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Hi, I am a college student who has not yet started investing. I have a "fantasy" portfolio whereby I can see some of the ups and downs of investing before I invest some real money. When I do decide to invest it is going to be with a small amount ($1000). My question is what would be the best place to invest; stocks, drips, mutual funds, etc?


My advice is to wander around the Fool's website and read as many of the articles and documents as you can before your head starts to swim. Start with the 13 steps of Foolish investing and branch off from there.

Read a little bit more every day - you don't have to read a whole lot, but make sure that at least a little bit more of it makes sense each time.

Keep playing with your fantasy portfolio and keep records on it. Pick a strategy you think you would like and implement it in your fantasy port. Keep a diary/log/whatever so that you keep learning from it.

When you're finally ready to spend real money, you'll be able to judge for yourself the best place to invest.
An annoying answer, to be sure, but it's the start down the path to financial enlightenment and independence.

But, since you asked, I would suggest staying away from mutual funds as well as the Foolish Four. The reason for avoiding mutual funds will be obvious once you start reading some more info around this site. My reasoning for avoiding the FF is because you don't have that much money to invest (yet), and the broker's fees will eat heavily into any profits you might make.

So what does that leave? An index fund that tracks the S&P 500, drips, and rule breakers/makers. An index fund will be nice and safe, but boring, IMO. Let's face it - part of the reason we invest in stocks is because of the fun factor, in addition to any financial benefits gained.

Stay away from Rule Breakers for now - they can be rather volatile and it's possible for your investment to tank. Wait until you have more capital and experience to start playing with these.

Finally, we're left with drips and rule makers. Often, the two are not mutually exclusive; that is, many rule makers also have drip programs. To a new investor, this is probably the best way to start investing, again IMO. Find a good company with a no fee (or low fee) drip program and start with them. For more info on these, see the Drip boards and Rule Maker boards.

One last bit of advice - probably the worst problem you'll have is the burning maddening itch to just do something with your portfolio. Don't. Resist this urge. Readjust your attitude and think long term. You'll make more money, but more importantly, you'll have less worries. Just pour the money in and let it grow. Time is on your side. Get a 9th grade algebra book and look in the section for compound growth. Put the formula into a spreadsheet and set the time for 40 years. Become amazed at how much you'll gain for so little effort.

Hey - I'm only 21, but with this long term attitude, I think retiring at 45 with a net worth of several million is not unreasonable.

In any case, best of luck.

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