Easiest way to start investing in stock market... (1 Viewer)

[Paul_Fisher]

Hello,
Does anyone have any advice for a 25 year old who wants to start investing in the stock market? Where is the best place to open an account?

 

[Mark Sherman]

Id say look into some sort of real estate stock

 

[DaveF]

That's a very broad question and can't be answered well without more information. Someone helping you needs to know your financial situation and financial goals.

Here's a few general thoughts, anyway

If you have no savings at all, don't even think about the stock market. Work on building your savings account, then investing in (risk free) CDs or money market accounts.

If you currently do not invest anything for retirement, begin to do so. Contribute to your employer-provided 401k (if available) or open an IRA.

If you've already got savings and investment under control and want to invest in the stock market for extra financial growth, then look into Mutual Funds from e.g. Vanguard.

If your finances are in order and want to have some fun playing on the stock market then start an account with an online brokerage to buy some stocks with. To find a good place, check the reviews in the financial magazines. Compare things like the fees (buy, sell, account maintenance), minimum investment, and ease of use.

For what it's worth, I've lost a few thousand dollars playing with individual stocks and I've watched my IRA track the stock bubble the past few years (up, then down). I now think buying individual stocks is an expensive hobby for the average guy and isn't smart finances for most of us.

 

[Paul_Fisher]

I don't really have the money to "play" in the stock market. It sounds like the mutual funds will be a great place to start.

Thanks Dave.

 

[Todd Hochard]

I now think buying individual stocks is an expensive hobby for the average guy and isn't smart finances for most of us.

A fairly concise and accurate assessment.

HOWEVER, I don't pay for substandard performance, which constitutes the majority of mutual funds. As such, I tend toward exchange-traded funds. Things like S&P Depository Receipts (SPY), Nasdaq 100 (QQQ), and S&P Small 600 (IJR), for instance. These exactly track their stated holdings, and their fee schedules (e.g. maintenance fees) are WAY low, compared to most mutual funds. I hold several of these, and they are KILLING some actively managed Fidelity funds in my 401k.

Dave is also right that your 401k ought to be funded before you start playing and saving after-tax money. In fact, I'd be putting in 10% each check before I had a dime in the bank. That's what an emergency credit card is for. When saving for retirement, time is your greatest ally if you start early, and your worst enemy if you start late. Building a sizable emergency cash fund is one of those things that many people always intend to get around to, but never do. And, if it's a REAL emergency (e.g. I've lost my job, and I'll lose my house if I don't pay this month), your 401k can be tapped without the 10% penalty (you'll pay the normal tax, of course).

I use TD Waterhouse for my accounts other than 401k.

Todd

 

[Joe Szott]

Paul,

WOuld be a good idea to contact a financial advisor and have them assess your goals. The good ones are like personal trainers or coaches. They don't do it for you, but they lay out what you need to do for yourself to get where you eventually want to be. Look for an advisor that either offers free initial consultation or one that doesn't directly work for a financial institution. For example, don't be surprised when the guy at Charles Schwab wants you to put it all in stocks I've used American Express (AMEX) financial services before to set up IRAs and 529 plans for my kids, they are pretty decent and low price/pressure.

If you want to run your investments yourself, check out www.vanguard.com for mutual funds. Vanguard has tons of no-load low entrance fee index funds in everything from the Wilshire 5000 to real estate or bonds. I personally have a ROTH IRA that invests heavily in this fund: http://finance.yahoo.com/q?d=t&s=VTSMX. It tracks the US stock market as a whole, nothing fancy just good old retirement savings.

Good luck and remember it should be fun not threatening to invest in your future!

 

[Eric_L]

Look for an advisor that either offers free initial consultation or one that doesn't directly work for a financial institution..... I've used American Express (AMEX) financial services

-Contradicting yourself. Good advisors can be found in many places, banks, accounting firms, brokerages, self employed. All the same places bad ones are found. The best way to learn how to find a good one is to interview several. The most important question "I'm speaking with several of your competitors as well - If you were me what would you be asking them?"

 

[Andrew W]

I'll give you a list of all the stocks I own and you can short sell them. Might as well do someone some good....

 

[Jason_H]

If you've already got savings and investment under control and want to invest in the stock market for extra financial growth, then look into Mutual Funds from e.g. Vanguard.

This is exactly what I did, and I am in the same position entirely. I am 25 years old and have never invested before. A few months ago, I opened an S&P index fund account with Vanguard, and am kicking in $100 a month for now. Over time, history dictates this WILL pay off, as long as I am patient and in for the long haul.

 

[DaveF]

Over time, history dictates this WILL pay off

Be careful, as history has dictated that this paid off. We presume that history will repeat itself. Or, as every prospectus puts it, "historical performance is never a guarantee of future results."

 

[Eric_E]

Two words: INDEX FUNDS.

 

[Jason_H]

Be careful, as history has dictated that this paid off. We presume that history will repeat itself.

Point taken. I understand the inherent risks in investing.

 

[Scott Merryfield]

I also recommend looking for a good financial advisor. We did this almost 10 years ago, and it was the best financial decision we've made. A professional can help tailor an investment strategy to meet your goals and tolerance to risk, and also provide assistance with tax planning and preparations.

 

[Bill Griffith]

OTC, I've made millions investing in OTC stocks or Penny Stocks.

SLAP SLAP

Oh wait no I've lost thousands, stay away from the OTC stocks.

Best thing when getting into the market is to find some companies with a good track record strong financial base.

Find a couple of stocks that you take a personal interest in and enjoy learning about. Like me, I like building computers so AMD (The people that make the Athlon computer chips, among other things) really interests me. So I like learning about them. Once you've learned about them if you think they have room to grow put your money into them.

The key is finding something your interested in and know something about than do your research and determin if there a good investment.

Never invest money that you need.