Lux Investing

What are the main things that I can do before I start investing?

I am a college student and I would like to start investing. To be honest, I don't much about the stock market, however I started doing research, especifically on Mutual funds. I head for beginners, one should starts with fedelity, vaguard group and T. Rowe price because they are not that risky. Is that true? Please give some ideas or websites that give basics information before I get started. For instance, I would like to know how to minimize risks. THanks

Public Comments

1. Too many people just open a brokerage account, read an article on a stock & buy it. Just as bad, they hear some "talking head" on a financial station scream how good a stock is.... and they buy it. This is just about the worse thing you could do. Hold off for a year or more (they'll be plenty of time for you to invest). Reading several books will help you avoid most of the mistakes the rest of us made when we were in your position. Take your time & learn. It will be worth it!
2. You said ..."because they are not that risky. Is this true?" No, it is not true. They have some very diversified index funds and large cap stock funds that are not overly risky, but they also offer (as does just about everyone else) small-cap and sector funds that are riskier than the market as a whole. Risk depends on what type of fund you are investing in, not from which family offers it. Go to Vanguard (www.vanguard.com), click on the ...go to site line, next page click on the gray "planning and Education" tab. Lots of good information offered. Common Sense offers some good common sense ... take you time and learn.
3. Vanguard, TRP, and Fidelity mutual funds carry risk just like any other. These companies are known for their "no load" mutual funds, meaning there's no up front fee (brokerage commission). I recommend doing some general reading on investing and mutual funds so you understand the basics as in: Fund structure, fees, the mechanics of buying and selling, etc. The main thing to do BEFORE investing, however, is to evaluate your finances. By that I mean your income, credit card debt, student loans, etc. I think saving and investing should be a top priority for everyone. But if you're carrying high interest credit card debt, you may be better off paying it down before investing. Why do I say that? Well if you have a credit card balance accruing at an annual rate of 12%, then your investments have to generate a return greater than 12% for you come out ahead. In most cases, you're better off paying down high interest debt before putting money into savings or investments. It sounds corny, but I started with the "Dummies Guide for Mutual Funds". It's easy to read and covers all the basics you need to evaluate mutual funds. And best of all, you can probably check it out for free at your local library. Even if you have to buy it, it's a great way to get your foot in the door.
4. Go here and learn: http://www.estocktrades.info