skullbang

I am 22 years old, working towards a degree in Business Management, and International Business Management. I expect to graduate with a bachelors degree within the next three years. I have recently realized that if I want to reach my financial goals, I cannot rely on one single source of income.

My original plan was to graduate, find a decent career, then to open up several small businesses over time. After much thought and conversation with others, I feel that investments will be a huge factor in attaining such goals.

I will not be able to contribute to a 401k or Roth IRA until I get a legitimate job, but I have a couple hundred dollars a month to invest into something, while I am in school. The question I have for you is if it is enough to put into stocks. I feel that putting that money into mutual funds is not enough to earn a substanstial return. Is $200 a month enough to invest in stocks? Would you reccommend otherwise?

I would like to get into this fairly early so that when my income allows me to invest a more hefty amount, I will understand the market better, and have a little experience. I understand the risks, and this is money I can afford to lose.

I am currently reading a book called The Informed Investor by Frank Armstrong. So far, the message the author is trying to send, is to use diversification, but with only said amount per month, how would I go about diversifying? Should I invest in one stock at a time until I have invested at least $1000 , and then invest in another stock? or should I invest in multiple stocks at the start, and then add more funds to them every month?

Thank you for taking the time to read this and offering your wisdom. I am really serious about my future, and am willing to do whatever it takes to be financially stable. Please feel free to adivse or criticize anything about my post or intentions.

Skullbang

trainwreck

200 a month is enough to contribute to a roth ira. i would open a roth account linked to where your parents bank. depending on their assets with the bank you may be able to negotiate some sort of deal where you can trade for free. i am with wells fargo and can trade unlimited ammounts in my roth ira with no fees because it is linked to my parents account. seperately, i have a pma brokerage account with wells that offers 100 free trades a year. i dont trade often so its ideal for me. but i would open up the roth first because gains are tax free and you can always withdraw the principle with no penalties.

SD_S2K

First for even being at this point at your age.

Second, the below are my opinions, take with a grain of salt and at your own risk. Everyone that replies will say something different. Every investor is different. We all have different risk tolerances, different incomes, etc.

Will need significant money to start "several small businesses" especially since most fail within 5 years, and they are not cheap to start. You can use investments for this or bank loans to finance. Depends on where your money is and how much you need. For example you will not be able to use 401k or IRA money for this.

[QUOTE=skullbang,Sep 25 2007, 11:58 AM]

SD_S2K

sahtt

[QUOTE=SD_S2K,Sep 25 2007, 01:56 PM] First

sahtt

With new strategies available in the marketplace being an individual investor with some knowledge is paying more and more.

80% of mutual funds fail to meet the S&P 500 Index. They fail to even make average. You will also be paying them, sometimes handily, for that failure. You can now buy an index fund that always tracks the S&P 500. So not only can you beat pro's, you can beat 80% of them without spending more than 10 minutes.

If you want some other exposure there are tons of emerging market ETF's to choose from as well. You can do it yourself and although Warren Buffet is Warren Buffet, enough said, if you look at his quotes in context you'll realize he's often just telling off short term guys looking at charts all day looking for break outs and trying to make 3 cents off 10,000 shares.

He is not shy to comment on how options and futures should be illegal. It may seem like he's belittling what "we" seem to do but Warren Buffet probably does about 80-90% of the same things I do before I buy a stock, though his exit plan might be different since he has no need to take profit and buy a sport bike or pay the rent because people give him money to invest faster than he can invest it.

SD_S2K

sahtt you and I will always butt heads on our visions, but it does nothing but help us in the overall scheme of investing and learning



[QUOTE=sahtt,Sep 25 2007, 02:36 PM]80% of mutual funds fail to meet the S&P 500 Index.

skullbang

thanks alot for the replies, they are very helpful, and provide additional inspiration regarding my path towards the world of investments.

After some thought, I think opening a Roth IRA might be my best choice with the funds I have to invest. I like the idea of having those tax breaks and freedom of trading. When I do max out my Roth IRA for the year, hopefully I will have enough expierience and understanding of the market to branch out further.

sahtt

Exactly, I agree. It's different paths to the same goal, often very similar paths.

I do not consider index funds to be mutual funds because they way they are managed is completely different. I think you are wise to put most of your money in index funds.

I think it's also as critically important to take some risk-and be willing to lose some money on a trade. If you look around at what stocks make guys in this forum real $$, it's stocks like AAPL and LULU that make gains no standard mutual fund is going to do (outside of emerging markets, specific unhedged mutual funds, or some funds that only allow accredited investors of over 1.5m of investing capacity).

Not only that it can teach you invaluable lessons about business and money management in general. I can spend 5 minutes or less on the internet and tell you just about every important fact about any public company. I know how important growth is and I know how dangerous aquisitions can be. As you buy stocks yourself you will gain the ability to judge the financial system as a whole and how individual players win and lose. That sort of benefit to "picking stocks" is harder to define but perhaps the most important. I've said before I have all my mother's retirement money in a vangaurd target fund and I think it's right for her. I think for those that know how to navigate the internet and are willing to spend some time learning how to take part in the stock market stock by stock is a very fulfilling and valuable experience.

Skullbang, one thing you will hear me say all too often is "hope is not a strategy". Don't hope that you'll learn more, go on Amazon and order as many of the books in the investment books sticky you can find and set up dead lines to read a book every two weeks or whatever works for you.

skullbang

great advice! I'll be picking up another book next week when I finish the one I'm currently reading.