Investing

[Bobby B]

I wanna start investing some money into the stock market but I'm not sure how or anything or if its even worth it

Advice?

[kdee]

Originally Posted by Bobby B

I wanna start investing some money into the stock market but I'm not sure how

If you are underage, it would have to be through a custodial-type account in your parent's name.

or anything or if its even worth it

It depends on what you are hoping to get out of it. If it is any significant amount of profit.......forget about it. Any trades would have be initiated by your parents (in whose name the account would exist). Try and get my parents to spend the time to do that more than a few times a week and you would be doing really good...

However, if you are looking for potential long-term investment, or are merely using this as an learning opportunity, I would say totally go for it! I'm so HUGE on people becoming self-learners.

The smartest people in the world are not born smart. They are just the best among us at being able to effectively teach themselves..

Best of luck to you.

Advice?[/quote]

[Braxton]

Originally Posted by Bobby B

I wanna start investing some money into the stock market but I'm not sure how or anything or if its even worth it

Advice?

You raise an interesting question, and my view is that it is all right for you to invest in the stock market as long as you are doing it for the long-term. Short-term investing right now is not so great, and the stock market is pretty volatile. You need to ascertain your risk level and invest with the understanding that you can loose part or all of your money. That is not to say that the stock market is a bad thing, but you should do your research before buying stocks. Oftentimes purchasing financial newspapers such as the Wall Street Journal or Crain's Chicago Business are good ways to read the tea leaves and to figure out the market conditions. Also, when getting information about stocks make sure you completely understand the background of the person giving out advice as there has been issues on MSNBC over the years with financial counselors giving out advice without fully disclosing they had interest in the stocks they were touting.

Anyway, to start off you need to sit down with Dad and Mum and make an appointment with a stockbroker. As mentioned above you do need parental consent to undertake this endevour as minors cannot enter into contracts on their own. Many banks do have an investment arm, and you can make an appointment with such a person the next time you are at your bank.

Another thing you can do is talk with your Economics teachers or someone in that department in your school. I know that in years past schools have done projects with stocks, and perhaps you can participate in such a study?

One thing you definitely can do is get a Certificate of Deposit (CD). What such an account does is pay you a relatively high rate of interest if you agree to keep the money locked into the bank for a set period of time being it six months or longer. During that timeframe you are not allowed to touch the money at all, but your money will acrue interest. At the end of the timeframe on which you agree with the bank you will get your money back plus interest.

Finally, you might want to consult with a tax professional as you have to be careful that you don't get pushed into another tax bracket as sometimes that can happen if you make too much interest income.

P.S. If this helps you at all, J.D. from "The Weekend" does work at a bank, and he can give you a lot of good advice on this issue.

[Bobby B]

Stuff from the Bank comes in hte mail in my name and says Custodian [Mom's name] and same for my brother except Custodian [dad's name]

What does that mean?

[rebellious_teen]

For starters, invest only in shares listed in the S&P 50 index. They represent the top 50 companies in the market and are relatively safe investments. One problem with this strategy is that most shares in this index are very expensive, but presumably you're young and are risk adverse this strategy should yield better outcome.

I'm not sure how or anything or if its even worth it

Depending how much money you have, there are rules in the minimum amount you can invest in. In Australia a marketable parcel is $500, you cannot buy or sell shares with values less than that. Nor is it safe if your purchase is exactly or near that value, since prices may move down and your shares then cannot be sold.
To be safe in that regard, I recommend the minimum parcel your purchase for one company should be more than $1000.

Also make detail value analysis before you buy shares. In particular look out for P/E ratio, P/B ratio, P/growth ratio, P/sale ratio....etc. Google the meaning if you don't know what they are. They basically tells you whether the particular share is "expensive" or not.

And as ^said, go for long term.

[rebellious_teen]

Originally Posted by Bobby B

Stuff from the Bank comes in hte mail in my name and says Custodian [Mom's name] and same for my brother except Custodian [dad's name]

What does that mean?

Custodian = guardian
You are a minor, so presumably your parents have control over your bank stuff...

[Braxton]

Originally Posted by Bobby B

Stuff from the Bank comes in hte mail in my name and says Custodian [Mom's name] and same for my brother except Custodian [dad's name]

What does that mean?

What that means is that the accounts in question were opened up when you were a minor child, and I am guessing those accounts were opened when you were still a wee lad. Obviously, a little child cannot conduct his/her own banking business which is why a parent is a guardian or custodian over the account until the child achieves the age of majority which is generally 18. Basically, what that bank statement says is that your parents are the folks who have control over your money until you are legally an adult as minors cannot enter into contracts on their own.

[praiseXXX]

If it's just petty cash to just play around with (like less than $10 grand), tell your parents you want to open an Etrade account and start compiling a list of products/brands you like. Many smaller brands & companies are still privately held so you won't be able to buy their stock, but others could very well be subsidiaries of larger multinational corps. For example, say you liked DC Skate shoes: they're actually a subsidiary of Quiksilver and traded on the NASDAQ. Whether you like the rest of Quiksilver's brands is another story and something you kind of have to feel around for.

[Kevin]

Originally Posted by Bobby B

I wanna start investing some money into the stock market but I'm not sure how or anything or if its even worth it

Advice?

I recently started playing the stock market under a custodial account on Scottrade with my parents as the owner. It's my money, but don't expect to make money quickly. Buy a blue chip stock such as Google (just as an example) and sit on it for a while. I've taken that route as well as buying other smaller stocks to see how it would play out, and I've made money and then lost money and so on.

It's unpredictable and honestly, unless you're willing to pay close attention to the market it might be best for you to open up some account with a bank that has a fixed rate of interest.

[The Mysoginator]

If you're looking to make a fast buck then forget about it. The only people able to do that are stockbrokers who spend the whole day monitoring the tertiary trends in the market, unless you are willing to devote several hours a day to monitoring shares and analyzing forecasts there's no chance of making supernormal returns.

If however you're thinking of this as a long term investment then go for it, I have some shares myself and it's a great way to learn about financial markets. Can I suggest however that you look to invest in low risk / low return companies if this is your first venture, forget about the high risk shares for now.

Another sensible thing to think about is diversification. Experts reckon the optimum number of investments is 20 (assuming they're in different industries) but for a small capital budget 3 or 4 is probably enough. This means that should one industry collapse you won't lose all your money.

Ratios are the best way of determining what shares to invest in, I suggest using the P/E ratio, the PBV, PEG and dividend yield to figure out how shares are doing. Try to get some historical data and calculate the ratios for the first day of every month for the last six months for example: fire these into a graph in Excel and you've got your trends.

I believe youre from the US so can I suggest that you stick to the companies listed as part of the Dow Jones or perhaps the S&P 500 as they're likely to be the most stable companies. If at all possible try to invest at least several hundred dollars in each share to make it worht your time.

Above all else, good luck and have fun!

[Braxton]

Just to add some more information, my suggestion is that you take a look at the website of the Security and Exchanges Commission which regulates brokerages in the United States as it does have good tips on how to be a responsible investor such as checking to make sure your broker is legitimate: http://www.sec.gov/investor.shtml

Also, the SIPC (The Securities Investor Protection Corporation) provides a lot of great advice on how to be a safe investor: http://www.sipc.org/

Finally, it would be a good idea to visit your State regulator of Investment companies in your State to see if they have specific recommendations for your area as investment companies are generally regulated by States to the best of my knowledge: http://www.nasaa.org/QuickLinks/Cont...rRegulator.cfm

[Da Silva]

Originally Posted by Bobby B

I wanna start investing some money into the stock market but I'm not sure how or anything or if its even worth it

Advice?

I came across one very good book called "I will teach you to be Rich" by Ramit Sethi. Its pretty good and it will give you all the info you need to get started. I strongly suggest you read this book!