Options/Advice for a college student looking to invest?

[Nave]

Hello friends,

I am starting to dabble in investing (newbie) and have a few questions;

What are my options at 19 years old? (I don't'have a lot of money) I have looked into Roth IRA and splitting up money into multiple index funds. Looking for something long term. I don't have the time nor the knowledge to day trade. Anything else?

Should I pay off my student loans first? Should I split money into both investing and student loans?

What are some good resources for beginning investors? (books,forums,etc)

Assuming most of you guys who answer are older, if you could go back in time and do one thing financially different what would you do?

Thank's so much SDN I appreciate the help!

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[Plectron]

The first thing I would say would be to educate yourself. Read as many intro to investing books as you can (Start with the idiot's guide or for dummies are good starts). With your age/knowledge/available funds, you are best to put in one broad index fund or ETF. Forget about day trading, it's not investing, it's gambling. As for the student loans, it depends on how much you owe, what your rates are and your personal preferences. I hate debt so I am trying to pay off as quick as possible.

If I could go back and do one thing different financially, it would be to not go into medicine and marry a rich girl. If that wasn't possible, I would take out less money and pay if off as soon as I finished residency.

 

[jsmith522]

Your 19. Find something that you like and read about it. If it has stocks buy a couple and forget about it. You can be as aggressive as you would like because you have a ton of years to make it back if your idea fails. Be what it is a tech stock, healthcare, or what ever. You never know maybe you will hit the jackpot, probably not but you should be able to make more then the minimal 0.25% in a savings account.

 

[SpartanWolverine]

My personal opinion is that you shouldn't look for anything long-term right now. Save the cash to help pay for medical school when you get there.

I was a bit too excited about saving in my 401k, 403b, and other various accounts during my years before starting medical school, and now I have tens of thousands sitting in accounts that I just hope recoup > 6.9%. I wish I just had the cash instead.

If you already have student loans... yes, pay them off. I personally don't think investing makes sense when you have a good chance of making less of a return than you're paying on loans.

It's a good idea to educate yourself on opportunities out there, but probably not worth playing around in the market right now.

 

[The White Coat Investor]

What are your goals? Generally, the best thing for a college student to invest in is himself and his future earning potential.

 

[QofQuimica]

It would help if you gave us some more info, like how much money you have to "invest," how much you have in loans (and at what interest rate), and whether you're planning to go to med school. If you're a premed, the best thing to do with that money may be to use it to help pay for med school considering how pricey med school loans are these days.

In general, the best thing you can do to help yourself have a good financial start in life is to be frugal. Don't be like some of your peers who spend loan money like there's no tomorrow, because guess what, those loans will come due some day....with interest. You should take out the bare minimum of loans necessary, and be honest with yourself about whether something is a "need" versus a "want." If you can get by without that new whatever, then get by without it. Also, most people's major expenses are for housing and transportation, so if you can cut costs there (have roommates, go without a car while you're in school, etc.), consider doing it.

I didn't do a lot of stupid financial things as a student, but the one thing I would go back and do differently if I could would be to not have leased a car during residency. I went through med school without a car, so saved a ton of money there. But then in residency, I thought a lease made sense since I had to have a car, and I thought I'd be doing a significant amount of driving. It was a big mistake. I only put a few thousand miles on the car over three years, and then I wound up turning it back in and buying a new car after residency since they gave me such a bad deal to buy the lease. The net effect is like I'm paying for my car twice. But I'm going to keep this one for 10+ years, so at least this time I'll get my money's worth. :-/

 

[dpmd]

I was lucky enough to have a job that did 401k profit sharing without me needing to put any money in. I knew I was going to be needing money for school so I only had my profit sharing amount in there (about 2k I think is what I started with). I did what someone above mentioned, picked a company that seemed interesting to me and researched it then purchased some shares. It was a lot easier to do that because it was basically free money that I wasn't going to be able to access for a long time. Even though I lucked out and the stock I picked has drastically increased in value I don't think I would have done things differently and put a bunch of my money into the same stock because I could have just as easily lost it all, but given what my student loan interest rates ended up being I probably should have put more into the 401k-that is probably not the case now that loans are close to 7% and there are 1% origination fees). I did have an investment account that I put money into and invested in mutual funds until I needed the funds. Didn't earn a ton, but it was better than a savings account and safer than picking individual stocks.

 

[Stroganoff]

If I had a time machine:

* Avoid private student loans & beware of sketchy financial aid offices. I would have not given full faith and trust into the financial aid officers at the private school I went to. They were in bed with Sallie Mae and [illegally] pushed us (almost literally, they shuffled us to dedicated sign-up computers) to sign up for private loans.
* Start a Roth IRA with index fund(s) and pretend the money doesn't exist. It doesn't exist. But you'll get a massive start to the power of compound interest. Vanguard lowered their minimum initial investment for their Target Date funds to $1000. Then $100 for each subsequent contribution.
* Overspent on credit cards. I started off very disciplined with credit cards at age 17 in high school, but around age 19 spent a little too much and broke those good habits. Definitely learn about credit, credit scoring, and the like, but be very careful about revolving debt.
* Focus more on investing in yourself like White Coat said. Grades, health. There's not much money coming into a student unless gifts from rich parents or something.


And you're right, day trading [is gambling] and individual stock picking shouldn't be a priority. Educate yourself first on personal finance.

Re: resources: I've been pushing the Bogleheads Wiki lately. The forums consist of well-educated, ridiculously wealthy (slowly) folks who started early and consistently. The Wiki has a ton of short articles on investing principles, and I trust the biases of that community over others. Like for example I don't care for Motley Fool and other organizations. The Wiki also has lists of financial/investing books.

 

[PL198]

I'm a fan of the starting an account early so the concept of saving gets in the back of your mind. It mathematically might be inferior to guaranteed 6.8 % interest savings on loans but I think the psychological benefits long term are more important when we're talking about being able to pay down very small fractions of your loans.