Lux Investing - Stocks, can I invest money in stocks?

Stocks, can I invest money in stocks?

Does anyone know anything about stocks? I'm 21 years old and have good credit. I don't know if htat matters but I want to invest my money into stocks, it is possible for me to do so? I asked on of my supervisors and he said I should wait til I'm older and have a house then invest in stocks bc it will be easier and the interest rates will be better. I would very much like to invest my money into something other than a 41K plan. I would appreciate any help.

Public Comments

Before you try investing, learn the basics. Among others, "Investing For Dummies" is an excellent book to start.
You should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too risky. Most folks have a dificult time buying a properly balanced portfoilio of stocks on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard.com has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund. If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. I am not sure why you are so against 401k plans, you can invest in stock mutual funds and do well. Investing in a mutual fund IRA is also a good idea, and if you don't like 401k plans, try this instea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free. I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion. Buying a house instead of renting will save you a lot of money in the long run. You don't have to pay rent and you build equity in your house instead. If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments. Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however. Sources: http://www.vanguard.com/VGApp/hnw/planningeducation http://www.fool.com/school.htm http://sec.gov/investor/pubs/assetallocation.htm http://www.diehards.org/readsites.htm http://finance.yahoo.com/education/begin_investing http://finance.yahoo.com/funds/basics Asset Allocation Calculators (Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.) https://flagship.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval http://www.ifa.com/SurveyNET/index.aspx Web forum: http://www.diehards.org/ (Many investment web forums are overrun by scam artists. This one seems the most legitimate site.) 529 plans: http://www.savingforcollege.com
You can start investing in stocks anytime, and the earlier the better. Who ever told you to start investing after you have purchased a home is completely bunk. I would say start small with a reputable online trading firm such as scottrade, interactive brokers, Bank of America has a decent plan if you have over 25k of investable cash, and their or other firms if you research that are pretty cheap and reputable. Most online firms charge a set fee per trade, some charge a rate on a percentage of the cost of the trade. Depending on the size of your trading volume and such you should do a cost benifit analysis on cost based trading vs. fixed fee trading. You can even invest directly with a company using one of their DRIP (Dividend Reinvestment Programs) these are great for set it and forget it type of investments. As for credit rating and such, its not overly important at this stage of investing if you plan on simple long style investments. Once you get more sophisticated you may want to use short style investments that use leverage. But thats for another question and topic... I hope you start now and make it into a regular thing to invest in your future. Hope this little tidbit helps...
I absolutely disagree with your supervisors. At 21, time is very much on your side! You need to invest early for the additional compounding on your money to take place. You can invest your money and then, if you want to, sell it later to buy a house.
Open a brokerage account at Zecco and I will help you for FREE. (I am a Portfolio Manager with over a decade of experience in the Stock Markets)