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Hello all. I am an eighteen year old fresh out of high school looking to start building a strong portfolio for the future. The money I put into the portfolio is not to be touched till retirement, and I mean that. I have read alot of books which just give inspiration and not much Do this! Do that! directed toward young people my age. I would love to hear from any and all of you, also by giving me advice you're also giving advice to every young person I come in contact with. Thank you. please respond.

Newman18
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Hey Newman, you're the same age as my oldest boy! Good that you ask!(Wish he'd think about such things<G>.)

I didn't start figuring our investing until about 5 years ago. My personal mantra is "asset allocation". By that I mean you need to decide which sectors get what percentage of the money. After that, follow a strict rebalancing every year.

This gets you a mechanical method that prevents following the herd. You automatically take profits from the biggest gainers and invest in out-of-favor sectors. You may miss big gains, but you also miss big losses. The way to win is to make sure you don't lose money! (We are our own worst enemy when it comes to wise investing<g>.)

Basically, one sets a percentage of assets for whatever sectors one deems makes sense. Morningstar has Value, Blend and Growth spread across Large-, Mid- and Small-cap companies - which gives a 3x3 array.

This is a very US-centric view and you may benefit by spreading this allocation across a global allocation. (Brinson advocates this.)

Since you are just starting, look at a Vanguard fund, such as a total world market allocation. (It takes a while to build up enough assets to pick and choose funds.) I mentioned Vanguard because their fees are low. The more you pay in fees the less your earnings accumulate.

Good luck,
Mom
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I think Polymermom covered it quite well, but let me add a few comments.

The most important decision you can make is the plan to save/invest regularly and to participate in Roth IRA and 401K plans etc when you get the chance.

To have funds to do that, you need to learn to live below your income. Running up large debts is the biggest mistake you can make at an early age. Learn to live within your means. That usually means learning that good times are determined not by how much money you spend, but by who you spend your time with. So find some like minded friends who also appreciate the value of living within their means.

Once you have the savings discipline, you will gradually learn investing by experience. That is usually the best teacher. Start small. A mutual fund such as a Vanguard Index fund is an excellent place to begin. But be willing to read and study, follow the market, and try new things when they sound like a decent opportunity.

Keep those funds growing and you will probably find that your goals are achieveable.

Good luck.
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Good answers so far, here's a recent thread with a whole bunch of points of view on the matter, started by someone your age. What's right for you entirely depends on your level of interest, risk tolerance, etc, etc, but it may be good to get an idea of the range of opinion. Plenty of other threads like this exist if you poke around

http://boards.fool.com/Message.asp?mid=22737554&sort=whole

I particularly recommend the advice by a smart fella named Delta-something ;-) j/k. Maybe this can spark some specific questions for you to ask.
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Hello, Newman (sorry, I couldn't resist the Seinfeld reference)

I admire you getting on here and investing in your future...hopefully the folks here can give you pointers.

Couple of questions. You just got out of high school...what do you want to do with your life? College? Tech School? Poker Player?

Reason I'm asking - as many who post around suggest, the best investment someone your age can make is in education. Sure, a few bucks invested now in the stock market should do well over the next 50 years. But that few bucks invested in your education will grow to a bigger and better number.

Is college/tech school/poker paid for already? Or are you going to need to scrap through whatever you want to do?

I'll check back later to see what you're planning.
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Thanks so much for you all who responded, I didnt expect to be noticed so much so fast.

PolymerMom - What I am getting from your response is that I should look into all three types of companies in the sectors and not just have a completely aggressive portfolio. Correct? I am trying very hard to understand the lingo of investing, so bare with me please. I have a binder deticated to notes for the things I learn about investing so I can never forget, or notes to at least remind me. Your telling me to look into a Vanguard fund to start and then broaden. And I will, much ablidged Mom.

Pauleckler - Thank you for your words of wisdom. You further enstowed the words of my dad by saying I've already taken a "Big Step" and that is by my choice to save money and start CDs for retirement as my beginning. I completly agree with living within my means. I have friends around me who get their pay checks from our work once a month and that check is gone by sunrise the next day. The new thing everyone is doing is looking into buying New vehicles of my graduated class 2005. I admit I have been looking at some 10,000 dollar cracker jack box 2005 model cars. Cant help the impulse. Im still trying to distint the differences and choices I have of deviding my portfolio into short term and long term goal managing. Any input? and yes the best teacher is experience, and Im not afraid to lose money, everyone does. but dont think of me as careless, i have a strict dad who doesnt allow carelessness. I also understand I have plenty of time to take some devistating loses and still recover. *smile* thanks, please respond again!

DeltaOne81 - thank you for the reference!
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"I am trying very hard to understand the lingo of investing, so bare with me please."

Hi Newman,

Welcome to the Fool community. It's great you're starting early.

Just in case you don't already have these links...

Investing Dictionarys: http://www.investopedia.com/dictionary/ & Investor Words http://www.investorwords.com/

Acronyms: http://www.acronymfinder.com/

The Fool Glossary: http://www.fool.com/school/Glossary/glossary.htm

http://www.netlingo.com/inframes.cfm

CustomizeYour Posts
http://www.fool.com/help/index.htm?display=community02#Styling

Regards, Ken
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Hey Jimclark - I just graduated high school and now I am going to a community college here in my same town and going to live at home still. Getting my general AA with a few classes in computer field. I want to ultimatly get my four year degree and get more into the computer field such as being a Systems Administrator or somewhere along those lines. I am very computer savvy, I type very fast even though I need some work on my spelling as I'm sure you've noticed. I am going to pay for college basically on my own with my Lifeguard job locally. Im sure I wont have muc Scrapping to worry about.

The reason I am not so sure of what career I am going for is because as of last year in july ... up till June 11th this year I was signed up to go into the Marines and ship out on the 11th of July... extremely condensed story is that the Marine personel in Seattle and I put together a contract and I signed it. 6 months later, my graduation day for high school they call me in the morning telling me that my contract is invalid cause of my test scores on the ASVAB. Well they had plenty of time to tell me that so i could remedy it and didnt say a word, then tried to put me into something completely different. yada yada, so on so on. I told them to discharge me and they said they ahve a full year as of my original ship date to do that. Im not one to sit around and waste time, my best asset is my time, and i know that. So here I am enrolled into college. All the scholarships i didnt apply for thinking id be fine, have really started to haunt me. Post back, thanks.
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thank you matt, i didnt have those sites, they are bookmarked now.
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The advice you're getting here is very conventional but it is not completely accurate. Since you are just starting out, let me be explicit about something the others are assuming you already know -- and if you do already know it, that's great, move on to the next post.

OK-- here goes--

An 18 year old is not necessarily helping himself by avoiding all debt. He can be severely injuring himself and his future. Unless you're heir to wealth, then you need to indebt yourself to acquire such assets as an education and a house. The person who chooses the cheaper higher education to avoid debt often learns that his cheap degree gets him no more than the high school graduate. "Everybody" has a degree these days. Today you have to get the best possible degree at a school where you have a chance of making those all-important contacts.

That is your best investment in your teens and early 20s. Even if you have to go $100K into debt. It is the only way you even have a chance of having decent earning power unless you're a natural salesman, which is a very rare personality type.

Don't go into debt for a new pair of shoes or a CD collection but don't hesitate to go into debt for your education or to get an early start on home ownership.

I know lots of people with paid-off homes who live well in retirement on just their Social Security. The renters do not do so well, not by a long shot.

Put the horse in front of the cart, not the other way round.
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So, wait, you're saying at any time now you could get called up by the Marines to do ... whatever?

I'd say you're screwed. I doubt you're going to be discharged. The armed forces are having a severe problem with recruitment, as a cursory look at the news might tell you. They're even taking the retarded and drug addicts. Being a bit below average ain't gonna save you.

Good luck to you. I don't know quite what else to say.
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I understand where your coming from with the whole education debt, my friends are also doing student loans all over and I just smirk at the debt they are getting themselves into. As far as saying a degree is just a degree, I dont see it that way, I think pursuing an AA is a great step in the right direction then going on from there. And as far as the Marines, i was in Delayed Entry Program, which the option is to be able to say no till the day before your shipdate. which i did a month in advance. I was very disappointed to have things not work out, but i told myself at the start I wouldnt join just for the sake of joining, i wanted a MOS that gave me certifications, which was the one i picked. Mechanical 1345 heavy equipment operator. anyway, thats no longer an option for at least a year, so now I want to get educated in investing. thank you.
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I understand where your coming from with the whole education debt, my friends are also doing student loans all over and I just smirk at the debt they are getting themselves into

He who smirks last smirks best.

Come back in two decades. Your friends who invested heavily in a top education rather than a community college could be earning 6 figures in today's dollars, while the community college graduate will be earning 25 percent of that or so.

Debt is not always bad. Carefully chosen debt is wise. The man who is afraid to invest in himself mis-trusts the future and shares the fate of all who take no risk -- he gets nowhere.

"Behold the turtle, he only makes progress by sticking his neck out."

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I think you have to give the OP a break for the moment though. With his military murkiness, committing to an education right now is kinda difficult.

That said, yes, the other posters are right. There is good debt and bad debt. Consumer debt for things you don't need at high interest rates is bad. Investment debt for investments in yourself or your future (houses, etc) at reasonable, low interest rate is absolutely good debt. Donald Trump, for instance, got rich by using a ton of debt that he knew he could get better returns on than the interest rate. Seriously, if you can get a 3% loan and you can use that money and get 8% interest on it, why wouldn't you (when you take into account risk concerns, I'm not promoting borrowing to invest)? The numbers may not be so easy to run for college, but the concept is the same.

Smirk at your friends for spending their paychecks on junk within a day or two. But do not smirk at them for getting an education, debt and all. Whether they know it or not, it is probably the only wise financial moves they are making right now.
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I'm also a bit new to this investing stuff, though I"m a couple of decades older than you. What I've found to be helpful is playing around with some of the calculators available on the Fool site to see what my regular savings and my retirement savings will look like over time. And, I've been reading the boards on the Fool, seeing what Vanguard funds and stocks people have recommended, then built a mock portfolio. You can also do this on the Fool. I just put in the funds/stocks I'm interested in, entered the price of that fund/stock for that day and pretended to purchase 100 shares of each.

I've been sitting now for about 5 months, just watching my mock portfolio and researching each fund/stock in it. I plan to start investing real money starting this month into the funds I feel good about. (I've personally decided that I'm going to stay away from individual stocks for now because none of the ones I picked seemed to have done particularly well, whereas the funds have.)

Anyway, I think you're going to do just fine in the long run because you seem to have a good head on your shoulders. If you keep investigating and learning what you can, you're sure to do better than your contemporaries. Just remember not to run up debts in frivolous things and not invest your money without investing some time researching first.

Good luck!

best,
Gchin2
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Newman,

Reading your posts gives me a murky understanding of you. First post, I thought what a forward looking kid, hope he's keeping his mind on the need for the best education he can get, Then it gets murky and murkier: Computer savvy, but thinking along administrator lines, signed with the marines, looking for an MOS as a heavy equipment operator. This is just an inconsistent picture.

I would have thought john clark and pekinrobin gave you the best and most appriate advice. I used to tell kids when they ogled one of my Ferraris and asked how I got it to stay in school as long as they could.

Maybe you just need some maturation. When I was 18 I had the ambition to become an architect, because I love architecture. In retrospect, I realize I would have been at best a mediocre architect, and probably worse than that. At 18, you have your life ahead of you. Make the most out of it is my advice.

db, phd
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Hey pal,

I'm glad that you are getting an education. Getting by with only a HS degree is almost impossible these days. Now that I know a bit more of your background, here is some advice. Use the money you could invest to continually better yourself.

Example 1: I put in 5 years getting an engineering degree (been in the real world for 5 years now). Worked my butt off in school, both working and studying. Came out with a bunch of student loans, which were killed within 2 years. In my mind, my investment was the education, and it has been paid off and continually provides me with income (pretty good return on investment - lots of "sweat equity"). While studying etc, everyone needs the off nights, whether it be visiting an arcade with some buds, or pounding a few when you are 21 (ha, right?). Anywho, while you could be putting away money while you are going to school, spend some of it to keep you sane. I'm not saying spending it all, just make sure you can spend something...because 24-7 of studying really wears on a person...

Example 2: During school in hind site I wish I had a chance to take a few business courses. I'm taking those basic business courses now to get some background before heading back for an MBA. Key takeaway: if you have a light semester, take something completely different, whether it be an accounting course, etc. You seem to be interested in stocks - you can get some insight by taking a finance course, etc.

So in summary, invest in YOU, and not necessarily the market. I liked the post about the mock portfolio...you can play for free, learn along the way, and have the cash handy to invest in you. If you are really hankering to invest some real cash, my 2 cents would be to keep it out of a retirement account. That way if you need it, it is a bit more accessible to you.

Again, best wishes.

JJ
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