Some poeple believe that investing should only be done by adults. This idea is rediculous. So much so, I have dedicated a web site to disproving it all together. Investing is about making money. But money doesn't multiply itself.. The outside factor that turns money into more money is, knowledge. The more knowledge you can obtain about your investments, the better your chances of making money.
Investing young allows you to ride out the bumps a company may go through. This is the supreme advantage kids hold over adults. If you have ever watched CNBC or any Financial Program for that matter you will often hear the term, "Panic Selling." What they should say is, "All the adults got scared because a few analyst don't like the current economy." You have to understand adults are investing large amoutns of money, so to them a bad investment could mean, Sally, doesn't get to go to college. My reccomendation to kids who are interesting in investing, is to follow that strategy I have entitled Investing In Increments (or for short, The 3I's). The 3I's consists of starting off with small capital (start off money), investing only after you have done exstensive research, and let the investment sit long-term (3+ years). This eliminates some of the stresses caused by investing and allows you to focus on gaining knowledge more so then losing your money. A loss is only a negative when you don't learning anything from it.
Even though this site was developed to incourage investing, there are risks that should be mapped out. The first part is that any stock you invest in has the possibilty of being worth zero. So when investing, use money you plan on losing to lessen the emotions of it. The next part is commission. Comission is a fee you pay to cause a financial transaction (sell or buy). Since you are investing in small amounts commission can be bothersome. There is almost no way to work around it. The only possibility is to convince a parent that you are an "investing genius" and have them buy the stock and take the commission fee (this technique is called, "piggy-backing").
Even though investing has its downsides, and you may lose some money, it is not a complete loss unless nothing is learned from the experience. Because I would much rather lose a hundred dollars today then a few grand down the road and learning now prepares you so in the future you will be making money not losing it. When it comes down to it, you have to decide for yourself, if investing is the right thing to do for you at this stage of your life.
Approximately 2 months ago, I founded, The Young Investor's Club, at my school. This club discusses the current market, developes investing startegies, and every member has a mock portfolio they track. All the mock portfolios are part of , The Stock Challenge, a game in which each student compares their percent gain to see who the Ultimate Investor is. If you have a similiar interest in starting a club like this at your school, feel free to e-mail with any questions.
How it Works:
Find intrested kids
Follow proper school rules to start club
Plan weekly meetings
At meetings have a list of what you want to accomplish
Give each student a mock amount of money (I used $5000) and teach how to reasearch and pick a stock
Set up personal portfolios for every student on internet (I used MyYahoo!)
In this current economy with the possibility of a future moron running this country, you should be frightened about turning old. Everyone seems to have a plan for Social Security, yet the predciiton is in the year 2015 there won't be any money left. So you must take your own retirenment in your hands.
A Roth IRA is a great way to do it. You can put up to $2000.oo in it per year. The best part is, that is non-taxable. So you can make money and the government cannot touch it or penalize you for having it. I think this is a great way to plan ahead for your future.
There are two basic ways to analyze a stock you are interested in:Technical and Fundamental. By using a good mix of both, it will increase your likelihood of picking a winner.
All numbers and charts, that's it. No CEO names, no news reports, just numbers and charts. By using daily highs and lows, charters (people who use technical analysis) predict futures of companys. To see these future charts go to Links and look at sites with symbol (T) at end. Personally I use technical analysis for buy and sell opportunities only. I once tried to buy a stock only on technical, and i lost big. So beware!
Just like in baseball, you have to learn the fundamentals first before you can play in a game. This type of analysis is exactly the same. Fundamental bases the predicted future on the past growth of company, P/E Ratios, revenue, net loss, quaterly earnings, and the list goes on. When doing this analysis you really get a feel for the company you are investing in. As you research you will get one of two feelings. Either yes I want this company or no this was a bad idea. Either way you gain knowledge, whcih is the ultimate tool.
As a general rule I use Technical 15% and Fundamental 85%.
MorningStar M*Allowing you to compare multiple stocks, this site is excellent for individual stock analysis. Click on the Stock Grader and it has directions to follow on how to use this great tool.
Money NetHere you can track multiple portfolios. The best perk about this site is Real Time Quotes, done by streaming media.
Individual InvestorThe site has a bizaree following. Everyday this site posts a Stock of the Day, which 9 times out of 10 does well for that day if not longer.
BarchartThe best free technical site on the web. Not only does it give you every calculation and chart imaginable, but it has great explanations that follow.
Dorsey & WrightThe best subscripition technical site. They boost to have the best results out of any technical site only catch is it is 34.99 a month. However, you can subscribe for a free trial which is worth it. And when that is done, use the DWU to learn everything you can to use technical analysis to your advantage.
Investor's Business DailyIf you ever contimplated buying an investing newspaper this is the premium. But if you cannot afford it heres the next best thing.
Yahoo! FinanceTracking is made simple. Unlimited amount of portfolios you can track at once. This site alos has email alerts which are great for people who cannot watch their personal finance all day.
CNBCGreat start site for anyone. However they cover the whole market so it is hard sometimes to get details.
NasdaqIf you want to fine 10 quotes immediately and walk away? Look no further. Nasdaq allows you to type in multiple quotes and receive their day history simultaneously.
NYSEBasically same sites as Nasdaq, but here obviously you focus on the New York Stock Exchange.