I'm a thirteen year old and I'm thinking about starting to invest in the stock market. I have some questions.?
To be completely honest please correct me if i sound like a total idiot in any part of this because to be completely honest i really don’t know what the hell I’m talking about. To me the stock Market is just this big jungle of symbols and numbers and scams and math. Lots of math. I’ve been researching every part of the stock market i could for the last 5 hours (and counting). I just wanted some idea on Custodial Accounts. First once my account is activated by my dad and he approves everything and its in his name, can i sell and trade and buy and stuff as i wish and all he has to do is just sign or enter a password everytime. And to do this would my dad have to transfer the stocks to me or can I create a custodial account in a website like sharebuilder and just start purchasing stocks. I really want to invest in this company that sells their stocks for 1 dollar a stock (On most days) using my 20 dollar allowance so that i can make some money without losing much money. And just put any idea in you can pull together about custodial accounts because I’m really confused.
Oh and my dad is kind of a umm… whats the word… cheapass. So I’m trying to find the cheapest way to do this. Oh and the company i want to invest in is Nasdaq Jsda
Jones Soda Company.
My dad just gave me access to the 00 dollars I’ve saved up my entire life. Im gonna use a bit of it on stocks so that should get me going.
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September 17th, 2010 at 9:30 am
Look into sharebuilder.com or sites like it. They allow you to buy fractional shares.
Check with your bank, a lot of banks have practice account where you can use pretend money till you get used to the system. Play with that till you feel confident with investing.
I’d read Alex Doulis’s "Take Your Money and Run" cause it’s a real easy read and the concepts are really simple. It’s written as a story so you don’t get bogged down in details. Plus starting young really helps with the strategies in that book. It’s a Canadian book but the concepts should apply everywhere.
I would also suggest anything by Ed Thorp, even Warren Buffet would suggest anything by Ed Thorp but Thorp started out as a math professor so it gets a little intense sometimes unless you’re taking University calculus, plus the books are really old from the 60’s so they are hard to get except in libraries. You may have heard of a movie inspired by Thorp’s escapades, the one about a professor who went to Vegas to test some theories out on Blackjack. Thorp is coming out with a new book in October but the $98 price on Amazon is a bit steep for me. Time to see if the library will order it in.
September 17th, 2010 at 9:30 am
Each brokerage is going to have different rules about how they handle custodial accounts – you and your father need to talk to a customer service rep to figure out their rules. You may find out also that a minimum amount of money is required (say $500) to open an account.
Two things you should know – first, investing $20 a week will cost you about half of that twenty in commissions. Each trade (buy or sell carries with it a commission, and the smaller the trade, the higher the commission. Even assuming an $8 commission (doubtful), your $20 would buy you $12 worth of stock (12 shares of your $1 stock). Figuring $8 to sell, that is a cost of $16, which means the price would have to go up to $2.33 a share just for you to break even.
Second, before investing, consider that you can possibly lose all your investment. There is no guarantee that the price of the $1 stock will stay there or that the company will remain viable. Rule number 1 of investing is never invest money that you can’t afford to lose. You always assume you will lose everything.
Lastly, before investing, head down to the library and get a couple of basic books on how the stock market works. Once you understand the basics, then you pick up a book or two on stock analysis. All those symbols and everything you see (EPS, P/E ratio, etc) is vital to understanding how the market works.
September 17th, 2010 at 9:30 am
Deposit all in the CD’s
September 17th, 2010 at 9:30 am
If your dad is willing to set up an account for you and let you trade on it, then there is nothing the on-line investing systems can do to tell its you using the account vs your dad. Basically the risk for your dad is if you end up getting permission from your on-line broker to engage in trades that can lose more than you have available. This is actually pretty common in online trading, so it’s a concern for your dad. Be honest and tell him that if he isn’t into this sort of thing. Life is too short to start lying to your dad about something like this.
Now, if you are worried about taxes and things like that, you should indeed look into the custodial account issue so that your status as a minor is clear to the online broker and the IRS. You’ll need that understanding to avoid having your dad incur a tax liability. Just contact the online broker (etrade has the funniest ads. I use TD Ameritrade for reasons that amount to me being to lazy to change) and ask about the custodial issue. They will be straight with you about that stuff.
Now, in terms of investing strategy. The best thing you have going for you is your age. Study the notion of compounding interest before you do anything else, and think about what your goals are. If you are motivated to do this because you want to make enough money to do something in the short run, than your challenge is large. If you are excited about the chance to make some real money over the long term, than you are on the right track.
Read what you can about Warren Buffet, and his investment philosophy as it translates to the ordinary person. There are many things he can do that most of the rest of us can’t, due to the scale of his resources and his specific abilities. But he has a common sense, and well grounded philosophy that is worth studying.
Then read the book, "the millionaire next door"
After that, start looking at mutual funds with good records that match their investment objectives to your goals.
You can pick individual stocks if you know something substantial about the segment of the industry that they are in, and you believe they are undervalued. Don’t buy "hot stocks". They are hot because the action is almost over. You want stocks that the market doesn’t think are very good, but you happen to know something about that company that you believe makes it’s chances a lot better than conventional wisdom would suggest. These stocks come at their own pace. You can’t go looking for them. Just read financial news, and look at the stocks that seem to be undervalued. When you see one that surprises you, investigate further.
Good luck and congratulations on realizing how wonderful an opportunity you have, being just 13 at the start of your investing career
September 17th, 2010 at 9:30 am
good for you. the best thing would be long term because you are so young. look at ETF’s and Bonds. I’m kind of new too all this too but I already started. It takes a lot of work to start the right way and i wanted to try and help people get started too, so i wrote an article about what i found out. its called "How to Start Buying and Selling Stocks" http://look.ac/cXym36 i hope it helps you out and good luck.
September 17th, 2010 at 9:30 am
hey there !!
Long Term investment is good as you are very young champ. I think since you are newbie to world of stocks, I think you can trade the markets with play money, have some good analysis and idea about how the stocks work, how the markets move, their trends, factors which influence, the risk level…then by the time you become eligible to trade…you can make jus wonders buddy..
just look out for various trading platforms like gnutrade which offers play money trading as well with real money trading.
good luck
September 17th, 2010 at 9:30 am
I can’t speak much about custodial accounts. My father ran my custodial account when I was a child, and I did not become curious about trading individual stocks until well after he turned the account over to me.
Just my personal opinion–I would not buy JSDA because it is in penny stock range. I know it seems like a bargain because it is very inexpensive, but it is so inexpensive that it raises questions about the company’s stability. Also, this stock doesn’t pay a dividend. Since you don’t have a lot to invest at one time yet, earning dividends would help you generate money to buy more stock shares with.
My advice is to save your money for a few months and then spend it after you have at least $200-$500 saved. That will allow you to buy ten or more shares of a $20 stock. From there, you can slowly grow your stock holdings, either by automatic dividend reinvestment (When you get dividends, they are automatically spent by the brokerage firm to buy more shares of the same stock you already own.), or you can let the dividends accumulate and use them, along with your weekly allowance, to purchase different stocks. It’s up to you.
While you’re saving your money, you can read the books.
The people who are advising that you practice with virtual money first are giving you good advice. I use Wall Street Survivor online to practice my trading–though I’ve been neglecting it lately. Practicing with virtual money is fun because you actually have enough to ‘buy’ decent amounts of virtual stock. WSS gives you $100,000.00 to start with.
Best of success to you! Starting out young is a Good Thing. The longer you save and invest, the wealthier you’ll be in the long run, if you invest wisely and are able to invest skillfully depending on what the economy does.
September 17th, 2010 at 9:30 am
You are still a minor.
You are not entitled to enter into any contracts.
Buy and sell of stocks is a contract with your Broker who will not entertain you.
It is better to take the assistance of your Dad/Mum or any elder to hold/undertake the transactions in your name as a mode of investment as per your choice of the company you would wish to invest.