20-something wanting to start investing in stocks? Any suggestions?

I'm young and still in college, but I'm wanting to test the waters so to speak so that I can begin learning how to invest now. Any suggestions on ways to start? I.E. Good companies to work with, a good (reasonable) amount to start investing with, and any other tips you might have. Thanks in advance!

Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. You want to buy a diversified portfolio of stocks as individual stocks are too risky. Most folks
have a dificult time buying a properly balanced portfoilio of stocks on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Unless you know what you are doing, it is best to buy mutual funds. I like Vanguard.com, other people like Fidelity, TIAA-CREF, and DFA. Buy no-load, low cost funds. If you are like most people you will invest part of your money aggressively in stock funds, and part conservatively in money market funds and bond funds. Vanguard has an on-line questionnaire which will give you an idea of how to do "Asset Allocation," determining how much to put in each type of fund.

Once you start working, if your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea.

I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.

If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.

Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.

Sources:

http://www.vanguard.com/VGApp/hnw/planningeducation
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetallocation.htm
http://www.diehards.org/readsites.htm
http://finance.yahoo.com/education/begin_investing
http://finance.yahoo.com/funds/basics

Asset Allocation Calculators
(Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
https://personal.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval
http://www.ifa.com/SurveyNET/index.aspx

Web forum: http://www.diehards.org/
(Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)

Investing should be done over time. At 20-something, you have plenty of time to stay with it for the long haul. Stay away from single stocks. Invest in growth stock mutual funds with a long track record averaging at least 13%. The more you have to invest (generally it takes at least $500 to open an account) the better the fund you can get into.

My accounts are with Charles Schwaub, but you should find a broker you feel comfortable, which might not be the first person you sit down with. Make sure they take the time to answer all of your questions and explain things so that you're comfortable investing your money.

Get an etrade account and only work with money that you can afford to lose. Investing in stocks in like gambling it can have great gains but also tremendous loses. Do your research on any stock you plan to purchase. Etrade will allow you to manage your stock portfolio fairly easily and will help you out.

What is your college major? Will you be in finance for a living or is investing going to be a hobby? Will you be investing to have a wonderful and fruitful future life or for immediate gratification? Please send me an email with your answers and read my profile.

start by reading the following boOKs first ok. then open a Scottrade account on-line.

1. the intelligent investor

2. security analysis

3. a financial accounting text book

Investing is most intelligent when it is most business like. so buy the business so to speak and not the stock. do not read to much into the charts.

Congratulations! You are thinking the right way and are way ahead of the game! Investing is the first step to avoid living paycheck to paycheck. There are millions of people that lives their whole lifes and never learn that! Find someone that you feel comfortable with that is a daily trader and let him take you baby steps and be there for you while you get your "feet wet". At the begining it may sound hard, but believe me it is not. Good Luck Kid!

use various financial ratio to get rid of junk stocks. these will helps you out:

Good Stock Pick for Unlimited Profits Framework
http://www.stock-investment-made-easy.com/good-stock-pick.html
How to Find Good Stocks That Will Survive 2008 Market Crash
http://www.stock-investment-made-easy.com/how-to-find-good-stocks-that-can-survive-2008-market-crash.html
How to Pick Good Stocks That Can Make You Rich in The Long Run
http://ezinearticles.com/?How-to-Pick-Good-Stocks-That-Can-Make-You-Rich-in-The-Long-Run&id=864890

You need to start out by understanding that the most powerful thing you can do in life is compound money over long periods of time. By starting out at 20 you'll be able to amass a fortune by the time you retire so long as you keep things simple and keep at it.

You need to have your money split between two assets, stocks and bonds. Stocks are ownership in companies and bonds are just like loans. In general, stocks will make more over the long run but be more risky while bonds will pay a fixed amount based on the financial standing of the company borrowing the money.

A good rule is to use your age as the percent of your portfolio in bonds. This way, the older you get the more money you'll have in the safe bond market vs. riskier stocks. If you're 20 you can put 80% in stocks and not worry about it too much because you have so much time in front of you.

Another thing to remember is that the market will go through bubbles and crashes in your life time. If the market triples in the next year you would have to sell stocks and buy bonds to keep your 20% ratio. In contrast, if the market gave back all its gains you would then have to sell bonds and buy stocks again to keep your 20% bond, 80% stock ratio. In this way you have set yourself up to sell high and buy low when you should rather than when your emotions tell you to.

The last thing to know is that 85% of all mutual funds and brokers do not beat the return on the index they track. In other words, buy exchange traded INDEX FUNDS for your stock exposure (mostly Nasdaq and some S&P.) This way you'll always beat 85% of the mutual funds and keep your expenses low.

As your portfolio grows you'll be able to start buying the amazons, googles and apples of the world, for now just keep it simple.

Vanguard is a great company that has lead the way in providing low cost investment options. Their Chairman, John Bogle has provided many great articles and interviews to further advance this investment concept I've just laid out for you. He's a great source for further information if you'd like ot know more.

Yea, if you want to start learning about the market and how to trade, I suggest you paper trade for a while (maybe 6 months) so you can learn a little about the market. You can do that at sites like this:

www.stocksquest.com

Then when you have some money saved up (I'd say at least $2000) you can open your own brokerage account. If you have more money to invest that's fine, but I suggest you start small to see how you emotionally handle losses! You'll probalby want a broker with really low commissions so it doesn't eat into your capital as much, I recommend looking at either www.zecco.com or www.mbtrading.com.

Have fun!

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