<p>So, I’ve got three hundred dollars lying around from Christmas. I haven’t really much to do with it, as my basic necessities are all met. I’ve always found the stock market quite interesting.</p>
<p>First of all, is it just dumb to invest such a small amount of money?
Second, does anyone recommend a good website to do this? Scott trade, ect?</p>
<p>Thanks!</p>
<p>My S (20) is doing that. He is very interested in the market and had been watching some stocks for quite a while. His instincts had been good. So we gave him $500 just to use for that. He set up a Scottrade account because their fee structure seemed to be the most reasonable (look for inactivity fees in other companies). He used it during the fall semester, then became extremely busy with his school work, so it had to take a back seat. He bought and sold a couple of different stocks and made a little money.</p>
<p>I think it is a good idea to give him experience in how it works and with REAL money. His idea is to maintain the original $500 the best he can, then reinvest any additional that he makes. So far he has done ok and is ahead by a little.</p>
<p>I’m not an investor, but I’ve seen basically this question asked and answered a million times all over the place and the consensus seems to be something like, “If your goal is to make money, investing $100 isn’t worth your time. If it’s about learning how to trade, read some books first then go ahead.”</p>
<p>I would generally not encourage it. If you do not understand investing (which I think takes some learning of the fundamentals) then playing the stock market is no more than gambling. There are many online simulations you could use to try out your strategy without using actually money. Every trade costs minimum $7, even on the least expensive online trading brokerage.</p>
<p>There is one particular online stock brokerage that gives you 100 free trades when you sign up (or something like that) with more than $1,000 or $2,000. So you could always invest that much but only play around with a smaller amount.</p>
<p>" Every trade costs minimum $7, even on the least expensive online trading brokerage."</p>
<p>I remember seeing a commercial or ad somewhere once which advertised $4 trades, but I guess your point still holds true.</p>
<p>Go for it. Time is on your side so think long term.<br>
DD, who is 15, got some $ for Christmas and bought some shares. Her goal isn’t to get rich, but to understand how the market works.</p>
<p>As my grandfather told my mother, and my mother told me . . . don’t put any money into the market that you can’t afford to lose.</p>
<p>I think it’s terrific that you’re thinking about investing. A few pointers for a very young beginner:</p>
<p>Decide on your basic goals. Are you saving for retirement, a down payment on a house, an emergency fund? The longer-term your goal is, the more of the investment should be in stocks.</p>
<p>Never buy individual stocks. Mutual funds will spread your risk by investing you in hundreds of different companies.</p>
<p>Don’t buy through a broker. Buy directly from the mutual fund company. </p>
<p>Diversify, diversify, diversify. It’s the golden rule of investing.</p>
<p>Once you’ve invested, resist the urge to follow your investments daily. This will lead you to make emotional decisions which will hurt you in the long run.</p>
<p>Begin now investing a small amount every month for your retirement. Time and dollar-cost averaging will make you a millionaire by the time you retire.</p>
<p>Thanks for the replies everyone!</p>
<p>Read a lot and study options which require a smaller sum of money to get started but more skill to be successful than just buying stocks. $500 is probably enough to get started buying option contracts.</p>
<p>^^^For a novice investor, stay away from options.</p>
<p>Go to Vegas.</p>
<p>I think it’s a great idea, I’ve taken some time to invest every summer and have come usually come out double.</p>
<p>I completely disagree with the aforementioned advice on going for mutual funds. I prefer index funds what with less money being taken off the top for management fees, etc. But with an amount like 500, I’d say make some measured investments in individual stocks instead of funds.</p>
<p>What I can agree with is not buying through a traditional broker, especially with that amount of money. Go for online brokers like Scottrade.</p>
<p>I am an avid techie and political economy junkie though, so I usually research sectors I have the best feel for.</p>
<p>I pointed out that they should read a lot and probably paper trade. Options can be a much more conservative approach than buying stocks.</p>
<p>Options is not good advice. I used to be an option market maker for many, many years.</p>
<p>RileyJohn, the way you learn is by doing. You’re not going to learn by paper trading. So go ahead and buy a stock. The $300 is good for a learning experience…whether you make or lose money. Good luck. And over time try to learn about investing internationally…because that is where the growth is. </p>
<p>I don’t know what the good books are these days for investing. Many years ago… the Peter Lynch books were good. The Stock Market Almanac. Market Wizards. Reminiscences of Stock Operator. Where Are The Customers Yachts? Ben Graham’s book. I’ve never read any books about Warren Buffet but there may be some good ones. Maybe others have suggestions. </p>
<p>Robert Stovall once said selling a soybean contract short is worth more than 2 years at Harvard’s Business School. Buying a stock isn’t quite that dangerous. So go for it.</p>
<p>My guess is Scotttrade is fine. E-Trade. Charles Schwab. TD-Ameritrade. Just make sure there are no extra fees for small accounts or inactive accounts.</p>
<p>I disagree with your advice on paper trading. Risk management and position sizing are important to learn before you put a single dollar in the market. I know too many people who just needlessly throw money at the market and lose it all. The OP should understand this stuff before he gets involved in the emotional aspects of real trading and investing.</p>
<p>It’s 300 bucks.</p>
<p>I’d also say try a virtual portfolio for a bit to see how you fare there.</p>
<p>You people are way too conservative. :)</p>