flyingmonkey:I'm 16. New to investing. Hope to open an account at Zecco but the minimum 2,000 is a bit of a problem. Actually not really, cuz you can take it out immediately and the account will still be open wouldn't it?
Need to convince dad to open an account.
Hi
flyingmonkey,
It's awesome your starting so young. I wish I had started 10 years ago.
Well to be honest, I did. I put my money on a great tip from a good
friend called EToys. It went way up then burst. It was a dotCom and the
year was 1998...that put me off investing for a while. Until I
discovered a way to invest which wasn't a gamble.
I highly encourage you to do a little reading first. Don't waste your
time investing over the next several years by not spending a couple weeks now. Time is money, time is the only thing
that generates money, and your time and money are valuable. That $2,000
could be worth $0 in 10 years, or it could be worth $10,000 in 10
years. That's with not adding a single dime after the initial
investment. If you add $2k/year over the next 10 years and earn 15%
interest, you will have $54,790.
In reality, you will probably be able to add more each year, but if you
go to college (best investment anyway), you might not be able to start
investing a lot more until your 24, so lets say you invest $2k for the
first year, $4k/yr (~$333/mo) until 24 then $10k for the last 2
years. Compounding the whole time (which is where time makes you
money), you will have $91,622.94. By this time, you will have a very
good idea of how best to invest, and with that kind of starting
bank-roll, you'll be in a ridiculously good position to retire early if
you wish (not with just $100k, but with what you'll know how to do with
it...you'll have 10 years experience after all!). For example, you
might want to buy a house and live in it for the equity growth and Tax breaks (which you
can then re-invest in your stock portfolio and repeat) The point is
you'll have tons of options.
The big assumption here is that I used 15% returns. The market averages
around 11%, including dividends, I believe, so I feel this is reasonably
attainable by investing in good companies and not trading except for
fundamental changes in the companies. My own goal is to return over
20%, beating the market by 10% or more. My current small cap portfolio
is returning 42% and beating the market by over 22%. This is NOT going
to continue forever though. Be careful what your expectations are. My
goals of $30k starting, $20k/year for 20years at 20% returns will give
me $5,630,640. I actually think it will be far more since I will be
able to invest more and more as time progresses (and perhaps a little
less just starting), and this doesn't include dividends. Even if I can
only pull off 15% I'm likely to beat this figure. It is only an
example. The important point here is to understand the power of
compounding gains. These numbers are achievable by anyone, not just the
pros day-trading, risking it all trying to predict The Market (which behaves more like a frightened child than anything else).
The best thing you could do right now is to read a few of the masters,
such as Warren Buffet or Peter Lynch. My own philosophy is somewhere in
the middle of the two. Also, I highly recommend checking out
www.fool.com and read the "Fool's School" section. This has some
excellent advice for getting ready to invest:
http://www.fool.com/school.htm. I actually disagree with some of it,
because it doesn't take the power of Zecco (for example) in to account (Some of the
advice was written when you had to pay $10 or more for a trade, so
things like DRIPs, where you get a single share, transfer it in to your
own name then invest for free, is a waste of time now, IMO), but it is a great start none-the-less.
Good luck!
Rafe