A stock represents ownership in a company. A bond is company or government debt. Either can have dividend or interest payments. Mutual funds owning these things can also pay out the dividends in various ways.
Any of the investments represents a risk of losing value, but also can go up in value or have payments to you that add up over time.
That is a simple way to put it. One good brokerage firm that I like is Scottrade.
https://www.scottrade.com/
Their fees are reasonable and they have many local offices and they do have advice offered at their web site.
Vanguard is a company that manages mutual funds.
There are 5 possible funds that The Coz is referring to. As a 20 year old, they are probably not the right funds for you.
https://personal.vanguard.com/us/funds/s...
Vanguard High Dividend Yield Index Fund Investor Shares ( symbol: VHDYX
https://personal.vanguard.com/us/funds/s...
Vanguard High Dividend Yield ETF (Symbol VYM
https://personal.vanguard.com/us/funds/s...
Vanguard Dividend Growth Fund (symbol VDIGX
https://personal.vanguard.com/us/funds/s...
Vanguard Dividend Appreciation Index Fund Admiral Shares (symbol VDADX
https://personal.vanguard.com/us/funds/s...
Vanguard Dividend Appreciation ETF (symbol VIG
All five can be called a Vanguard Dividend paying index fund
There is a Yahoo Finance section where you can look up mutual fund ratings and risks and returns over time. I have been investing in stocks and mutual funds for over 35 years.
It is impossible to explain everything in one answer. One of the things to understand is that past performance does not always do a good job in predicting futures. One year real estate does well. Another year it is gold stocks. When market interest rates fall, bonds go up in value, and dividend paying stocks often also rise faster, but when market interest rises, it pressures the stocks down.
It is true that saving a little bit each week adds up to a lot of money, and investing in things gets better interest than a 1% savings account (best savings accounts).
Scottrade gets $7 per internet entered buy or sell of stocks, and many mutual funds are no-fee.
Here is a page comparing some brokers
https://www.scottrade.com/online-brokera...
An initial deposit to open an account there is $500. That is not a fee. Like a bank, it is your money held on account and can be transferred out or closed out. You do not need $3000 to open an account like at many Vanguard ones, but some mutual funds may have minimum purchases.
The number of ETFs is huge, and they tend to be low expense by the managing company because they are unmanaged. They keep a set of stocks and only buy or sell in ratios.
If opening a Scottrade account with a $500 deposit, here are 19 mutual funds that are managed, have low expenses taking by the managing and have $100 or $250 as an initial investment, and all are 5 star rated by Morningstar that rates mutual funds.
Fund Symbol Fund Name Morningstar Category expense minimum
ANFFX American Funds New Economy F1 Large Growth 0.86 250
CHTTX ASTON/Fairpointe Mid Cap N Mid-Cap Blend 1.12 100
HFCVX Hennessy Cornerstone Value Investor Large Value 1.22 100
MCVIX MFS?? Mid Cap Value I Mid-Cap Value 0.97 100
NICSX Nicholas Mid-Cap Growth 0.75 500
PAVLX T. Rowe Price Value Adv Large Value 1.07 100
PCKDX PIMCO Small Cap StocksPLUS AR D Small Blend 1.09 100
PETDX PIMCO Real Estate Real Return Strategy D Real Estate 1.2 100
PIPDX PIMCO Intl StksPLUS?? AR Strat (USD-Hg) D Foreign Large Blend 1.18 100
PIXDX PIMCO Fundamental IndexPLUS AR D Large Blend 1.19 100
PMBPX Principal MidCap R5 Mid-Cap Growth 0.86 100
PPUDX PIMCO Intl StkPLUS?? AR Stra (Unhdgd) D Foreign Large Blend 1.05 100
PSPDX PIMCO StocksPLUS D Large Blend 0.9 100
PSTDX PIMCO StocksPLUS Absolute Return D Large Blend 1.04 100
RYOCX Rydex NASDAQ-100 Inv Large Growth 1.26 100
SCWFX American Funds SMALLCAP World F1 World Stock 1.07 250
SICNX Schwab International Core Equity Foreign Large Blend 1.1 100
STITX RidgeWorth International Equity I Foreign Large Value 1.15 100
TIVFX Tocqueville International Value Foreign Large Value 1.55 250
That is how to find a mutual fund for new investors.
You may want to read "The Only Investment Guide You Will Ever Need" by Andrew Tobias.
recently i asked a question and this came up. I am very new to stocks and all that but looked this up and see things i dont understand. someone said i will be rich when im 50 if i do.. how? I dont plan on doing stocks soon because i wont own one shirt, i need to learn first because the future for me is important.
but what does this do? how does it work? how much money? what do i need to do? do i own shares? sorry for my lack of knowledge
