How to Invest When You're Young
I am 11 years old and I would like to by stock in my favorite soda company. Unfortunately, I have no clue if a guy my age can buy stocks.
Sure, a guy your age can buy stocks. All you need to do is get in touch with a stockbroker to place your order.
Because you're a minor under 18 years old, you'll need to open what's known as a custodial account. That means an adult -- most likely one of your parents -- must open the account with you and be the custodian.
When you buy shares of stock you'll have to pay the broker a fee or commission. And because you're probably investing a small amount of money, you'll want to keep your commissions as low as possible.
That probably means going through a no-frills online broker. A good choice for a fledgling investor like yourself is ShareBuilder, which has no minimum investment, no account minimum and no inactivity fee. It costs just $4 to buy a stock, and you can even buy fractional shares. So, for example, if your soda company costs $12 a share and you want to invest $100, you could buy 8 1/3 shares.
Mutual Funds for Little Cash
I'm 18 years old and want to start investing in mutual funds, but I don't have a lot of money. Are there funds that will let me invest just a few hundred dollars? I want one with a good return that only needs to sit around for a year or two.
I can suggest several funds, but let me first say that investing in any mutual fund is a long-term commitment. Don't expect a quick profit. And if you'll need your money in less than five years, keep it somewhere safer than the stock market, such as a high-yield bank account or CD.
For longer-term investments, here are some good candidates:
AARP Aggressive (800-958-6457). This fund, which invests in a mix of U.S. and foreign stocks plus bonds, requires only $100 for entry.
Just $250 gets you into the Hodges fund (866-811-0224), which is run by a father-and-son team and invests in companies of all sizes, or Pax World Balanced (800-767-1729), a socially conscious fund that avoids companies that derive revenue from alcohol, gambling or weapons.
For $500, you can invest in either Homestead Value (800-258-3030), which owns mostly large companies, or Excelsior Value Restructuring (800-446-1012), which invests in companies that are being restructured or are in industries that are undergoing consolidation.