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Question: I'm 15 and i want to invest in mutual funds. where do i begin?

(Posted by: on 2010-09-02 11:07:54)

I understand that you should not invest in stocks if you don't have a lot of money which is why I want to check out investing in mutual funds instead. I have less than $1, 000 to spend, but I'm in no hurry for it to grow - - I just want to get into investing and learn a thing or two about it. What exactly should I do in terms of a step- by- step process? I'm not really sure where to begin exactly. Any help would be greatly appreciated!

Posted by: Blazenskyy.com on 2010-09-02, 13:32:34

Mutual funds are composed of stocks. In general, mutual funds are safer since it's less risky lets say for example Company A goes bankrupt. If you held company A as a stock then you would lose 100%. In a mutual fund, it generally holds over 32 securities so your loss would be less than 3%. Step by Step process Open an account at a discount broker such as Charles Schwab or TD Ameritrade. 1) Asset allocation or fancy word saying where to invest. In general, experts say: What percentage of your portfolio in stocks and bonds. Since your 15 - you would want to invest 100% in stocks. Rule is 100 - age and start bonds when your 30 or 100 - 30 (age) + 30 for instance at 31 only 1 percent of your portfolio in bonds, CD's or money markets. At 40 years of age have 10% You should have an emergency fund or rainy day fund of 6 months cash which is separate from your Investments. Don't worry about this until you start working. B) What type of mutual funds - In general, you want growth or small cap equities; large cap, International, Emerging Markets and Mid Cap. You could also go more aggressive for instance in tech, biotech or medicine or into the banks. However, a good first fund is Vanguards Total World Stock market fund since it gives you an average of the World stock market. 60% is invested in the USA with the NASDAQ, NYSE and American stock exchanges. The rest is divided into the International markets such as Europe, Asia, Canada, Latin America and the Emerging markets. It's a great fund to invest in since your have small, mid and large cap stocks and be completely diversified.

Posted by: d3 on 2010-09-02, 11:27:48

Ideally you should go to a financial advisor if you do not know much about, the problem is a lot of them will charge a commission and often $100+ so it may not be worth it (IMO). Your other option would be to buy a magazine or look online of a listing of fund providers and note how much the min investment amount is. There are a few mutual funds with min investments of around $500, for example I think meridian offers some. Once you find a listing of funds that will allow you to invest given the amount of money you have you should look at the funds rating, what the fund invests in and its performance. Picking a fund is not an easy task though, you may want to look through the funds with someone who knows about investing. Also if you are only buying 1 fund, I recommend staying away from funds that are focused on one item (ie gold). You may want to consider something like a index fund, or a general mid-large cap fund. Once you found the fund you want to invest in you should contact the fund provider. They should send you forms to fill out to purchase that fund. Keep in mind your parents will most likely have to sign the forms.

Posted by: Doctor Deth on 2010-09-02, 13:26:22

Most mutual fund DO INVEST IN Individual STOCKS you will need an adult to help you even open any kind of account , so talk to your parents this is not the place for step-by-step instructions when you know absolutely nothing about the subject educate yourself - read books, magazines, visit financial websites

Posted by: J on 2010-09-04, 15:27:15

At 15 you are a legal minor. No mutual fund company or brokerage should be taking your money. However your parents can invest your money in your name in some cases. You have the order of what you want to do mixed up -- you say you want to get into investing and then learn -- It should be the opposite learn then invest. Otherwise you are not investing you are gambling. Try educating yourself by reading the Bogleheads's Guide to Investing. It will help you develop an investing philosophy so that you won't listen to every Tom, Dick and Harry about what to invest in. If your parents want to start you off in investing I would suggest the Vanguard Star fund. It invests in a group ot other Vanguard stock and bond funds. It is low cost and well diversified. Take it from me - learn before you invest. Good Luck

Posted by: RAMESH CHANDRA J on 2010-09-06, 04:13:24

You just invest in children mutual fund they are secure