investing at a young age

alright im in need of some financial help. For a little info on me I'm 18 just made it through basic training and going through tech school right now. I'm wanting to invest in something like stocks, savings account, cd. I'm in the process of setting up a savings account with ge capital being there interest rate is 1.9% this is going to be a rainy day fund im going to set up my allotments to send a little money each pay check to it. I plan on investing in something in the next couple of months so i can plan everything out. Im thinking stocks not sure what yet but I plan on putting a little in when they raise Ill trade or sell out and buy stocks in something else. Let me know what yall think. I dont want to be like some younger people and go out and blow money. thanks alot

 

whole stock mutual funds..... a great start...

 

Why not start with the military TSP?

 

because military tsp is garbage... anyone who knows ANYTHING about the tsp program knows its retarded

 

Might wanna wait a week

 

x2 haha

 

X2 use a Roth as your investment vehicle. (No taxes on withdrawal). Deversify, small cap, large cap, growth and emerging markets, and international mutual funds. Put the money in and DON'T TOUCH IT!

 

All depends how much OP's looking to invest. IRA's (traditional and roth) are capped at $5.5k and at that rate you're taking a larger upfront hit if investing in mutual funds. If starting out a portfolio, I'd look at picking up a couple ETF's indexed off the S&P500 or a preferred dividend like SDY. These provide easy diversification and a lower expense ratio than mutual funds as they are not actively managed.

Just remember, everyone's going to have an opinion on what you should do with your money. Explore your options and do what's right for you.

 

Just starting this conversation is great! Keep up the research and follow through and you will be set. After a while it becomes fun seeing it all grow and you will want to live on shoe strings to put it all in. Do it now while your still used to being young and not having money or real nice things.

 

The best thing to do would be to go to a financial planner and sit down and tell them what you want to accomplish.

 

First off, congrats on thinking about this now. You are now one of the few at your age considering it.

My advice is before you invest in anything, understand what you are doing and what you are buying. Mistakes and irrational investing can cost you mucho $$$, take it from past experience. If you are not sure, or don't understand what you are buying and why, then spend more time researching.

I would recommend that you do more research on budgeting and asset allocation before you start down any road besides cash right now. You should first decide on some savings "buckets" and how much you can put into each. Each bucket should be assigned to a goal/time horizon so that you can properly allocate investments into it.

E.g.,
o Emergency fund (0-1 Yr) - some amount, like 3-12 months wages, depending on your job and comfort level for loss of job, car/home repair, health issue, etc.
o Short-term (0-1 Yr) - vacations, home improvements, truck mods, stereos, tvs, etc.
o Mid-term (3-5 yrs.) - new house, new car, major home improvement, etc.
o Long-term (20+ yrs or so depending on age) - retirement

Once you budget amounts into these buckets, you can decide on the asset allocation (cash, bonds, stocks) that fit into each. For example,

o Emergency fund/short-term = cash, short-term bonds
o Mid term = cash, short-term bonds, mid-term bonds
o Long term = cash, bonds, stocks (small, large, int'l, REITS, commodities, etc.)

Each bucket's assets should match your time horizon/goal for that money. i.e., putting stocks towards any goal that is less than 5 years is very risky,,, too much cash or short-term bonds is risky in long-term.

Also note that there may be a time period where you are building up savings such that you can invest a sufficient amount without spending unnecessary fees. You also need to research and decide which investment vehicles (savings accounts, investment accounts, tax-advantaged accts (IRAs, 401ks, TSP, etc.) make sense for each bucket.

 

On board with these guys ^^^^^

The sooner you start the better. Just stick to the plan and commit 100% to saving/investing, this is always the hard part and where most falter.

 

I started when I was about 14 but can be of absolutely no help. My uncle is a stock broker so I just kinda give him money and he makes it grow haha. I just accept it as black magic, but it's something I'd like to understand a little better cause he is nearing retirement and at some point I'm gonna have to take the reigns. I know I have stock in John Deere, Halliburton, and McDonalds, but that's about it.

So sub'd for the dumbed down explainations of everything, I'm sure it would help many of us

 

stocks are a good way to go if you can start putting a bunch of money into stable companies and can leave it for a while. problem with stocks vs other investments is they are unstable and your not promised to keep your money.
stocks are typically at there low when the economy isn't doing to well which equals a good time to buy.
cd's do not pay what they use to.
savings accounts not worth it.
roth ira's are a great way to go for a more stable investment.
imo for the op.....
your at a young age and can rebound a little better from a loss in money. use your money not only for a learning experience but also for a chance to make money.
If it was me and I know now what I knew when I was 18, I personally would find things you like to do for instance buy a used car and flip it this will make money and be a good learning experience. use your money to try and make money instead of sitting idle.

 

http://www.bogleheads.org/forum/viewforum.php?f=1 great site to observe and learn.

 

x2. set allotments in the roth savings plan great route. put it to you this way like I was told say you put $200 every paycheck (hard with the type of pay we get anyways) and do this for about 20 years. The taxes are being taken out every time you put money in the it( not like traditional which taxes right when you start to take out for retirement) the lady said you would have roughly over 1 million saved up for when you retire. to me shit that's a f*** load of money for when you retire. Now when you are in longer in the military look in to putting money in stocks. don't want to put a lot of the money you get ( since your a low rank) in to stocks with how the market is at this time. TSP is a great route for newer military members that just enter. If you want more info talk to your Air Force Family Readiness Center at the base your at and they will give you all kinds if information. That's what they're there for.

 

I don't agree at all. It's another option to reduce your taxable income and if you watch it reasonably closely, you can maintain a reasonable rate of return on a larger amount of money than just an IRA.
Should it be your FIRST or ONLY investment...Hell no. But it is certainly worth keeping in the toolbag.

 

So hard to learn without making mistakes IMO. You can say you will hold out on a stock even if it's low all day, but when the time comes nothing will test you more mentally

 

Another thing to add on to my long-winded note, since you and others have mentioned it. Individual stocks, by themselves, are risky, and if you don't have sufficient time to properly monitor, or money to properly diversify (I have read, at least 30-40 stocks across business areas), then individual stocks are a gamble.

 

I agree start smallvat first then plan to go big. There will be loses just have to remember that its the stock market. Just like a casino by rolling the dice.