Forum: money.stackexchange.com
Tags: <investing><stocks>
Title: A University student wondering if investing in stocks is a good idea?
Question: I'm a University student (with a University student budget) and I was wondering if it is worth my trouble and my money to invest in the stock system? I don't know much about it, but it seems like a good way to make money. Are there any stocks that are "sure things"?  Basically, I want to know if its worth investing now when I only have about 2000$ in personal money after paying for University.

Answers:
sents: text: The power of compounding interest and returns is an amazing thing.
text: Start educating yourself about investing, and do it -- there are great Q&As on this site, numerous books (I recommend "The Intelligent Investor", tools for small investors (like Sharebuilder.com) and other resources out there to get you started.
text: Your portfolio doesn't need to include every dime you have either.
text: But you do need to develop the discipline to save money -- even if that savings is $20 while you're in school.
text: How you split between cash/deposit account savings and other investment vehicles is a decision that needs to make sense to you.
answer_details: author: money.stackexchange.com/users/1288/duffbeer703
score: 12
sents: text: For most people, investing in the stock market directly is one of the last things to do.
text: That's not to say you shouldn't, but rather that there are other things to consider as well.
text: Start with automatic monthly deposits to a liquid account such as savings or money market.
text: The morale boost you get from seeing the balance grow is nearly impossible to beat.
text: Following that, paying down any debts such as student loans or credit cards.
text: Once you've done that, then you should look at company sponsored 401k plans or IRAs.
text: Sharebuilder offers IRAs holding whichever stock or fund you pick.
text: Again, automatic monthly deposits are the way to go here.
text: Good luck, and happy investing :)
answer_details: author: money.stackexchange.com/users/1739/Benjamin Chambers
score: 8
sents: text: There isn't really a clear way to answer this question objectively.
text: I'd offer my opinion that yes it is a good idea.
text: You don't need very much money to start (I began investing on $200).
text: To answer your second question, no there are never any "sure things."
text: Instead on focusing on making money, focus on learning how the markets work.
text: Pick a few companies you know (perhaps in an industry you are familiar with) and buy one or two shares at a time.
text: Watch the prices evolve over time and make note of the changes and always ask the question
text: "why did it go up/down".
text: Good luck.
answer_details: author: money.stackexchange.com/users/4296/Mike G
score: 5
sents: text: Investing in the stock market early is a good thing.
text: However, it does have a learning curve, and that curve can, and eventually will, cost you.
text: One basic rule in investing is that risk and reward are proportional.
text: The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead.
text: Given that, don't invest money you can't afford to lose (you mentioned you're on a student budget).
text: If you want to start with short but sercure investments, try finding a high-interest savings account or CD.
text: For example, the bank I use has an offer where the first $500 in your account gets ~6% interest - certainly not bad if you only put $500 in the account.
text: Unfortunately, most banks are offering a pittance for savings rates or CDs.
text: If you're willing to take more risk, you could certainly put money into the stock market.
text: Before you do, I would recommend spending some time learning about how the stock market works, it's flows and ebbs, and how stock valuations work.
text: Don't buy a stock because you hear about it a lot; understand why that stock is being valued as such.
text: Also consider buying index funds (such as SPY ) which is like a stock but tracks an entire index.
text: That way if a specific company suddenly drops, you won't be nearly as affected.
text: On the flip side, if only 1 company goes up, but the market goes down, you'll miss out.
text: But consider the odds of having picked that 1 company.
answer_details: author: money.stackexchange.com/users/1599/Jimmy
score: 3
sents: text: Contrary to most other advise given here, I'd recommend (in your situation) not to invest in stock (yet).
text: There are some 'hidden' cost to investing that will eat your profit and in the end, that's why you are investing.
text: Banks will charge for buying, selling and maintaining stock as well as for cashing dividends.
text: Depending on which bank or intermediary these costs will rise.
text: So, my advise is to start playing with stock creating a virtual portfolio and track that.
text: Just as duffbeer says, start saving.
text: Also look at my answer here .
answer_details: author: money.stackexchange.com/users/1482/GUI Junkie
score: 2
sents: text: I say, before investing your real capital into the Stock Market, play around on the virtual stock exchange game.
text: It let's you invest with virtual capital and you can gain experience with the stock market.
text: I wouldn't start investing in stock until I'm sure I can cover losses though.
text: If you do intend to invest stocks so early in your career, then you should learn how to read SEC filings (not necessary, but helpful in understanding how investors think) such as 8-K/10-K/10-Q documents so you can predict profitability and growth of companies you invest in.
text: Once you become a veteran of the stock market game, you probably won't need to read the SEC filings into too much detail - especially if you have a diverse portfolio.
text: Good Luck.
text: The one takeaway from this message would probably be:
text: Stop! and play around on virtual stocks before immersing yourself in the real thing.
answer_details: author: money.stackexchange.com/users/4278/JLDork
score: 2
sents: text: You can start investing with any amount.
text: You can use the ShareBuilder account to purchase "partial" stocks through their automatic investment plan .
text: Usually brokers don't sell parts of stock, and ShareBuilder is the only one allowing it IMHO using its own tricks.
text: What they do basically is buy a stock and then divide it internally among several investors who bought it, while each of the investors doesn't really own it directly.
text: That's perfect for investing small amounts and making first steps in investing.
answer_details: author: money.stackexchange.com/users/2998/littleadv
score: 1

Summary of the answers:
Investing in the stock market early is a good thing. You can start with very little money. There are never any completely sure investments, so don't invest money that you can't afford to lose. Start by learning about the stock market and investing a little at a time.
You don't need very much money to start investing in the stock market, but there are never any "sure things."  One basic rule in investing is that risk and reward are proportional.  The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead. Therefore, you shouldn’t invest money you can't afford to lose and probably shouldn’t start investing in stock until you are sure you can cover your losses. You can use the  ShareBuilder  account to purchase "partial" stocks through their  automatic investment plan. Start by picking a few companies you know and buy one or two shares at a time and focus on learning how the markets work. On the other hand, be aware that there are 'hidden' costs to investing, e.g. banks will charge for buying, selling and maintaining stock as well as for cashing dividends.