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Author: TMFSandman Big red star, 1000 posts Feste Award Nominee! Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27509  
Subject: Re: stocks suggestions needed Date: 9/2/2012 1:17 AM
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usha,

A good first lesson for him might be that $300 is not enough money to start investing in public stocks just yet. Does he have a cash emergency fund established yet? Does he have a high yield savings account set up yet that he's regularly adding to? I'd get those things going first if not. At 17 he may need money for college within a year, so the stock market might not be the best place for extra money he's earning anyway.

A big problem with such a small amount of principal is that even if you invested all of that in just one company so as to incur just one commission charge, the $10 in fees would eat up 3.3% of your principal. That's unacceptable. You wouldn't want that commission to be any more than 1%.

If your son is set on investing the money instead of putting it in a savings account, a good stretch goal for him would be to increase that $300 to $1,000 to get that commission down to 1%, and use the time to research some companies that interest him. $1,000 is a lot of money to a typical 17 year old. He should want to take his time so as not to lose that money!

These are all great lessons for him to learn, even if it means not buying a stock just yet. Knowing when it's appropriate not to invest and why is just as important as knowing why a company is a good investment.

Mike
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