1. Einstein called compound interest the 8th wonder of the world. Check out how much $400 invested monthly at 6% interest compounded monthly will grow to by the end of 45 years. It's $1,102,397!! If you're 17 years old now, by the time you're 62, you could have over $1,000,000 in your IRA or other tax sheltered savings account!
Note: You need a tax sheltered account for this to work -- like an IRA, annuity, 401K plan, etc. Because if you have to pay tax on the interest earned each year, you lose a lot of the benefits of the compounding. You can do a search for a "compound interest calculator" and see for yourself the effects of compound interest over time on even small amounts saved.
2. Where to get those kinds of interest rates or returns on your investment? That's a little harder. Interest rates these days are at historic lows. They can't stay that way forever, but until they go up, you almost have to follow Warren Buffet's advice and invest in the stock market using index tracking ETFs. After interest rates go up again, regular investment grade taxable bonds might be interesting inside your IRA. And tax free municipal bonds (again, investment grade only) might be interesting in a taxable account.
Until then, we're all kind of stuck with the stock market, and here's where I disagree with Mr. Fanara. Rather than trying to pick a few undervalued large companies, I'd suggest you buy ETFs. ETFs (Exchange Traded Funds) let you buy whole stock market indexes or stock market sectors (groups of stocks) in a single security that trades just like a stock.
For example, you can buy the whole S&P 500 index by buying an ETF with the ticker symbol "SPY" . If you want the Nasdaq, buy "COMP" or "QQQX". You can also buy foreign stock markets. The Australian stock market has been doing well lately. Its ETF is "EWA".
All of these ETFs trade on the New York Stock Exchange or other American stock markets, and they are widely available through most American stock brokers. They are kind of like a mutual fund, but the management fees and sales charges are *much* less, and they're faster/easier to buy and sell.
There are hundreds (thousands?) of ETFs covering almost every index or sector, but one that I like a lot is "DBA". It's a group of agricultural and farm stocks. It's been doing very well lately -- much better than most of the stock market indexes. I like the way it's positioned demographically, too, for the long term. More people means more food will be needed, which makes DBA, IMHO, a good long term investment.
Get a few of these puppies compounding monthly or annually for you now in a tax free IRA or other retirement vehicle, feed it regularly as much as you can, then sit back and watch it grow. Enjoy!
When is a question of balance. The chances of your money growing very quickly as a new investor are very low, and if the use of your cash or time for investing hampers your business objectives, it will be counter-productive. At 17, I assure you you have a great deal to learn about business, and that will require a lot of your time and attention as well as emotional energy.
Business income can feed the investment portfolio, but it needs to be surplus income over and above what the business needs to have reinvested for it's own growth.
Chances are you understand what your are doing to make money in your business far better than you understand the market, and one should always go with their strong side. Your business should become the generator that supports you, and the excess when available should go to investments for the future. I don't live off my investments in any way; I don't take money out because it's working for me 24/7 without me working at all.
My investments often make more than my business, but at the same time my business is well established and has a surplus of cash that is earning nothing by sitting in the bank. As I'm debt free and properly insured, I have little exposure that requires a cash reserve. At the same time, investing needs to be done when the time is right to buy in or sell out. When it's not time to buy, you just build cash and wait. Right now, my idle cash balance is very large, but that positions me to take advantage when opportunity arises. I was once in the same position you are, and you may eventually be in the position I am. What's right depends on your position at the time, and right now I would recommend you not get ahead of yourself.
I agree with Hugo90 that re-investing in your business is a very real option.
You do not have enough to invest elsewhere. And do not listen to people that play with unrealistic numbers. {... if, if ... then ONE MILLION dollars !!!} Saving is good, but the problem is, inflation is the flip side of interest rates, so you will barely maintain your purchasing power. { i e you will retire decent, but not rich.} At your age and income level use current money for current expenses to avoid bank fees and interest charges.
Yes, it is best to invest as much as possible, as early as possible. The more money that is invested on the front-end, the larger the compounding gains.
Now I hold that statement contingent on the notion that wise investment decisions are performed. If one is gambling (i.e. penny stocks) rather than investing (value investing), then it's almost certain that the trader will eventually lose his entire portfolio value.
Keep reading and doing your research - the more ideas you understand (even if they aren't all used), the better trader you will be. Learn the basics of accounting and fundamental analysis.
I recommend starting off with the minimum required balance (generally $500). Split that $500 into 3-4 undervalued, strong companies. Periodically place more money into the account and buy other undervalued, strong companies.
This method will progressively get your feet wet in the market, while diversifying your portfolio across various companies that are not prone to financial distress.
Good luck to you-
invest into agnc goog dis msft ge
If your business has potential to grow, that's where your money should go.
Hello I am a 17 year old male in high school. I have finally started my entrepreneur activities since last month and already made $500 dlrs. I calculate I will make $400 by the end of May. So I have on mind on saving all my money but in all the books I've read and on the Internet I always see the Dont save, invest quote and I've also read that investing at a young age is really good. So how should I start investing ? What amount should I invest? Where should invest?
I appreciate your time for any answers. Thank you
