Lux Investing
how do I invest money?
I am 17 years old and I have a bank account I am going to have a spare 1000 bucks canadian how do I invest this money. I don't know too much so be specific and givve me more details
Public Comments
- go to one of those investing firms ask for high risk, drop 100 bucks a month in there after you've established your account. And you win. .. and yes it's that easy. basically all your answers are going to be a scrambled version of this one.
- Mutual funds. They invest for you. Financial magazines list the best and worst funds. Just make sure its a no load fund. Most funds reduce their fees in you keep your investment more than 5 years.
- the first thing to do is determine your investment goal. Are you investing for the long term, or do you have a goal in mind in terms of making a certain amount of money in a certain time period. the answer to that will help you decide how much risk you are willing to assume, which in turn helps you decide what to invest in. Another variable is your need to adapt to changing circumstances quickly, which is basically about something called liquidity. If you know you can leave the investment alone for a while you can invest in things that have some short term volitility but solid long term prospects. The best example of that is the stock market. It goes up and down, but over the long haul has never failed to perform at around 10% AVERAGE annual yield. So, at 17 years old, do you expect to be able to spend the gains of this investment in a year or two, or are you saving for something 5 to 10 years down the road? The easiest thing to do is invest in a fund that is modeled after the S&P 500. It will go up and down in value, but you should expect to get about 10% average growth in your investment over time. don't forget that interest compounds in a fund like that, so the first year you might make $100, but the next year that grows too, and you make $110, and so on. If you need a larger return and are willing to risk losing some of your money, look at a growth fund. Many have short term records of 20% or more, but eventually most will come back down to earth or close and force you to sell your shares. Another higher risk method is to research individual companies and buy a stock that is expected to move up in the near future. to do this effectively, you need to know something about the business that the company is in to make a better than average assessment of that probability. hard to do with any larger company as they are well monitored and studied and the market tends to be reasonably well informed. If you just want to make a modest return on your money and know you will have to use it in a year or two, consider a Certificate of Deposit. You can get over 5% on those these days with a term of less than 1 year. those are generally insured by the FDIC, so you have no risk of losing any of your $1,000 which is certainly a risk in any of the other options I've mentioned. Good luck. Its rare to see a 17 year old investing. You will do very well if you keep this up for a lifetime
- You may want to consider not investing this but keeping it in a liquid savings account or bank CD. At 17 there are so many things you may need the money for in a few years: car, college, first apartment, get a suit for job interview, pay the movers, a couch for the apartment, etc. When you are past all of these "initiation rights", you can read my free downloadable book on investing at http://www.invest-for-retirement.com The above poster gives some good advice. However, I disagree with his assertion that the stock market gives a guaranteed 10% return over long periods of time. Go to chapters 21 and 22 of my book to see a historical review of returns and possible future returns. The stock market usually goes through extensive periods of high returns followed by extensive periods of low returns. The mathematical average is somewhere in between, even though the market did not actually behave like that during any 20 or 30-year period. In fact, very few 30-year periods have given a 10% nominal return. In fact, there have been 3 seperate periods in the 1900s where stocks gave a zero real return, meaning they did not produce any gains above inflation. Sorry, the market does not obey a long-term average. It does not obey anything. It is unpredictable. That's why it's called risk. If we could know with absolute certainty that the market will always give a 10% nominal return over the long run, then there would be no risk ... and hence no return. Without risk there is no return, so we would run into a paradox. The irony is that we need a good degree of uncertainty to allow us the possibility of a good return. Also, the Gordon Equation tells us to expect nominal stock returns in the 7 - 8% annualized range over the nect 30 years ... not 10%. There are going to be a lot of people who will wind up surprised and short of their financial goals because they assumed that the market "always returns 10% over the long run". Sorry, it doesn't work like that.
- I suggest the saving account of Bank of Nova Scotia, it is the most competitive in the market.
