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Investment for Kids

Guide to Investing for Students

Aug 31, 2008 Roman Barbera

Have you ever considered entering the market but don't know how? Many young people experience this because of a lack of information and are put off; there is no need!

Have you ever considered what your future will be like? Concerned about how you're going to finance that European trip once you leave school, or even buy your first house?

The stock market may not be the safest way to ensure a steady rate of growth combined with a risk free environment but it sure is fun. Think of all of the positive stories that could come out of it.

'Hey mum, I just made a grand while I was at school' or 'hey dad, I'm over this, I'm moving out'. If you've ever wanted to storm through the door and scream this at the top of your lungs then this article is for you.

How Young People Can Start Investing

Firstly, there's always the issue of risk in return. The first lesson you have to learn and get into your head is that the more you're expecting to make, the more disappointed you'll be when you either don't get to that point, or, you lose the lot. Therefore, the first lesson is to set realistic goals. Don't invest $1000 and expect $5000 in a couple of years because odds are it won't happen. When you invest your money, you lose control of it, it's up to the business then. That just means you have to investigate before you invest to make sure when you're not in charge of the money anymore, the people who are know what they're doing.

What Am I Looking for as an Investor?

As a first time, or beginner investor, you won't know what to look for in a management team. That becomes important when you're investing huge sums of money but at the moment there's just a few characteristics you want to look for in a stock.

Firstly, if you're investing a significant proportion of your savings you want a steady stock. Try and avoid shares with inconsistent performance and heavy day-to-day movements. Look at price graphs over a period of around a year. The smoother the line the more reliable. These are called 'blue-chip' shares.

Secondly, you need to determine how risky you want to be with your money. This depends on numerous things including the amount you're investing, state of the economy and your personality and knowledge. For beginners, you should probably 'jump on the band wagon'. That means that when a share is going up at a steady rate, BUY! For risk takers and more experiences investors, attempt to locate a stock which has experienced a fall in the share price but has maintained a steady valuation, that is, hasn't lost all of its assets or had an oil field explode.

Then, try and pick where you believe the market is at its lowest point and buy there. If the share doesn't increase in value immediately, don't worry about it. It's only paper wealth; it doesn't affect you unless you decide to sell.

The copyright of the article Investment for Kids in Investment is owned by Roman Barbera. Permission to republish Investment for Kids in print or online must be granted by the author in writing.