I am 14 years old and I want to start investing into something. My parents said just pick what you want and they'd go along with it. I don't know where to start. There are stocks, bonds, CDs, etc. Can you recommend anything? I only have about $250 and it should be short term, say under 3 or 4 years. So, considering my situation, what fund will be best suited for me?
Thanks in advance.
Ed Nargel
Favorite Answer
As above you need more learning before committing money.
Go to library (free)
Read all of the finance magazines they have (free)
Select your favorite (free)
Go to circulation desk and get the last year of your favorite magazine (free)
Read all of those (free)
Go to Yahoo finance and set up a portfolio with $100k (free)
Select several stock for several different reasons following the advice in your now favorite magazine (free)
Write down why you selected each stock or ETF (such as low P/E, high growth, sector in favor) (free)
After one year, determine which of your strategies has worked best (free)
Make a new selection based on your work and at this point consider committing money (not free)
Most of the above is learning. Most of the above is free. Most of the above take effort. Before committing money to anything you need to learn about it.
Mark
I would pick some individual, lower risk stocks. Some good choices are stuff like McDonald's and Apple and high dividend paying stocks like Verizon. Do some research on the companies and review their financials. Do some researching on investing in general. Your parents should be able to set up an online account for you at like scottrade or ameritrade or something.
However before you make any trades I recommend doing virtual trading for at least three months, maybe even a whole year. You're only 14 so you have time to learn, and $250 is not a lot of money so commissions will eat a good part of that. For example, scottrade charges $7 a trade so if you split the money into two stocks you're paying $14 of that $250 in commissions which is a pretty high percentage. If you could save additional money while practicing with a virtual account you can bring that percentage down.
What is a virtual trading account? Just trading stocks on paper. You can keep track of it all on a spreadsheet yourself. Give yourself $10,000 fake dollars and then write down all your purchases and keep track of the sales and see how you do. Just look at the market and say you want to buy McDonald's next week at $100 a share and you buy 10 shares. Write that purchase down and subtract $1000 from your remaining capital. Then choose when to sell it and add that money back to your fake dollar pile. It's interesting to see how potential trades can work out. At the time of each trade ask yourself your reasons for making the trade and write them down. Then if you lose on a trade you can look back on your reasons and see if they really were sound and things just didn't go your way or if there's adjustments you can make. At the same time you can look at your gains and see if you just got lucky or if there was good reasoning that brought you to the decision to buy the stock.
Rosanna
If you are serious to invest, you can google for HSFX Asset Management and start making consistent profits!