Please explain the ins and outs of online investing to me!! (19 year old with limited $)?
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Scottrade is very inexpensive at $7.00 per transaction. TradeKing at $5. I believe Scottrade has a $500 minimum. Now there is also available to you Sharebuilder. Give some thought to them. $4.00 per transaction and they buy, I think every Thrusday or something like that. And I do not believe they have a minimum.
For you, index funds and closed end funds will be your best bet under the circumstanses. Yes, you can purchase less than 100 shares and you still pay the standard commission.
There is another alternative that you might wish to consider. That is American Funds. They have a very wide selection of funds with a minimum investment of $250 and $25 additional per fund. There is one slight hitch. They are a front end load fund, which means you pay a 5.75% commission to buy. But on the flip side, their expense ratios are very low. Also they do not charge commissions for reinvesting dividends. Over 10 years even with the front end load they will be less expensive than many open ended funds.
I still think though that index funds would be a real good choice. Very low expenses, hundreds to choose from, and $7.00 brokerage commission on a $300 purchase is only 2%. If you invest every other month only about 1%.
P S. Do not invest all in just one fund. Invest in several with different investment objectives.
http://www.sharebuilder.com TRY IT!
Stocks can be a very risky thing... most times the smaller investor won't hear any news on a stock until after the market closes.
By the time it opens in the morning you could be left with nothing.
With limited funds and the way interest rates are currently rising you may be better off in the short term to invest in short term CD's.
They are safer and you can yield a safer return of 5 -6% on your money... You can find some 6 month - 12 month CD's with roll-over.
Invest the same amount every other month... minimum is usually about $500 and you said you have about $300 a month.
Good Luck
Me
Here is what you should do: open an account at Scottrade.com - they offer $7 online trade commission. I think the minimum is $500. Save up $2500 to $3000, and then buy your favorite stock. Do a lot of research before then. You can create a portfolio of stocks that you are considering investing in at http://www.top10traders.com - this is a free site that lets you create a portfolio with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors.
Here is a portfolio of REIT stocks you might be interested in:
http://www.top10traders.com/viewportfoli...
Good luck!
dont try to invest in single stocks right now, go to a no load fund company
www.troweprice.com you can start a fund for 50 bucks a month if you use the automatic asset builder, set it for 50 a month then whenever you have more just click on add money and you can transfer money from your bank to the fund, very easy, much much much safer than stock investing
edit: at first while learning just stick your money in the target date retirement fund, they set your allocation so you dont worry about anything besides adding money, just tell them the year you plan to retire, my 2040 fund has earned just a hair under 16% this year, i'll take that over picking my own stocks, especially at a low amount
after doing this for a while you may want to play with some stocks, but dont plan on getting rich like that or using money you cant lose, say you put that 2k into a stock that has one bad earnings report, then you may lose 800 bucks in one day or something, are you ready for that?
i cant believe all these people telling new investors to jump right into stocks by themselves, or into forex or options
edit again, i didnt see the ten year horizon, so maybe the target date fund isnt for you, but find a balanced fund, something not overly agressive, 10 years is long enough to get a good start,but maybe not long enough to ride out a very aggressive portfolio through a bear market
At your age, I would say investing in stocks is a good idea. Any one can start with any amount of money. $300 is not too little. I recommend reading William J. O'neil's "How to make money in Stocks" it really helped me.
If you sign up with Scottrade, the commisions will not be that much of a burden. Just don't overtrade.
Its also important to know why you have a 10-year horizon. Do you want to retire at that age? Then you have to be very (probably overly) aggressive. Do you want to have a nest-egg started? Then a conservative plan with Mutuals and a CD is in order.
Good Luck and don't be too intimidated by the market. Just read everything you can about how it works and be disciplined.
I trade individual stocks using e-trade.
To be successful requires much reading, and much educated guessing.
The downside for the individual investor is that they of Out Of The Loop, Of the Know, of any given company. Even after you've done your diligent homework.
By the time news positive/negative breaks on a company, others will have traded and affected the stock's value.
A sudden negative report by an analyst covering your stock can put serious damage on an investment.
Stocks are currently pretty volitale -- they are currently on a high.
Can they sustain the high, can they go further, will the direction change as a result of interest rate increases, housing slump, retail disappointment, act of terrorism, oil price increases ??
These are but a few question ones need to juggle to make a successful trader -- and even then, your at risk of losing principal, or earnings gained.
I wish I had started at 19.
However, I would start off small to get your feet wet.
This will get you in a need-to-know investment mindset.
Good news -- you can write-off losses against you income up to $3,000 dollars per year -- this drops your tax rate.
Bad new - you will have some losses.
The above said, given there are costs associated with varying funds, the rather high risk of individual stock trading, and the relatively attractive rate on CD's, I would put the bulk ot the moneyy into CD's, with a small toe-hold in the invesment market (to get a taste of it).
Additionally, if your employer has a matching-fund 401k, I would likely increase my contribution to take full advantage of the match.
Good luck as you start your investment life.
I love it, but I do wish I would have started at your age.
If you like Vanguard, you could save up $1,000 and put it in their Star Fund. When you reach $3,000 you can switch it into the Total Market Index Fund. The Star Fund is not my favorite fund, but your options are limited with a small amount of money. It would probably be best to open an IRA account, not a regular account.
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