Investing advice at a young age.
 

I'm an 18 year old student who attends his local college. I work part time as a night leader at a restaurant making 15 per hour part time. Each pay cheque I get in a good... $600-800. I have been wanting to invest my money into something that is worthy of doing. I barely know anything about investing, but I would love to put a good chunk of money into something like a savings fund that will build up quite nice when i'm older.

Now here is my question to you. If you were in my position, and were willing to invest at least $100 a week into something, what would you put it in?

Thanks in advanced.

How much are you spending that you only have $100 to invest? Granted, it's better than nothing, but I would, first, find ways to cut back on my lifestyle and invest a little bit more now to have a lot more later.

ING Direct (now that I'm a user) is good for savings (better return than most traditional banks). Then, once you've amassed 2-3 months of spending (to hang onto just in case it's needed), you should then be able to think about investing as opposed to saving.

To start, you want to amass some wealth from which you can live and invest.

I was in your shoes, and I invested all of my money in beer and women. So far, the stock has not paid off yet.

Seriously though, depending on where you live, I would recommend that you put half your money into t-bills that mature on regular intervals. Take the other half and invest in some high-risk stuff. People call this the 'Magic Bean Method' because of the story of Jack and the Beanstalk, but at your age, you can afford to be risky; very risky. It is also alot of fun...

You are 18, and with the amount of time you have before retirement it is more important to teach you strong saving habits than it is to secure a steady retirement income.

I know, next month, take your hundred bucks and go to the local bookstore. Buy 5 20$ books on investing (investing for dummies, Investing ABC's) and read them. The wealthy Barber, the Richest man in Babylon, 7 habits of highly effective people, et cetera.

You want to be able to access your money without too much penalty, since this is more about saving than it is about retirement planning. A savings account is good, but something that keeps pace with inflation and then some is really good.

When you have enough to invest, I recommend starting up a Roth IRA. The money is taxed when you enter it, so that when you withdraw it years from now, it not subject to taxes.

Generally, it's a good idea to have $2k available to start up a Roth IRA, but there are some, like T. Rowe Price, that allow you to invest $100 a month, automatically for an initial period of time.

IRA's are nice, but just understand that the money is "locked away" until you are an adult near retirement age. To pull it out early incurs penalties. You can move the money around from fund to fund as you wish, but you can't withdraw it until you reach the age specified by the terms of your agreement.

From what i've read people invest certain amounts per week, opposed to huge lump sums. I'd assume that i'd be a lot easier to just pumping a hundred bucks a week from my paycheque than saving up a few grand. I don't want to invest most of my cheque everytime. I still need leisure money.


Big-Ben - I'd love to invest in stocks, but I don't even know where to begin and what to invest it. Also, don't you need a huge lump sum of money to start off with anyways?

I would recommend opening an account at emigrant direct over ING direct. The interface is complete crap at emigrant, but the interest is unmatched.

And to asnwer your question, no you do not need a large sum of money to start buying and selling stock. Firstrade.com for instance, has no minimum starting balance. But for stocks... well, it's not easy money. I personally would recommend just socking it away in an emigrant account, but that's just me.

Good luck.

Hmm. I would love some advice as well. My situation is a little different. I have a large lump sum of money but no weekly income (I have a monthly income, but it's pennies compared to what I want to invest). The money needs to be available in 2 years when I go onto post graduate studies. Any ideas?

Here is what the Bank of Montreal offered me: 2 year plan. 2.5% the first year, with the option to take my money out after the first year. 2.75% the 2nd year and obviously I can take it out at the end of the 2 years. I'm thinking I can do better (I believe ING offers something like 4%?)

Any help would be awesome.

You've got some good advice here. But the key is keep investing. My advice is that you learn something about investing. Read some books, perhaps join the National Association of Investment Clubs, their magazine Better Investing is excellent. At your age you've got lots of time on your side. Frankly, knowing what I know now I would also utilize a fee based finacial advisor. Someone to meet with once every 3 - 4 months and discuss investing. I think Einstein once said compound interest was the most powerful force in the world. Just keep it up, pay yourself first.

Firstly, I'd look at a savings account if you don't already have one and build up some money into that. Then I'd suggest a Roth IRA as a good thing to start investing in. Even if you can't put in the maximum amount for one year ($4000 for people under 50) it is still a good idea to invest in your retirement as early as possible. Finally I'd start looking at mutual funds and stocks.

An overfunded VUL is exactly what you should get.

#1 You are locking in an enviable health rating at a young age.
#2 The money you put aside grows tax deferred until you pull it out. Even then -you can get exactly the amount that you've put into it without paying taxes.
#3 Often these come with investment options that are not freely available elsewhere ie. closed ended mutual funds.

Here's a link for a more robust definition.

http://www.answers.com/topic/variabl...life-insurance