Investing?

[bhakta]

Well, I'm turning 18 in a month and going to college soon too. Turning 18 would mean,I would be allowed to sign up for a brokerage account. The question is, is an income investing portfolio a good choice? The reason why I picked this instead of a buy low/sell high portfolio is because I want a steady income. 95% of the income made from this portfolio will be reinvested into the portfolio. The 5% percent would probably be saved or spent on a buy low/sell high portfolio. The amount I want to invest is $500, I know this is a low amount, but I'm not looking to become rich just looking to not lose money due to inflation and such. Plus, I feel that investing at this age with $500, I would be able to make at least 10,000 in this portfolio by the time I am done with college which would be 6-8 years (debating med school or bioinformatics). What I mean by 10,000 is there would be 10,000 dollars in this portfolio. To me this goal seems unrealistic, but worth a shot. I know I have to invest in dividends stocks, bond funds, bonds and probably real estate investment trusts. The question is, how do I start? How do I find the help I need to get this portfolio in action? I believe I need a brokerage person? What firm has the least amount of fees and how much will fees run to start something like this up? In the beginning I am looking at getting a return of 1-20 dollars a year from investing 500 dollars? So, what should I do, where should I start and is this a good choice ?

[dontgopoor]

Hello,
It's great that you are interested in investing at such a young age. And it's great that you are seeking help - I expect that you'll receive lots of input on this forum and elsewhere.

Yes, your expectation of growing $500 into $10,000 in 6-8 years is not realistic, that's a 45% return a year. You'd likely lose most of your investment fairly quickly chasing that return.

You don't provide info on your financial situation but if your family has your living and educational expenses covered and you just want to dip your toe in the investment world with $500, park that $500 in a Vanguard or other large, well managed, low cost 100% equity fund and let it sit there while you read and ask more questions. But don't bother pulling 5% of the income out - do you really need $1 and change in cash flow or $10 in an account?

You're too young for bonds to make sense in the current interest rate environment (and arguably in any interest rate environment). Read as much as you can about Warren Buffet's strategy - broker's won't want you to do that because Buffet's influence will limit frequent trading.

And if brokers could help you turn $500 into $10,000 in 8 years, they would not be wasting their time working as brokers.

[SnapDuck]

That's awesome that you are interested in investing at such a young age. I wish I would have started that early.

Since you're looking to invest, I'm assuming you have access to money for living expenses and an emergency fund. If not, that would be the best place to start. I'd go with an online savings account from someone like ING. If you open a new ING savings account with $250 you get $25 for free. Free money is always nice.

After all that is taken care of, I'd start with a low fee index fund like the Vanguard Total Stock Market ETF. With only $500 I don't think you'll be able to open an account with Vanguard directly. However, through other companies, like ING, you could purchase Vanguard ETFs. There would be a commission on the purchase ($9.95 for ING) when buying from a company other than Vanguard which would be a 2% hit to your investment and another 2% when you sell. I'm not sure what better options are available with that starting amount.

I would put the $500 in an online savings account and try to add to it until there is enough to open an account with Vanguard ($3000).

[bhakta]

okay so open a account with ING and start investing with them? the 10000 mark was a unrealistic goal which shouldn't be taken seriously. sorry. honestly I just want to make get started actually investing because i have had an savings account and such for a very long time. I want to start investing, I know 500 dollars is not much and to be honest truly im just expecting 10 dollars the most out of this. this is pretty much a trial run for when i actually have more spare money and can actually start investing with large amounts like in the thousands

[SnapDuck]

Yes, if you want to start investing your $500 right now you could open an account with ING. Also there are promo codes out there, 502INVEST is one, that can get you $50 for opening an account. Basically, you have to open an account and make a trade, then 7 days later you should receive the $50. As long as you leave your money in the account for 6 months they won't try to take the $50 back. Once you have an account opened you can use the mutual fund screener to find no transaction fee funds with low enough initial investments to invest in. Also I'd recommend screening for funds with an expense ratio of less than .5%. Based on the screen I just ran it looks like ACIVX, American Century Equity Index Fund, fits the bill. It's a .49% expense ratio fund that tracks the S&P 500. This should work to get you started but when you get to the point of having thousands to invest, keep Vanguard in mind, you'll have expense ratios of .2% or less.

[bhakta]

thank you that is a really good answer thank you a lot. some of the other post kinda shattered my dreams

[dws123]

rental property management boca

Well, I'm turning 18 in a month and going to college soon too. Turning 18 would mean,I would be allowed to sign up for a brokerage account. The question is, is an income investing portfolio a good choice? The reason why I picked this instead of a buy low/sell high portfolio is because I want a steady income. 95% of the income made from this portfolio will be reinvested into the portfolio. The 5% percent would probably be saved or spent on a buy low/sell high portfolio. The amount I want to invest is $500, I know this is a low amount, but I'm not looking to become rich just looking to not lose money due to inflation and such. Plus, I feel that investing at this age with $500, I would be able to make at least 10,000 in this portfolio by the time I am done with college which would be 6-8 years (debating med school or bioinformatics). What I mean by 10,000 is there would be 10,000 dollars in this portfolio. To me this goal seems unrealistic, but worth a shot. I know I have to invest in dividends stocks, bond funds, bonds and probably real estate investment trusts. The question is, how do I start? How do I find the help I need to get this portfolio in action? I believe I need a brokerage person? What firm has the least amount of fees and how much will fees run to start something like this up? In the beginning I am looking at getting a return of 1-20 dollars a year from investing 500 dollars? So, what should I do, where should I start and is this a good choice ?

This is also a good business, it can help you in earning money easily and rapidly but in my opinion as i did, property investment is one of the finest and guranteed beneficial business because real estate is one of the largest field in today's market and every one want his own home so it has very large requirement and there is no doubt of loss.
But still it is my opinion you have your choice, in portfolio investment you can invest low amount while in property it should be large enough, but both are beneficial you can opt any one.