Put the money into an index fund based on a broad market index. QQQ is a good place to start. Picking stocks is for fools and gamblers. You can make money on stocks three ways:
1. As the economy grows, the market as a whole goes up.
2. Luck
3. Choosing individual stocks within the market that will do better than others because you predict the future better than everyone else.
You're competing against a market full of professionals who have advanced degrees in finance and economics. People who like to feel smart get lucky on a few stock picks and tell themselves that they're smart. They need to tell others their picks to reinforce their own smartness. They tell themselves how smart they are for picking stocks that go up when the market goes up, but when the market as a whole drops and their stocks drop with it, they tell themselves that this was the market, and it wasn't their fault. They tend to remember the wins and forget the losses.
You're not going to pick stocks better than the general market. Don't bother trying. Buy an index fund based on a market index.
There are serious researchers and industry professionals who question whether professionally managed funds can beat the market reliably enough to be worth the management fee they charge. Don't you think you can outperform the professionals.
Plus, with $500, even with a low cost broker, you'll pay enough in commissions that you will seriously hurt your returns if you invest in more than one stock, and putting all your eggs into one basket is a bad idea. You might as well go to a casino and bet everything on one spin of the wheel.
Even better than an index fund is a target date fund. This fund invests in the asset classes that are appropriate for someone who will retire in a certain year. (The year doesn't need to be exact. Someone who will retire in 43 years doesn't need a different asset allocation than someone who will retire in 40 years). Fidelity waives the purchase commissions on many of their target date funds if you buy them from a retirement account like a Roth IRA.
You may start from IPO(Initial Public Offerings) Or you may go to an expert of stocks, I think the later will be very helpful for you.
Always use a stop loss. Always. Only ever move the stop up higher (if you're long). Simplest way to manage risk.
If its just a "side thing" then dont do it or you will lose your money. You need to pay more attention then that.
I'm in high school right now but since I have some free time over the summer, I wanted to get involved in the stock market as a side thing. I only have about five hundred dollars and I really don't know where to start. I have done some research but I was hoping somebody can enlighten me. Maybe with some tips and starting points for a beginner.
