do and make them disclose every cent they make off of you and how!

3 On line Broker: good for a small town. Places like but not limited to www.sharebuilder.com These sites are easy to use and set up, linking them to your savings or checking. You can make one monthly investment for as little as $4. You can buy stocks, mutual funds, and ETF’s. Some of these offer IRA's, Roth IRA's and other investment vehicles. Good side: a very inexpensive way to invest in almost anything. Down side it's all on you baby to make all your own decisions.

Answer 5

As long as you have earned income of $4,000 per year or greater, you can make contributions to an IRA (either traditional - pre-tax or Roth - after-tax).

Another option would be to open a brokerage account. If you have enough money saved up to do this, you are allowed to keep some in cash equivalents (like money market or CDs). The things you need to invest in with smaller cash outlays are exchange traded funds. You don't have to worry about putting all your money in one stock. These trade like individual stocks. Check out Powershares. They have plenty of options.

Once you have cash built up, move to individual stocks. It would be nice to have enough to spread your investment across 5 or 6 stocks in different sectors (business types).
Individual stocks are where you will hit it the biggest.

I really enjoyed reading Jim Cramer's Mad Money book. It gave good information about valuating stocks and spotting potential big movers. Check it out, it'll help.

Ron, ChFC
Investment Advisor

Answer 6

Simple answer: Vanguard.com

You simply can not go wrong with a quality fund from Vanguard. They are probably the best mutual fund company around and have an outstanding reputation for customer service. Their website will help you decide your risk/reward tolerances.

Be careful with investing in "individual" stocks. It is a very difficult game to master. Beginners are much better off sticking with "quality" mutual funds.

Answer 7

You could also open a high yield savings account online many sites offer them now at around a 4-5% return rate. With a little research into these and others that are out there you'll realize how easy it is to save your money and get a decent amount in addition to what you save. You can transfer money over via a checking account number. A CD (certificate deposit) is also great but there are more cashout limits.

Answer 8

Like the guy above me said a retirement fund is a great way to secure your future and invest your money good.

Answer 9

Go to the bank and open a roth retirement fund.

Answer 10

Open a brokerage account at Zecco.