Would ETF's fit me?
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Wow- you sound extremely mature for a 16 year old! Sure wish I had your ambition when I was 16.
You're definitely on the right track. With your $2000, either and ETF like DIA or SPY or QQQQ or an indexed mutual fund would be a good safe investment for you.
With your ambition, I'd start to learn as much as you can about the market. Start with your public library and look for any or all of the following books...
Get this book: Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema.
Another good book: The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of (Motley Fool) by David Gardner, Tom Gardner, and Selena Maranjian
Jim Cramer's Mad Money: Watch TV, Get Rich by James J. Cramer and Cliff Mason
Stock Investing For Dummies (For Dummies (Business & Personal Finance)) by Paul Mladjenovic
All About Stock Market Strategies: The Easy Way To Get Started by David Brown and Kassandra Bentley
The Motley Fool Investment Guide and their Web site (http://www.fool.com/).
How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition by William J. O'Neil
Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder
Big Trends in Trading: Strategies to Master Major Market Moves (A Marketplace Book) by Price Headley
Buy Investors Business Daily. It has lots of tutorials and I like it better than the stodgy Wall St Journal.
Money Game by Adam Smith
Value Investing with the Masters by Kirk Kazanjian
The Intelligent Investor Rev Ed. (Collins Business Essentials) by Benjamin Graham. Warren Buffet was his student at Columbia.
The Money Masters by John Train
After reading some of these and applying the knowledge you've gained, you'll be on an even keel with the rest of us market players. Good luck to you and keep your eye on the target.
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There are many different ETF's to choose from and many have low fees. They are a little bit safer than stocks, and are focused more on how a certain sector does (i.e. energy, carpet, semiconductors, etc). I currently use Ameritrade for ETF and stock purchases, and they go into detail and give information on each of the ETF's available.
You didn't mention how long you planned to hold the investment. This is part of how you determine whether funds or ETFs are better in your situation.
If you go to a broker that charges $10 to buy and sell, and you dedicate $500 to your experiment, when you buy, you will get $490 worth of the ETF, and when you sell, if the ETF has been dead-flat (unlikely), you would get back $480.
So you can see that frequent buying and selling chews into any returns you might get. This is also true for funds with sales loads, but not for no-load funds which is what most people would recommend.
But you are correct, the other factor is your small amount to invest, which would restrict your choices in funds (most have minimums over $500 for a single-shot investment.)
Choosing the correct investment is a broader topic and I urge you to read a lot on the many useful web sites that are now available, and books on investing as well.
Start with something like Morningstar's Learning Center
http://www.morningstar.com/cover/worksho...
Or books like:
The Only Investment Guide You'll Ever Need
by Andrew Tobias
The Millionaire Next Door: The Surprising Secrets of America's Wealthy
by Thomas J. Stanley and William D. Danko
Anything by Peter Lynch particularly One Up on Wall Street
Hi, here is a collection of informative articles about investing. a free online investing tutorial for you.
http://www.investingtutorial.info/...
good luck !
wish you make fortune from investing !
Yes...
ETFs have a lower turnover than most mutual funds. As ETFs do not require active management and hold nearly a steady stream of stocks, there is hardly any portfolio turnover. On the other hand, many actively managed mutual funds churn their portfolio many times throughout the year, leading to recurring transaction fees on every purchase and sale.
ETFs have higher tax-efficiency than mutual funds. As against this, actively managed mutual funds, carry taxable short-term gains and distributions to shareholders.
Well i was in the yahoo directory and i was looking in a teen investors group and i saw one of your questions, it was the one you asked about penny stocks, but i saw that your question was already resolved, so i guess ill answer this one instead,.. so what is it that you meant by "a good investment for my small amount of money"??.. what is it that you consider to be a "good" investment when dealing with securities?? is it an investment that can make you alot of money in a quick time span, or is it a relatively safe investment that gives small amounts of interest annually each year?
well i personally don't really know too much about ETF's myself, but i'll try to help you anyways,..
But first you need to realize, what are your goals??
take awhile to think about it,... now you need to think about how your investment strategy can help you achieve your goals, will ETF's help you get to get from point A to point B, if not what would then? i previously read another post from you and it said " I've read many business books and one stock book dedicated to teens." well have you read any Robert Kiyosaki books?? if you haven't i suggest you run down to your nearest Borders Book store and buy one of his best sellers titled "Rich Dad Poor Dad" it's about how the rich think different from the poor and middle class, i think that it will give you an insight on some things, well i know you might of been looking for some specific answers but first you need to think out of the box and realize your goals first...
My favorite ETF is SPY ("Spiders"), which track the S&P500
SPY trades currently at about $150 a share, so you could buy 12 or 13 shares. The S&P has risen at an average of 9%, so your $2000 would be worth about $300,000 when you retire, even if you never invested another penny!
With your time horizon of 1 year for the car, I would suggest a savings account at ING Direct (www.ingdirect.com), or a PayPal account with the money market option. Waaaayyy to short term to invest.
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