<p>Although it is not mentioned in this thread, it is important to watch the financial aid angle. If you received any kind of aid, you should consider the impact of having money in a bank account versus an IRA. Remember that the school will assess unexempted students assets at 35%, in addition of requiring 50% of summer earnings in excess of the student's allowance.</p>
<p>confidential, am I overdramatic? Perhaps. But, your posts show to me a rather interesting lack of understanding of how financial markets work, not to mention what they are about. </p>
<p>If your $1500 is play money, and you just want to (figuratively) buy lottery tickets, then just ignore my comments. OTOH, if you really want to understand the markets, you need to do some homework. Where to start? Try these:</p>
<p>A Random Walk Down Wall Street
The Motley Fool series</p>
<p>Xiggi or others may have better suggestions, as I know Xiggi, for example, delved into this area not too long ago, if I recall correctly.</p>
<p>Benjamin Graham The Intelligent Investor</p>
<p>is the book Buffett credits with his investment savvy.</p>
<p>I have two "favorite" stocks these days: Bank of America, which pays a hefty dividend and is threatening to own every bank in the US, and Starbucks, which sells a legal addictive drug (caffeine) with very few side effects--at exorbitant prices. (Actually, I think Starbucks sells two things these days: first, the caffeine, and second, a clean, well-lit place to hang out.)</p>
<p>I want to buy lottery tickets? I think you're being presumptuous. I never said I don't want to learn the financial markets more than I do now.. thats why I'm posting in the first place and I already got some references to books/articles. </p>
<h2>I said you're being overdramatic because you said theres a good chance I'll lose it all. I'm not dealing with penny stocks here. I plan to research and invest in respectable companies. </h2>
<p>The point of investing now is to get my hands dirty and learn from experience. If my purpose was to invest real money(like a chunk of an annual salary), I would do much more research. Whether or not I make/lose money, I will gain experience that I can take with me when I'm really investing 5-10 years from now. Some people are book people. Learn by the books. Some people are experience people. They learn from experience. Since I'm in a good situation right now that many people can't be in(most ppl start investing much later), I want to take the experience route. Besides, the people who WRITE the books normally took the experience route. You can be a good following conventional trading, but you can be great by learning. Experience gives you confidence( not overconfidence) and gives you insights that only you can tell yourself.</p>
<p>That's what the great investors did.</p>
<p>confidential,</p>
<p>I think your experience analogy w/r/t financial markets may be a bit of a stretch. These markets are way too complex to rely too much on experience. That's why I so strongly recommend the readings. And the authors of the better texts do not rely just on experience. They rely on far more complex academic study of the markets, coupled perhaps with some experience.</p>
<p>I won't bore you with the details, but I will tell you that modern financial markets analysis was borne in the 1960s when some academics started looking beyond experience and began analyzing the various approaches traders used. But the academics tested the theories against much broader data sets (more companies over longer times) than the traders ever used, and found surprising results. The academics also moved the reverence point from "did you make money?" to more complex questions like "would you have made more money with a less risky approach?" and then went on to define financial risk. Their results were controversial at the time, and continue to be so today, at least among traders, who whould like to think they have a "magic touch" (or whatever).</p>
<p>i believe in financial risk. And I have previously stated that I have the ability to invest with high-risk due to my circumstances. I have evaluated my situation and stated that I have the option of trading with lots of risk. Once you put yourself in high-risk category, what's wrong with learning by experience over learning by book reading. And let's pretend I lost all my money. Then in 5-10 years, when I got an urge to trade riskily, I will remember this experience. So in the long run, I might profit if I lose money now. And there are some things you have to experience for yourself, even if some guy in the book told you to do something that you just figured out. I would rather read books after I get more experience so that I can relate more to what the author is saying, and then I can take more in.</p>
<p>confidential, go for it. You will learn more with real money on the line.</p>
<p>confidential, I reread your original post. Sorry I addressed a question you did not ask. Your mind is obviously made up regarding trading, so go for it.</p>
<p>Regarding opening an account, the problem you have is that minors (those under 18) cannot, in most states, enter into contracts of the nature necessary to open a brokerage account. The legal way to do it is to open one with an adult. The "other" way is to...keep in mind that the brokerage firm may not ask for ID...</p>
<p>Any chance you qualify to open an account with USAA? Do you have any family members that are/were military officers? You can do on-line trading for very little $ through their brokerage account, and can also set up a Roth. Very user-friendly.</p>
<p>There is a difference between "investing" and "trading". Investing implies that you have researched the company and believe in their product or service and their outlook for the future. Any time you are planning to sell short term you are trading - betting that some market factor will cause the stock to rise so you can quickly sell at a profit. These are two very different approaches to being in the market. It sounds to me like you plan to trade, not invest. No judgements here, just don't fool yourself that you are investing in a company when you really aren't doing that.</p>
<p>i have another question. tomorrow im creating a bank account at wachovia. i am then planning on getting a roth ira account with scottrader.com. can you only put money into roth ira if u earned it? see the thing is, the money that im getting is a 'government stipend', meaning i don't pay taxes on it. is that still considered earned money and eligible for roth ira contributions?</p>
<p>You may want to investigate the plain jane federal and state tax laws that applies to all of us. Also securities and banking laws for ownership. </p>
<p>If <18 age you cannot open a security account in your name only. Must be a joint or UGMA/UTMA even if an IRA.</p>
<p>Current tax laws (thankyou GWB) favors non IRA's(either Roth or traditional), or any other tax deferred programs.</p>
<p>IRA's and 529's and like tax advantaged programs only benefit those with earned income, especially the high middle class. </p>
<p>Stipends is not earned income and therefore no tax advantage in IRA's and my be to your disadvantage. I can think of more than one way that you can be penalized with an IRA. </p>
<p>I know of this because, we went through this with our kid, and I do not intend to be audited. But if I were, I have all my documentations. </p>
<p>Before you go and gamble your stipend away, I'd take some investment seminars given by many financial planners, institutions, and the like. Most are free but be aware there is no free lunch.</p>
<p>IRAs, 401ks, SEP's, 529's, savings bonds, savings accounts, security trading accounts, mutual funds and others all have some tax aspects, which if used correctly could net you more than trading gains. </p>
<p>If I had $1500 and I want to really "invest" and I was your age, I'd go buy books and literature, and courses on personal taxes and investment options.
$1500 will probably get you an H&R Block tax course and state licensing exam.
$1500 may even get you a securities license. But $1500 willnot get you much in stock, bonds, or MF. Learn how to fish rather than go fishing. </p>
<p>The stipend is there to help you live at a liveable income, not to invest. </p>
<p>I Learned the hard way before I learned the easier way.</p>
<p>although i appreciate your advice itstoomuch, i don't think taking a class would be good for me. </p>
<p>remember, i won't start really investing until i get a real job which will be 5-6 years down the road and by then things might change(plus i will forget most of it having not used it). i feel like everyone thinks that because i am under 18 i am incapable of making good decisions and that i will lose all my money.</p>
<p>whats the point of a securities license?</p>
<p>I lost money in investments at a time when I was much older than you. If I had some training in investments, I don't believe that I would have lost that money. An investment of $1500 for knowlege is a whole lot cheaper than the six figure investment money that I lost in gaining wisdom. </p>
<p>If you think that $1500 is for gaining investment experience then you got your priorities out of sync. I hate to lose money, and I do everything to avoid losing money, even if it costs me more money. I also like to make money but I like to make money because I know what I am doing rather than just luck.</p>
<p>To more of a personal note:
In 2000 our kid came into $10,000. (His college costs was at that time achieved) He invested in large, well known companies. By the end of 2002, he had $3000 and falling. What do you think the primary lesson he learned in that experience?</p>
<p>Its not that I think you are incapable in making good decisions, its that the statements you have made, indicates that you have not done enough research. </p>
<p>As for getting a securities license for $1500; I suggest that you learn from the inside of the industry rather than learn from just being a consumer. Learn to fish rather than go fishing. Got it?</p>
<p>$1500 can get you a professional license. $1500 at a community college gets you 1 term. $1500 at an top college gets you a PE class for 1 credit. Go figure.</p>