Investing

[Porra]

Im a current college student working 25 hrs/ week, debt free living with parents. I would like to take some of my money and start investing. Currently I have about $200 dollars to start out with and I would like to add about $100 a month while im finishing college. Ive done a bit of research and it seems like most investing websites need atleast $500 to startup. My question is, are there any good mutual fund websites that I can invest with and do next to no work. I dont have too much time now with everything going on in my life and Ive always learned that a good long term plan is to invest instead o ff just savings which at the moment cant keep up with inflation. The $100 a month isnt much to me at the moment because I try to keep my expenses to a minimum.

tl;dr - looking for a good investing site with minimum $100-200 startup balance that will manage my stocks for me. Also, any advice to a new investor.

[Laize]

Im a current college student working 25 hrs/ week, debt free living with parents. I would like to take some of my money and start investing. Currently I have about $200 dollars to start out with and I would like to add about $100 a month while im finishing college. Ive done a bit of research and it seems like most investing websites need atleast $500 to startup. My question is, are there any good mutual fund websites that I can invest with and do next to no work. I dont have too much time now with everything going on in my life and Ive always learned that a good long term plan is to invest instead o ff just savings which at the moment cant keep up with inflation. The $100 a month isnt much to me at the moment because I try to keep my expenses to a minimum.

tl;dr - looking for a good investing site with minimum $100-200 startup balance that will manage my stocks for me. Also, any advice to a new investor.

Almost every site worth using has an initial startup balance of about $500. It's worth it to wait as discount brokerages generally get you in other ways (Maintenance fees for sub-$X balances and such).

My broker, for instance, is Scottrade. They have the lowest brokerage fee I've found and provide me all the tools I need for investing.

They do not run mutual funds, but there are financial products called ETFs that will allow you to invest in index-weighted funds at a fraction of the expense ratio (amount the fund takes for its fee) of mutual funds.

As for advice, I can only offer a few bits.

1) Educate yourself on the markets, how they work and what great investors have done in the past (Hint: It isn't day-trading).

2) Diversify your portfolio. If you intend to self-direct, I recommend building what's called a satellite portfolio where you place a significant chunk of your assets in an index-fund (Such as the Standard & Poor's 500 index) with the rest going into various stocks that you find to be great buys.

3) If you really can't be bothered to maintain your portfolio at all, there are brokers who will do it for you.

[aztr0]

Laize makes some good points, but with $200 bucks, brokers aren't going to take you seriously.

[Gheld]

Pretty much the only two investments that you could start on 200 dollars would be RRSP or Bonds.
Of the two I would recommend bonds.

The returns suck on bonds, but bonds are 100% secure, as long as the issuing party doesn't vaporize over night.

In my own humble opinion; money security > uncontrolled risk.

Because uncontrolled risk = gambling. So unless you are intimately familiar with any company that you invest your money in, you're gambling son.

Your best bet would be to buy bonds or GICs from your bank. That way you can get a modest return (maybe just slightly more than inflation rate) that is guaranteed, without having to pay admin fees. Instead of researching the stock market, research about what you are studying in college, and research the field you would like to get into, find out if there's a way there to put your money to work for you.

[Spectral]

I know that I'll get mostly disagreement with this, but I don't think investing very small amounts of money is a great idea. I'd keep that cash in reserve in case you have personal emergencies instead. You never know when you're going to need/want money for something, and there's not a ton of value to be had by investing $1K/year.

[slime]

If you are adding $100 a month to it, I'd say wait 3 months and make your $200 into $500 and then go with the proven companies. If you are headstrong about starting right now, with $200 - you have some good advice here on this thread already, i say, maybe look into a CD - which locks you into a % based on how long term it is.

Patience is a virtue - and with investment, probably the most important one.

[Gheld]

I know that I'll get mostly disagreement with this, but I don't think investing very small amounts of money is a great idea. I'd keep that cash in reserve in case you have personal emergencies instead. You never know when you're going to need/want money for something, and there's not a ton of value to be had by investing $1K/year.

Plus for every 1 person that picks the next microsoft, there'll be tens of thousands of wanna-be investors that get burned, and you don't hear about them on the news. If there was significant money to be made on the stock market by ANY method other than random chance, everybody would be a day-trader (because you'd be a fool otherwise). But that's just not the case.

Save your money, lock it up into bonds if you are concerned about inflation (and bonds can still be quickly liquidated for face value if an emergency arises)

and I repeat; the best investment, would be to fully understand the field you plan to go into and invest in becoming your own boss in that field as an independent contractor, or even a business owner.

[Spectral]

Save your money, lock it up into bonds if you are concerned about inflation (and bonds can still be quickly liquidated for face value if an emergency arises)

While I agree with your general advice in this post, I have to nitpick that no reasonable people are presently concerned about inflation, which is part of why bond yields are basically nothing at the moment. While bonds are certainly a generally good idea for safety, there's no value there right now.

[Gheld]

While I agree with your general advice in this post, I have to nitpick that no reasonable people are presently concerned about inflation, which is part of why bond yields are basically nothing at the moment. While bonds are certainly a generally good idea for safety, there's no value there right now.

But there's even less value than just letting your money sit in a chequeing account.

and the fact is that bonds are still fairly liquid. You can't access the money in a bond outside of bank hours but if you are willing to give up any interest it accumulated the bank will cash out your bond any time you can speak to a teller (worst case scenario only on monthly anniversary dates).

and everyone says "Buy gold" but the fact is that there's more than enough gold on the planet to suit all of its industrial applications. It hasn't lost its value yet, but it's the biggest asset bubble in existence right now. Its value is mostly speculative. And nobody will ever sell you gold at cost. They'll want to profit off of you. Which means as a short term investment it's worse than doing nothing with your money.

[Spectral]

Sure, fair enough on the bonds.

Agreed that gold is a very, very bad buy presently. The only way it can remain this expensive is if demand in India skyrockets.

[Gheld]

Sure, fair enough on the bonds.

Agreed that gold is a very, very bad buy presently. The only way it can remain this expensive is if demand in India skyrockets.

Sadly though, when you have talking heads; left, right and center promoting gold buying, the bubble isn't going to burst any time soon; making it all the uglier when it finally does.

[Jackmoves]

I don't live in the land of the free so interest rates might differ... but two things to consider is

1. Corporate fund bonds, 4-6% interest rates in general(a normal savings account here is around 3.5%, and thats high, it can be as low as 2%), you lend your money to corporate funds. The interest rates is pretty much decided by the credit rating of the corporations. A fund with corporation with high credit ratings is generally refered to as "investment grade fund" the opposit would be a fund that one refers to as a "high yield fund", which gives higher returns but also means higher risk.

2. "Interest certificates", not sure what you call this in english, your interest rate and returns is connected to the stability of the corporation, this is a fairly limited way to invest here at the moment, only one bank(one of the big ones, Nordea) gives out these "interest certificates" right now and only 9 corporations are available, I invested 15.000 SEK(around $2300) and got that sum bound up on a 5 year plan, returns are given out 4 times per year, the backside is that if the corporation is doing so-so you might lose out on the entire return(you can not lose the money you got invested though), this has been a good investment for me so far though and I've gotten closer to 8% in returns. Wish I had dared to put more money into it from the start. ;P

Also 200 bucks isn't much to start with, you wouldn't be allowed to invest in interest certificates for starters, at least not here(minimum 1500).

[Deleted]

Do not use a managed fund.

Unless you have hundreds of thousands/millions in wealth to invest in a proper fund, you will not get any proper returns on your investments. Especially because transaction and management fees will eat up almost everything.

With only a couple of thousand dollars to invest, passive investing strategies are the only ones that are worth anything. With only $200 to invest, well, just don't. There's no point. It's not worth the effort. Getting a couple dollars extra yearly because you perfected your investment strategy makes no sense.

[Venant]

It will yield great advantages throughout your life to educate yourself about investing as early as possible. Being that you are so young, you can comfortably risk some of your money going further out on the risk curve, IE investing in slightly more speculative companies which may yield exponential gains. Don't believe people who claim you can keep your money safe in conservative investments, you will just get burned the next time there is a financial catastrophe. You aren't going to serve your interests well by trusting somebody else with your finances, most people in that field are just out to bring as much money as they can into their firm, they don't especially care if you are maximizing how much your money can earn.

[Niteynite]

Unless you are investing around $3000 to $4000, you won't really see much in return, unless like an above poster said, it's a speculative company with the possibility of exponential gains. I once invested about $1000 with the intent of adding $100 every month, and this was at the end of 2008. Needless to say, I would have been better off stuffing the money under the mattress.

This is just my personal opinion, but I suggest saving the money.

[Tinfoy Lat]

Saving money is a habit you have to develop. It's always worthwhile to learn the habit. Kudos to the OP for wanting to get started on it while in college.

Off the top of my head, check somewhere like Schwab. It strikes me firms like them will have a low initial investment with an agreement to add given amount per month until you hit a regular minimum plan.

edit: to add to what's above, i'd look for an index fund rated no lower than 4 stars. I'd stay away from investing in individual stocks for quite a while until you have the money to diversify a bit and withstand some setbacks.

[Laize]

While I agree with your general advice in this post, I have to nitpick that no reasonable people are presently concerned about inflation, which is part of why bond yields are basically nothing at the moment. While bonds are certainly a generally good idea for safety, there's no value there right now.

When you guys are talking about bonds, are you referring to government bonds? Because corporate bonds have some great yields.

---------- Post added 2013-01-20 at 05:12 PM ----------

Saving money is a habit you have to develop. It's always worthwhile to learn the habit. Kudos to the OP for wanting to get started on it while in college.

Off the top of my head, check somewhere like Schwab. It strikes me firms like them will have a low initial investment with an agreement to add given amount per month until you hit a regular minimum plan.

edit: to add to what's above, i'd look for an index fund rated no lower than 4 stars. I'd stay away from investing in individual stocks for quite a while until you have the money to diversify a bit and withstand some setbacks.

Schwab is AIDS. My friend uses them and their commissions are high while providing bare minimum service and denying him the use of more exotic trading strategies.

If you plan on learning a lot about the markets, don't need assistance and eventually would like to trade exotic products (options, bonds) go with Scottrade.