Stock Market Question?

Hi,

Recently, I have been pondering over the idea of owning some stock. I'm not sure if being a 20 year old college student is much too young, but I absolutely don't have the "get rich over night" mentality at all. I'm hoping to invest a specific amount of money that I would like to see grow

Hi,

Recently, I have been pondering over the idea of owning some stock. I'm not sure if being a 20 year old college student is much too young, but I absolutely don't have the "get rich over night" mentality at all. I'm hoping to invest a specific amount of money that I would like to see grow gradually over many years. It's safe to say that I do not know most of what there is to know about being in the stock market, so there is much research for me to do. But, if anyone has any suggestions or helpful tips about certain investment accounts that are particularly good for those my age and willing to invest at least $2,500- $3,000, I would be very grateful!

Best Answer:

ju: LOL @ "keep your cash in the bank". That is the biggest waste of money. The bank only pays you a 0.01% interest rate. Don't keep your cash in the bank. Millionaires only have about 5-10% of all their money in the bank. That's how they stay millionaires. They let their money work for them not the other way around. Better than a savings account, put your money in a blue chip stock if you really are that worried about the stock market yet still want to receive a juicy 3-6+% yield a year. Much better than receiving a savings account 0.01% interest rate a year, wouldn't you say?

Here's a few stocks for your consideration:
General Electric
Bristol Myers-Squib
AT&T
Verizon
Altria Group
McDonalds
Proctor & Gamble
Johnson & Johnson

Those are some of the best blue chip stocks with the highest paying yields and those companies usually are known for increasing their dividends annually. I suggest you pick one or some of those instead of placing your money in a savings account.

Better yet if you buy any of those blue chip stocks, open up a ROTH IRA account (only if you currently make less than $150,000 a year) and buy those stocks in that account. It's a investment account that'll allow you to take your money out TAX FREE. But I must warn you. You can't ONLY take your money out at around 59-60 years old.

So if you need the money in the next few years like helping you to pay off school debt or buying a home then open up a regular investment account with Ameritrade or Scottrade or Etrade or another brokerage firm.

Good luck.

EDIT:

I'd like to add if you want to make some side income on the side. Extra money besides long term investing. You should learn how to trade OPTIONS. At least learn the simple buying LONG calls and buy LONG puts. Let me give you an example:

Lets say there's a stock that's currently priced $50 per share. To buy 100 shares of that stock you'd have to pay $5,000. It's a lot of money and you don't have that much but you still want to participate in the upside or downside of the stock. Lets say you're bullish that stock. So you want to participate in the stock making money without having to spend $5000. You can buy a LONG call option instead. You can buy 1 contract =100 shares but at a fraction of the cost. You'd have to look at the options sheet but it can be even $2.00. So you'd spend 2.00 x 100 = $200 to participate in up side movement of stock. However, there's rules you'd have to learn with options o fcourse like time decay and implied volatility and maximum loss/gain, break-even price, expiration risk and assignment risk BEFORE you trade your first option. Anyways, when that stock moves up $1 for example you'd only receive about $0.95 cents or so on the FIRST day. In other words on the first day before taxes and commission and contract charges you'd make $95. If you bought the stock for that $5000, on the first day you'd make $100. See? But this is just an example of course. You'd have to learn all the rules first, it's not as easy as I make it seem but that's how it works.

Other answer:

ju:
One good way to have the benefits of owning stock without needing the expertise and expense of trading, is to get a diversified no-load mutual fund. Any major investment house (e.g.: Fidelity) should be able to set you up.

An even better idea is to make it a Roth IRA, where you will pay no taxes on the earnings.

With your "get rich slow" attitude toward investing, and your young age, you should be able to retire a millionaire.

Richard:
You should really only invest money that you are not likely to need at short notice, and money that you could afford to lose (at least partially); in your situation it would be better to keep the money in some boring cash fund where you can easily access it, rather than get involved in the risks and fluctuations of the stock market.
Love big words:
Contact an adviser, set up a meeting and talk through this. You could be a millionaire (truly) by age 40.
npk:
Keep your cash in the bank until you graduate and have full-time employment. THEN look at investing.
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