What’s the best way for a 17 year old to invest, say $100?
Stocks? Bonds? Mutal funds?
I guess its a really good time to buy stocks, so if that’s the way to go what stocks do I choose? How do I get started? Is $100 enough?
Your financial advice is greatly appreciated.
-Kevin
Just don’t get tricked into baseball cards or comic books or other “collectables”.
They’re really a scam against the young. The only real market is from store to collector. Collectors have few avenues to recoup their “investment”.
Make the check out to “cash” and send it to:
Diogenes
P.O. Box 1311…
What?
Unless I get a car in return Diogenes, I don’t think that’s gonna happen… 
You could contact a broker and inquire about investing in a mutual fund, but I believe the minimum investment is around $10,000. I think a savings bond would be your best bet. They’re as close to risk free as you can get. Inflation is about the only risk with a savings bond. There’s a very remote risk that the Federal Govt. could default, but that isn’t likely. Then there’s always the option of opening a savings account at a bank. Buying shares in one stock would be the most risky thing you could do, but there’s always a chance you could get lucky and pick a winner. There’s also a good chance the stock could tank, especially in today’s market, and you could lose your $100.
There are some funds that will let you start with a minimum investment of a few hundred bucks. Here are some pages that might help you get started:
If you have a job, you can put that money into a Roth IRA. It’ll grow tax free for the next 40 years. I’m sure if you search around you’ll find some Investment companies that will accept as little as 100.
You should go onto one of the online calculators and figure out what your 100 dollars will be worth in, say, 40 years at 12 percent interest.
Umm, nice idea, but also see what the 100 dollars is worth in 40 years at 5% interest. Long term interest rates are probably going to remain lower for the next 40 years than they have been during the previous 40 years.
Red.
Well China Guy, you could be right about the 5% interest, but I hope not.
The only reason I used the 12% figure is that is how much the S&P 500 has traditionaly grown since the 1920s. It’s also the figure I use when trying to forecast my own retirement in 30 odd years.
K3v1n, I think you’re going to need a bit more than $100 to invest. Even cheap online brokers will end up taking about 10% of that for commission. I don’t think anywhere takes less than $8 a trade, and even then, I believe there are still restrictions.
Some companies allow for direct investment into their company. This way you don’t have to have a middle man, although some companies still charge fees. There is usually a minimum investment too, and then you have to contribute so much each month. A lot of “blue chip” companies have these plans, called DRiPs. Go to http://www.fool.com to learn more about them. That’s probably your best bet.
For example, General Electric offers a direct investment plan that requires a minimum initial investment of $250.
You probably want to read up on this a bit more, because I’m not real sure about how accurate my info is.
I really doubt that you’d make enough in a year to buy a car, but I think investing it would be a better plan than letting it sit in the bank with these low interest rates. Good luck with whatever you decide on.
$100 isn’t worth investing in an attempt to accrue capital benefits. Invest it in something more valuable - yourself. Buy $100 worth of books on subjects like investing, self care, motivation. Your $100 could end up millions.
Here’s a couple of suggestions:
Wishcraft: How to Get What You Really Want by Barbara Sher
Rich Dad, Poor Dad by Robert T. Kiyosaki
Well, ok. You’ll probably need a little more than $100 to start your investing spree.
But if you really want to save that $100 and protect yourself against inflation you might look at the “I” Bond from the government.
It’s a savings bond like Ave Minerva suggested, but it has two interest rates, the second one to reflect the level of inflation. These rates are reset every 6 months.
At the moment these things are beating standard savings accounts, CD’s and most money markets.
They’re also attractive if you live in a high tax state, since they’re exempt from state and local income taxes. Since the I bond is a savings bond, it means you don’t pay Federal tax until you cash 'em in (which could be 30 years from now).
If this sounds attractive to you, here’s a place to look into 'em:
Right. My bad, actually a typo. I think long rates maybe will average 7% tops. I thought you were using the 12% as a discount rate. Actually, you’re probably right that the the S&P will return 12% annual compound growth over the next 40 years. 12% is a reasonable assumption.
K3v1n, stock indices outperform bonds in the long term, and by a huge percentage. You will never get rich investing in bonds, and you’re going to have to do it for a long time to buy a car.
That said, it’s a good thing that you’re trying to learn about this stuff now. My best piece of advice is to invest in something. If nothing else, you’ll pay close attention and learn what not to do. Maybe you’ll get lucky and make some very good long term investments. Either way, you’ll learn some valuable lessons about managing investments.
I’m surprised that noones brought up any basic investment advice yet:
Two (inter-related) things you need to decide before you invest this money. 1) how long you want to invest it, and 2) how much risk you are willing to incur.
If you are going to invest it for a short period and/or you really really don’t want to lose half of it (or all of it), then you need to make a low-risk investment, designed to not get you a high return, but keep your money somewhat safe. Bonds are the typical investment here.
If you are going to invest your money for a long time (say until you retire even) and/or you’re willing to lose a lot of it if everything goes wrong, then you want to make a higher-risk investment. The advantage of taking on more risk is that your average return goes up, and especially given some time this is typically very rewarding. Stocks are the typical investment here.
Time is important in both of those categories because in the longer term, higher risk can be smoothed out somewhat, but in the short term high-risk is even more so.
In the meantime this is a good time to look at the information available. The web is a good place to start.
Here are my two favorite starting places.
Brinker’s reading list is interesting.