Friday, June 29, 2007

You CAN Start When You're Young

When I was younger, I used to talk to my grandfather quite frequently about money and money issues. He started teaching me this stuff when I was in high school and college mostly. But it was really interesting when I look back on it because I always felt like he was out of touch. I always felt like he was not really able to understand how difficult it was to actually save money and have that much "extra" left over. I mean, even during my best times, I had only a few hundred dollars of extra money. In fact, it wasn't until I was out of college that I actually had more than 1500 dollars to my name at any one time.

My grandfather was wise, however. He touted the idea of index funds. He described to me the ideas associated with great books from Mr. Bogle. And the ideas make sense to me now more than ever. Unfortunately, I didn't jump on them at that point in my life. It wasn't until I was in my mid twenties that I really started to realize the real importance of investing. I still have enough time to do some amazing things with investing and working hard, but the main point is that you CAN start when you're young.

If you don't have the minimums for some of the mutual funds you want to invest in, don't be discouraged. Instead, try to save up over 100 dollars (better yet two or three hundred) and then deposit the money into an online brokerage account with low trading fees.

I don't get any kickbacks from these companies, but I've been using Sogo invest for my personal stock investments (non retirement) and sharebuilder for my roth. Since sharebuilder has a fee for roth accounts, you might want to consider simply opening an ING account until you get to a few hundred dollars.

Start small. When you're a kid or young adult in high school or college, there are many times that you get small amounts of money for special occasions. Instead of spending all of it, simply take a dollar once per week out of your discretionary income and put it aside. Then when you get large chunks of money either as gifts or paychecks, try to save 10 dollars per chunk.

Each time you get a decent amount set aside, put it in the a high yield savings account. In this way you won't have to change your habits very much but in the course of 6 months if you have some sort of job, you will likely have between 100-200 dollars to start with. I wish that I had started this kind of habit earlier on in life. I don't really think that I've done that badly with my money, and I am doing better each day. But what seemed impossible when I was younger--saving money and investing--now seems simple and obvious.

For a great example of how young people can become investors on their own, check out <a href="http://www.pencils2.com/pencilsfund.html">Pencils Fund</a>

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