Best Way For A College Student to Invest?

CreditMadrid's picture
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As college students, I am sure that some of you may relate to the fact of looking for new ways to make a solid amount of money. Personally I have a little under $2000 and would like to get started in investing. For the experienced members on this forum, what would be some good ways to invest in the long-term and dip your feet in the water with a small amount of capital?

Comments (143)

Jan 30, 2018

Crypto. You're welcome.

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Jan 30, 2018

Damn beat me to it

Jan 30, 2018

You're not going to make a solid amount of money with just $2k in traditional stocks unless you're playing binary-events like earnings or FDA phases in bios.

I don't know what your specific "long-term" time-frame is but if you're trying >1 year just throw some money into some long-dated SPY Call-Options.

Jan 30, 2018

If you don't want to actively manage that $2k, throw it into a couple of ETF and mutual funds.

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Best Response
Jan 30, 2018

"Your job is your best investment." My mother

You're in college and have $2,000. Graduate with good grades and get a good job.

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Feb 19, 2018

Going off of learning being your best investment, treat this money you have now as an opportunity to learn more about investing. Then you will know how to manage your retirement finds and whatnot.

Feb 21, 2018

Wait am I really the first one to say that's a terrible saying? Your job is some shit you're replaceable at that you'll probably change 20 times in your career where you're trading time for money. It is by definition not an investment. Income property is an investment. Stocks are an investment. A share in a farm is an investment. Knowledge is an investment. A job is a good way to make money to get into investments. Your mom's probably still punching the clock.

heister:

Look at all these wannabe richies hating on an expensive salad.

Jan 30, 2018
GoldenCinderblock:

Your mom's probably still punching the clock.

My mother is a retired millionaire real estate investor.

Her point is that if you maintain a marketable skill set, in the event that your investments fail--ESPECIALLY in real estate, where failure and bankruptcy are common--you can still fall back on your ace in the hole, which is your job. Fools invest without planning for the downside.

Jan 31, 2018

Travel. Thank me when you retire.

Feb 21, 2018

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Feb 21, 2018

I think you are probably best suited to either toss it in a target date or similar type fund - jump-start a retirement savings account (i don't know Canada - in the US i'd suggest a Roth IRA as a starting point since you are a student). Since you aren't trading or actively trading, i'd simply recommend some type of diversified index fund and then just buy in portions over time - i.e. every six months buy another XX%.

If that isn't on point, then, why not use the $3k as seed money for a crazy idea you had or try your hand at a small business type venture (i.e. buying and selling some items, etc.). There are a ton of things via online businesses, or even in person businesses, that you can jump into with little outlay - I don't know what they are because I've sold my soul to the corporate devil for the time being, but hey! you never know.

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Feb 21, 2018

$3,000 to invest? Does this mean these funds are in addition to your regular savings and you have an additional $3,000 to spend on discretionary purposes? Or you have $3,000 total in the bank?

Either way, I would recommend hanging on to it. It would be nice to have somewhat of a cushion for when you start to take your board exams to get certified. Those things can cost a lot of money.

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Feb 21, 2018

When you have less than $50k in the bank, I'd recommend thinking of your returns as dollars instead of percent. Why? Say you invested your $3k and got monstrous 20% returns. Guess what? That's only $600. If you got a market average of 7%, you get $210. That's like one month of groceries.

But if you're thinking in dollars, things start to change.. In highschool I played the drums a lot and knew the value of different drum sets. I would go in craigslist and see drum sets for sale at much less than their value. I once bought one for $300 and reposted it for $500. Unfortunately I didn't have the capital, time, or interest to keep doing this, but in a couple hours worth of work I profited exactly what your $3k would make on the market in a year- while only risking $300.

Know anything about cars? If you casually watch craigslist for a few months you'll absolutely find a car you can flip to profit more than $210. I know you might think you don't have the time, or that you want to forget about your $3k and find it worth much more many years later, but as a new investor you'll be checking you stocks daily and you'll be pretty disappointed to find that after a generous year of returns on the market, you'll only be ahead by little more than one month's student loan payment.

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Feb 21, 2018

Invest in yourself, hookers and blow can never go wrong

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Feb 21, 2018

assuming he already has money in the bank, I'd def do this. maybe pick an ETF or stock or two with half, and enjoy the other half

Feb 21, 2018

invest in yourself motherfucker read a book

heister:

Look at all these wannabe richies hating on an expensive salad.

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Feb 21, 2018

So are you in middle school, high school, college, an alien, dog, or what?

Feb 21, 2018

I will be a third year this coming Fall at a target. When I say best place to start, I am talking about which job out of undergrad (IB, Asset management, equity research, etc.)
Thanks!

Feb 21, 2018

lol i love how this site is filled with fundamental value-biased types...the world of investing is so much more different than the era that Buffett made his name yet people continue to be drawn towards that style for reasons I can't entirely fathom.

given that you're a 3rd year at a target, you probably should have given this more thought a long time ago if you wanted to make a living out of this and be good at this stuff ...out of the choices you gave, obviously go with the one closest to the actual description, which is Asset Management. IB/ER are great places to learn about valuation, but the optionality that they pitch you is systematically overvalued in today's environment as probably only the top 15% of an IBD class goes to a great long/short, event-driven, or distressed HF, if even that.

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Feb 21, 2018
syntheticshit:

lol i love how this site is filled with fundamental value-biased types...the world of investing is so much more different than the era that Buffett made his name yet people continue to be drawn towards that style for reasons I can't entirely fathom.

Most people who think that Buffett's style is outdated don't really understand what his style is. I'm not really sure how buying predictable companies selling for less than they're worth is outdated. It's your broker trying to sell you some Facebook that must've given you that idea...

All I care about in life is accumulating bananas

Feb 21, 2018
syntheticshit:

lol i love how this site is filled with fundamental value-biased types...the world of investing is so much more different than the era that Buffett made his name yet people continue to be drawn towards that style for reasons I can't entirely fathom.

given that you're a 3rd year at a target, you probably should have given this more thought a long time ago if you wanted to make a living out of this and be good at this stuff ...out of the choices you gave, obviously go with the one closest to the actual description, which is Asset Management. IB/ER are great places to learn about valuation, but the optionality that they pitch you is systematically overvalued in today's environment as probably only the top 15% of an IBD class goes to a great long/short, event-driven, or distressed HF, if even that.

The world has changed a lot and Buffet himself would probably admit that. Despite all of the folksy wisdom in his annual reports he is doing things differently than he did 40 years ago. That doesn't mean his principles have changed, just how they are being applied. At the end of the day it comes down to being a cheap bastard. There was a great Seth Klarman interview on Charlie Rose where he talks about how Buffet evolved.

  1. Buy cigarbutts at good prices
  2. Buy great companies at great prices
  3. Buy great companies at so so prices.

The cigar butts would be when he ran his original investment partnership (before Berkshire and after Graham Newman). Great companies at great prices would be Gillette and Coke at cheap multiples in 1988 and 1989. Great companies at so so prices would be IBM today at 15x earnings. Klarman goes on to talk about how there is fourth stage where he basically uses his influence to get sweetheart deals i.e. the BAC and GS preferreds.

There are a lot of people that have compounded money at very high rates of return applying the same principles. If you made a list of funds with significant AUM, a 15+ year track record, and 20%+ annualized returns I bet about half of the names would be "value-oriented investment partnerships."

http://www.gurufocus.com/news/154159/charlie-rose-...

Feb 21, 2018

also that can get you like a half P of weed. high ROI if managed properly - i.e. not getting high on one's own supply

heister:

Look at all these wannabe richies hating on an expensive salad.

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Feb 21, 2018

1. Your record with a univesity fund and paper account means nothing - totally different circumstances
2. You can't actively trade with 6k, you need 25k to daytrade
3. If you cringe at a $7-10 commission fee, I don't know if you're cut out for investing
4. TD Ameritrade is probably the best platform for individual investors
5. Yes, you will probably have to stop trading when you start working, because it will be a pain in the ass

Feb 21, 2018

I'd start slow at first just because you don't have much experience with using real money. Not sure what you meant by "active" trading, as noted above you need $25k to day trade (or your stuck with 3 daytrades in a 5 day rolling period). Interactive Brokers is great. Its stupid to pay $7 (Scottrade) or $20 (Schwab) if you're only going to trade and don't need research. It should be about $10/month for live quotes at IB with the ability to pick and choose extra data, research, etc. Should only be about a $1 a trade with IB. And yes, the BB will have pain in the ass restrictions on your trading. You may even have to open up another account if they have their own list of approved brokers and IB isn't on it. Finally, definitely paper trade options, FX, futures, etc. on Thinkorswim before you ever start trading them with real money. They're a lot more wild (or can be) than equities.

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Feb 21, 2018

Start by reading about companies that do things/provide products that interest you. After that, look at their finances and make a decision to buy in. You're only in university - you have plenty of time to make back whatever you lose.

Also, TD Ameritrade is a good brokerage.

Feb 21, 2018

Since you only have 6K, stick with IE (but beware of minimums). Growth stocks are long term investments so 6 months might not let those stocks yield as much as you want.

Then nothingness was not, nor existence. There was no air then, nor heavens beyond it. Who covered it? Where was it? In whose keeping? Was there then cosmic water, in depths unfathomed?
-- Nasadiya Sukta

Feb 21, 2018

Echoing what BTBanker said.

I advise not trying to day trade simply because the comissions will eat a lot out of your profit/loss with 6k. I use optionshouse, platform is...meh, but the trades are $4. Also I encourage you to check out robinhood. It may very well be revolutionizing how comissions work.:

http://techcrunch.com/2014/02/27/trade-stocks-free...

I say buy into companies you can see owning for a long time (research them first though!) and don't worry about them. Saves you time and headaches of constantly looking at your p/l

Jan 31, 2018

A robo or micro saver like Stash. just puts into goal set or thematic etfs

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@JustinDDuBois

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Feb 21, 2018

you can run screeners on yahoo finance for example that screen down the universe of stocks based on your criteria, such as industry, PE multiple, market cap, etc.

www.sharpeinvesting.com

Feb 21, 2018

much more important than any of that is your ability to hold positions through tough times if you're doing long-term fundamentals. Do you have the stomach to see your banking stocks lose another 20-30%(at least) through the next set of market swings in the coming months? If you don't, then you would actually be better off doing momentum.

In addition, when doing long-term, I've found it's helpful to only log in to your stock account and check the markets maybe once a week or twice a month.

Feb 21, 2018

thanks for the tips guys.

@Warhawk_1: seems like a good idea to only check it once in a while. That way im less tempted to sell it off.

looking forward to hear more from people here. Probably one of the best resources I've found so far for finance related help.

Jan 31, 2018

Open a Roth IRA with Wealthfront or Betterment.

They're robo-advisors that allocate your portfolio based on risk level, and rebalance it automatically to keep the allocation levels. I know Wealthfront manages the first 10k for free.

An example portfolio for you would be:
* 45% US Equity
* 25% International
* 15% Corporate debt
* 10% Commodities
* 5% Treasury/risk-free assets

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Feb 7, 2018
Peter Bread:

Open a Roth IRA with Wealthfront or Betterment.

They're robo-advisors that allocate your portfolio based on risk level, and rebalance it automatically to keep the allocation levels. I know Wealthfront manages the first 10k for free.

An example portfolio for you would be:
* 45% US Equity
* 25% International
* 15% Corporate debt
* 10% Commodities
* 5% Treasury/risk-free assets

why does this have so much monkey shit? opening a Roth and buying some index funds is much better advice than 90% of this thread.

Jan 30, 2018
Ricky Sargulesh:
Peter Bread:

Open a Roth IRA with Wealthfront or Betterment.

They're robo-advisors that allocate your portfolio based on risk level, and rebalance it automatically to keep the allocation levels. I know Wealthfront manages the first 10k for free.

An example portfolio for you would be:
* 45% US Equity
* 25% International
* 15% Corporate debt
* 10% Commodities
* 5% Treasury/risk-free assets

why does this have so much monkey shit? opening a Roth and buying some index funds is much better advice than 90% of this thread.

Uh, because the OP has <$2,000. The idea that you would open an IRA, as a college student with no material income, with <$2,000 you have sitting around (possibly your last $2,000, who knows?) and allocate it 45% equities, etc. (specific allocations) is...uh, it's ridiculous.

Feb 19, 2018

Because its boring to young people, if this was posted on bogleheads it would get 30+ up votes

Feb 21, 2018

John Kay, 'The Long and the Short of It' is a good guide aimed for intelligent retail investors, although pitched more at the UK market than the US one.

Basic tips (based merely o personal opinion and experience): build your portfolio around ETFs or low-cost funds. Don't invest more than a small proportion (possibly up to a third) in individual stocks. Don't put it all into equity - seek a balance between equity and fixed income. To add risk, look at listed private equity or listed hedge funds (although a lot of these are closed to US investors). Think a lot about correlations between your investments, and avoid anything that's correlated too much with what you already have - so, for example, don't invest everything in US industrials, but have a balance of US/European/Emerging Market funds, and cyclical/non-cyclical stocks. Use a website or computer programme to keep track of your portfolio. If you decide to add stocks (not too many) based on speculative short-term views, be ruthless about cutting them if they underperform.

Above all, constantly bear in mind the fees you're being charged (by brokers and fund managers) and what you're losing through bid/ask spreads (which can be large through retail investing platforms). Put just as much effort into minimising these costs as you do into picking winners.

And, above all, enjoy it. You may occasionally lose money, but investing is a hell of a lot more fun than just sticking it all in a savings account.

Feb 21, 2018

Buffet/Lynch

You can't go wrong with buying the SPY/DIA and mixing it with bonds.

Feb 21, 2018

If you work in financial services, your firm might put restrictions on your trading activities.

Otherwise, go nuts. There are so many ways to invest, I can't really recommend a given strategy. Graham's stuff is the basis for value investing, and is still a good guide.

Malkiel and John Murphy basically established technical analysis, and much more has been written since their original texts. I am sure other posters would have better recommendations.

Buffet's (and other major fund managers) letters are good for general macro outlook, as are Pimco's letters for FI. I really have no clue about commodities.

For a good, very simple introduction to investing, try "The Investment Answer". It's written for the non-finance professional, but it is a good overview of money management.

Feb 21, 2018

I would recommend Greenblatt's "the little book that beats the market" if you aren't super proficient at investing (which is fine). This goes with his website screener. Finds companies with the highest combination of ROIC and earnings yield (good companies and cheap). Buying a basket of these and rebalancing every now and then is IMO the best way to go if you do not have the time/energy to truly pick bottoms-up stocks. If you want to be more active, then analyzing this list for companies with moats (their high ROIC won't go away) and normalizing earnings can achieve better results. Long story short, I believe that, when done with the proper psychology and discipline, buying good and cheap companies is lower risk than the buying an S&P500 etf and will yield better returns.

Feb 21, 2018

nice. thanks hedge the world. any more input on psychology of investing or recommendations on what to invest in with limited knowledge? or for that matter, other ways of gaining knowledge to make the big $$$

Feb 21, 2018

If you don't want to mess with researching and monitoring individual companies, buy some passively managed index funds, balanced across large and small cap, international and domestic stocks. Maybe add a commodities fund, VIX, or something else that looks interesting and is cohesive with your views on the markets.

Just rebalance every quarter or so to keep your ratios intact, and you are good to go.

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Jan 31, 2018

If you're looking to make gains, crypto is your best bet. Disclaimer: I am a student

My tips would be:
Don't invest all $2000 all at once. Cost average them.
Don't diversify among too many coins. Choose ~3 and go all in on them.

To play it safe, once your coin double, take out your initial investment so you can ride it for free.

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Feb 21, 2018

30K not much for a first year? I wish I could bank that much in my first year out

Feb 21, 2018

Oh sorry, I don't mean to be offensive. I thought that figure wasn't much compared to what a lot of the finance people on this site make. If it helps, I'm incredibly, incredibly frugal. Hahahahha. :)

Feb 21, 2018

I think you should look into niche strategies, such as risk arb, as opposed to stupid shit like value investing...until you have a hundred million to invest, where your say counts, you're gambling.

Feb 21, 2018

what brokerage are you using?

Feb 21, 2018

start off smart and continue the frugalnicity (as i like to call it lol) Dividend Reinvestment Plans and Stock Purchase Plans... i buy super stable stocks (in canada Rogers, Bell, ScotiaBank, BMO, Molson Coors, etc) that pay a dividend and reinvest all those stocks in to buying more stocks... in canada they are taxed at an amazingily low rate and it takes the headaches and worries out of investing... once i get to about $20,000 in annual dividend income i will start to look at more risky methods of investing

Get it!

Feb 21, 2018

you have 30k only..might as well just play it risky. if you have 300k then i would start playing safe portfolio management

Feb 21, 2018

@Conan, Are you saying that if I invest in Canadian stocks those dividends are taxed at Canadian rate? Or do you just live in Canada?

Feb 21, 2018
Xepa:

@Conan, Are you saying that if I invest in Canadian stocks those dividends are taxed at Canadian rate? Or do you just live in Canada?

I live in Canada, i have no idea about the tax implications on using that strategy if you live somewhere else, but we canadians havent re-invented the wheel... there has got to be comparable companies on the NYSE and stuff... there are 3 things I look for:

  1. Steady and Stable history of dividend increases
  2. Attractive Dividend yield rate
  3. able to buy the shares directly from the company

call me an old man in a 23 year old body but it just makes no sense to me to not get paid while i wait and hope for capital gains... especially when i am just starting out...

Get it!

Feb 21, 2018

I assume Conan lives in Canada.

I would avoid Brazil. I am not extremely knowledgeable about the area, but I work with people from there. I obviously won't go into work details, but I would avoid that entire country right now.

$30k is a very good amount for a first year. Use that to build yourself a nest egg to last a lifetime. I wish I had your attitude when I first got out of school.

twitter: @CorpFin_Guy

Feb 21, 2018

Dont listen to anyone telling you to "gamble", the stock market is not a casino and anyone who tries to make it one ends up loosing their shirt in the long run. I would make fundamentally sound investments shooting for a RR of 10-15% after trading costs. Right now I am really liking Ford, and would look into selling the strike $10 Jan 13 puts, or buying stock and selling strike Jan 13 $12.5 covered calls.

Feb 21, 2018

buy property in Cuba.

Feb 21, 2018

Dude, invest in a REIT.

Feb 21, 2018

Unless you know something Gundlach doesn't, don't buy a REIT.

What do you want to know about hydrogen?

Feb 21, 2018

@freemarketeer

I have a friend at UC Berkeley that's double majoring in chemical and nuclear engineering (only 3 people are doing it in the entire university) and we just had a super deep energy conversation about alternative sources. Then I talked with another contact of mine that works on the environmental side as well. With some friends in the energy sector, it's easier for me to get some leads on certain areas such as Hydrogen, but I really want to flesch it out more to the point of what advantages certain companies have in R&D and how they plan to apply the technology. People with subtle nuance details that I can read about online. Things of that sort. If you know any resources I'd be very grateful to hear :)

Feb 21, 2018
Xepa:

@freemarketeer

I have a friend at UC Berkeley that's double majoring in chemical and nuclear engineering (only 3 people are doing it in the entire university) and we just had a super deep energy conversation about alternative sources. Then I talked with another contact of mine that works on the environmental side as well. With some friends in the energy sector, it's easier for me to get some leads on certain areas such as Hydrogen, but I really want to flesch it out more to the point of what advantages certain companies have in R&D and how they plan to apply the technology. People with subtle nuance details that I can read about online. Things of that sort. If you know any resources I'd be very grateful to hear :)

Weird, I thought I replied to this a while ago. I don't know of any real pure-play hydrogen companies, but I did catalysis research for hydrogen production. Be careful of getting investing advice from engineers. The research-oriented ones are usually pie-in-the-sky optimists who don't note the practical. If you do find a company, it'll most likely be a micro-cap that is more like a long-term option. I wouldn't really recommend that unless you think there's a commercializable break through in the near future.

Feb 21, 2018

double post

Feb 21, 2018
Feb 21, 2018
Xepa:

3) Same as 1 and 2, except for infrastructure companies in India/Brazil (or just companies in those countries generally).

If you're looking on a good play on global infrastructure check out BIP, although they are not focused on specific regions, I believe their management team has an excellent track record of picking up undervalued infrastructure assets at the right time.

I bought around a year ago at 23.00 and have been collecting quite a hefty dividend along the way, but at 28.56 and a dividend yield of 4.9%, you're not exactly getting in at the same price I was.

http://www.brookfieldinfrastructure.com/

Competition is a sin.

-John D. Rockefeller

Feb 21, 2018

I'm not even an SA, and I certainly don't have $30K to play around with, but I can certainly say that if you look at companies like JNJ, you might end up a winner despite a double dip.

@Conan, JNJ addresses 1 and 2, for sure. In healthcare, say: If you couple JNJ, which is pretty darn good for dividends (3.5% dividend yield, IIRC) and has growth potential for some divisions, with a generic company like Teva, you've got a good pair for the long-haul.

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is."
- Oscar Wilde
"Seriously, psychology is for those with two x chromosomes."
- RagnarDanneskjold

Feb 21, 2018

don't know if you guys like Peter Navarro - but one of the things he preaches: don't buy a good company in a down market.

Short bad companies. (if OP thinks double dip)

(Teva is probably a good call in my opinion considering they just got a new CEO with a track record and the stock is sooooooo cheap.)

Feb 21, 2018
febreeze:

(Teva is probably a good call in my opinion considering they just got a new CEO with a track record and the stock is sooooooo cheap.)

I picked Teva up at $48.50, so I certainly should've held off, but it's a strong long position -- Jeremy Levin has a great record for sure, and with all kinds of drugs going generic in the next couple years, Teva can kick arse going forward.

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is."
- Oscar Wilde
"Seriously, psychology is for those with two x chromosomes."
- RagnarDanneskjold

Feb 21, 2018

concur.

really don't know why this stock has been such a value trap.

constant lawsuits? that's practically a standard. - I guess people want to see them making more patents like copaxane...

but this company makes MONEY.

Feb 21, 2018

30k you can't get into alt energy, unless you want to buy into an Obama pumped up solar companies and other shit thats going to go bankrupt once hes out of office. It takes around 10,000,000 to make an investment in alt energy. I looked at Hydrogen about a year and a half ago, its a loss leader invsetment. You better be able to stomach 100% loss on your money for the 5% or less chance of making bank. The risk was way to much even for me.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

Feb 21, 2018

Sorry, when you said hydrogen, I was thinking fuel cells.

Most hydrogen is currently made from nat gas, and the two co's you'd look at for that are APD and PX. They used to talk about fuel cells as a major opportunity, but that's been off the table for a while.

Jan 31, 2018

Education. Purchase online course, buy books. That's gonna yield greatest ROI.

"If you're afraid - don't do it, if you're doing it - don't be afraid!"
-- Genghis Khan

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Feb 21, 2018

Security Analysis
The Intelligent Investor
Margin of Safety

Feb 21, 2018

All the books that the guy above me said are good and very very very boring but probably the best ones. All the Market Wizards books are obvious ones you should tell "him". The Hedge fund market wizards is an instant classic and the first one is great too. Also Greenblatts You can be a stock market Genius is good too. The most important book to start with though is probably Reminiscences of a Stock Operator.
These are all cliche but necessary reads.

Feb 21, 2018

The Lazy Investor by Derek Foster

Get it!

Feb 21, 2018

4 Hour Work Week by Tim Ferris

Feb 21, 2018

Check out ZeroHedge. On the left are a lot of sites they follow. For instance, Value Walk has reading list by both past and present value investors. A ton of books. Im not sure what kind of investing would be best for your friend, but this could be a good place to start.

Feb 21, 2018

Joel Greenblatt's You Can Be a Stock Market Genius Too

Or whatever it's dumb title was. Really stupid title, really good book, and many of the strategies are still directly relevant today, as opposed to some of Graham's stuff (it basically updates his strategies to a more modern setting.)

Feb 21, 2018

Aside from all of the ones above, might as well look into some of the "how-to" type texts:
--Beginner's Guide to Short-Term Trading
--Neatest Little Guide to Stock Market Investing

Currently: future psychiatrist (med school =P)
Previously: investor relations (top consulting firm), M&A consulting (Big 4), M&A banking (MM)

Feb 21, 2018

I liked The Intelligent Asset Allocator.

Actually got it from an IM firm that recruited on campus.

Feb 21, 2018

Can't believe no one has mentioned the quintessential guide for beginning investors. Am I that old?

The How to Make Money in Stocks Complete Investing System: Your Ultimate Guide to Winning in Good Times and Bad

Absolute bible on stock investing. CANSLIM FTW.

Feb 21, 2018

the most important thing

Feb 21, 2018

Fail-Safe Investing by Harry Browne

Jan 31, 2018

Spend your money on hookers.

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Jan 31, 2018

As someone who swings 5 figures daily +/- in my portfolio (not in a good way lately), I can't really relate to you.

Other than saying, you should travel and spend money on experiences, not physical objects.
Because on your death bed you won't remember the Rolex/Maserati as much as you do the places you go and people you meet.

Best of luck.

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Jan 30, 2018
MonacoMonkey:

As someone who swings 5 figures daily +/- in my portfolio (not in a good way lately)

Lmao wtf are you trading?

Feb 13, 2018

10 shares of BRKA

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Feb 19, 2018

Baseball cards

Jan 31, 2018

Invest in yourself by buying the videos from Tai Lopez.

"Drill, Baby, Drill" - Sarah Palin

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Jan 31, 2018

Learn blackjack strategy. Take the 2k to a casino. Turn it into something with which you can actually trade some volume. Or stay at the tables.

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Jan 31, 2018

Astoundingly bad advice for the most part in this thread. Looking at all the crypto kidz.

With $2000, you can't really do much in the way of active investing on anything sound. The reasons for this:

  1. Most securities that are safe for a novice to trade are going to be too expensive to get exposure to without sacrificing diversity. Say you want to buy a $10 stock - buying 200 shares (enough shares that a 0.01 price move correlates with a $2 change in your P/L) will cost your whole $2000, and actually a little more when you include commission. If the stock you bought then has a rough patch, or the market hits a downturn, you are going to have to take the pain as the market takes you for a ride through the red, or you'll have to panic sell at a loss. This could be avoided if your portfolio had other winners to balance out the loser, but that wouldn't be your situation in this example.
  2. The transaction costs involved in "active" strategies are going to be prohibitive. Dollar cost averaging won't work for you. For instance, buying $100 of a security at a time and making 20 purchases total means you're paying something like $7 every time you enter a position - that means the price over the long haul must rise at least 7% over your average purchase price just for you to break even on your investment.

Similarly, making structured trades with options where you use multiple contracts to skim beta won't work because you pay a lot of commission to enter and exit each options contract in the overall play.

Honestly, my advice to you is to open a regular brokerage account with a low-cost broker (but not a no-cost broker like Robinhood et al - brokerage risk is a thing whether or not people choose to acknowledge it.) and just invest in a diversified Index fund or ETF. If you want to get fancy with it, you can choose a thematic ETF - there are tons of them out there (check out ROBO, for example).

ETFs can be nifty because they are traded intraday and can be converted into the underlying security - however I would strongly encourage you to stay away from levered ETFs. Holding these over the long term will cause beta slippage/volatility decay (@Escobar Houdini has a good post about what this means in this thread), and you don't want that as a new investor, or probably even as an experienced one.

Jan 30, 2018

Bro, buying 7 shares of SPY isn't worth anyone's time. He should just pocket $1k, and throw the other grand in 300 April Calls. If he buys now and say SPY gets 7 points within the next month, dude can make 100% return already. Worst case scenario the options are useless in Aprl and he loses 1k, big deal. He also can use TastyTrade which is 1.25 round trip. If he wants to save more money he can just do 1 spx call instead of 10 spy calls, less scalable but better on taxes and commissions.

Jan 31, 2018

To each their own dude. If I was investing my first $2000 as a college kid starting out my savings, I would not be making options plays even on a vanilla index like SPY.

Feb 19, 2018

Not saying this is a bad strategy if you believe SPY is going up short term, but how is the downside case no big deal? With 2k to lose half of it is a big deal....

Feb 1, 2018

Curious to hear more about brokerage risk and what brokerage firms you think have more of it...

"Even if you're on the right track, you'll get run over if you just sit there" - Will Rogers

Jan 31, 2018

"Brokerage Risk" is a catch-all term I use for describing the myriad ways in which a brokerage can play a role in financial hardship. Usually it has to do with:

  1. The risk of your broker becoming insolvent

Now, to an extent you are protected from brokerage insolvency by the concept of segregated accounts and the insurance offered on them by the SIPC. However as the above stories from recent memory make clear, segregated accounts are largely self-enforced...or not. If your brokerage behaves unethically during a squeeze and uses client money to cover losses, you are (best case scenario) looking at a long wait while regulators sort out the pieces of your former brokerage.

Worst case, you are screwed by the intricacies of SIPC coverage. First off, SIPC insurance will replace the actual securities you owned, but not their price. So if the market moves out from under you while the SIPC sorts out your claim, you are out of luck and stuck with positions that have moved out of the money while they were out of your control. Furthermore, the SIPC does not insure holdings of currency, warrants or commodities, or related futures or contracts - so if you are trading any of these, you are likewise out of luck.

2.The risk that your broker experiences operational difficulties during intense movements in the market

This piece is generally a great story about the '87 crash through the eyes of various street legends. Note some of the things Jim Chanos has to say about brokerage risk:

"Tuesday the 20th and Wednesday the 21st were two of the scariest days I've experienced in the market--not because of the market action itself, but because of the concern about the system. There was a lot of suspicion that brokers were insolvent and that they might not be able to clear trades later in the week. People were on pins and needles come Wednesday for trades from the previous week and Monday to see if the trades would clear."

"Black Monday made a huge difference in how I manage my fund. It was my lesson that as a short seller, I was an unsecured lender to a prime broker. It forced me to understand my back-office operations, and that really helped in 1990 when Drexel failed, in 1998 during LTCM, and again in 2008. I understood how to hold collateral in the form of Treasuries. It was an immensely important learning experience, and luckily I didn't have to pay financially for it."

So, as Chanos points out, there is a real risk during black swan events that brokerages can fail to do what they are supposed to. Imagine if you went in to panic sell your holdings the Monday Lehman declared bankruptcy and you couldn't access the web portal. Or if you could, but there were restrictions placed on your activity. In fact, I know people personally who could only withdraw up to 50k/day from their brokerage accounts during the 08 crash - we're talking about people at the end of their careers with their entire life's savings on the line, and this was with a major retail brokerage.

Also, read this article about the near-collapse of Knight Capital based on a trading algo error. Near the end they discuss how Knight Capital was the only market maker servicing certain smaller retail investor brokerages - if you were a customer of one of those brokerages and Knight had went under, would your trades have gone through when you wanted them to? What if the market moved out from under you when they did?

Generally, I think that the newer commission-free platforms like Robin Hood etc are more risky than the more established brokerages, for these reasons:

1.They are new, and haven't weathered downturns in the past. There is no substitute for experience when that happens.

2.Though their financials aren't published, I'd be willing to bet that as a new company not charging commission and essentially making their money from skimming uninvested funds and investing them overnight in the lending market, their balance sheets have less ability to withstand punishment.

3.Robinhood specifically is now letting people trade cryptos commission free on their platform. So take all the risks I laid out above and compound them with the generally opaque, inefficient, volatile nature of crypto assets and try to imagine what would happen if things got unstable all of a sudden.

Feb 1, 2018

Bud light

Feb 1, 2018

Instead of investing money, perhaps running a company should be able to demonstrate that you know how business work (I am assuming that you are trying to use this experience as a leverage in applying for jobs). A bit out of the field but thinking with US$2,000 - contact a Chinese vendor to make you a sample watch (price point US$50-100). Then use crowdfunding to launch an online fashion watch platform like Daniel Wellington. Just a thought.

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Feb 1, 2018

Good advice here - and fun to do. Or do some amazon selling

Jan 31, 2018

Don't know why this is given monkey shit. Better advice than 95% of the ones

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Feb 1, 2018

I'll just leave this here...

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Feb 1, 2018

I'd put half in the S&P 500 index and then use the other half to pick stocks and test your skills. You'll learn and earn

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Feb 2, 2018

In all seriousness head over to /r/wallstreetbets and learn how options work and the high risk trading to make real gains or real losses.

You'll learn what behaviors are moronic and what high risk plays can actually makeyou a ton of cash.

You'll lose some money at first but you'll gain an understanding of market moves better than all the "hug SPY all day" people.

This place really isn't the place to learn how to trade well, but its a good place to learn what not to do using real money... and thats like 3/4 of trading in general.

Its like an investment so when you're trying to put 50-100k in a decade you know a little bit.

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Feb 2, 2018

Have not read any comments, so forgive me if this is redundant. What you're asking is what I do. That said, my suggestion would be to open a ROTH IRA. If you're not familiar with this product, you may invest after-tax dollars into a fund that will grow tax-free for the rest of your life. In other words, when you withdraw the funds at, or after age 59.5, you may take tax-free distributions.

Another great aspect of a ROTH is the fact that you may withdraw your cost-basis tax-free, at any time, with no early withdrawal penalty. Although I would advise against it, you could use a ROTH as an emergency fund such that if you needed money in a hurry, you could at least withdraw the money you originally invested without being penalized.

All of the major fund companies have a ROTH option. I literally within the last week opened a ROTH IRA for my youngest son who just turned 18. He'd been saving up for several years and had $2500 to open. You do not need that much, though. Many funds will allow you to open with as little as $250 - 500.

Lastly, I might think about setting up an auto-debit from your bank acct to your IRA such that you put $20 dollars or so every paycheck into the IRA. What you never see, you won't miss. Learn to live on less than you make. You will thank yourself in the future. Trust me when I say that delayed gratification is much sweeter than immediate gratification.

Good luck

PS I forgot to mention the fact that you do need to have earned income for the year in order to open a ROTH. If you have not worked and earned money, you may not open a ROTH.

Feb 2, 2018

I'm in a similar situation. Where did you advise your son to put his contributions toward?

Feb 12, 2018

Vanguard has a lot of great index ETFs that can be bought commission-free.

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Feb 19, 2018

I'd argue that most people are way too illiquid. While I agree with saving (my situation pushes me to pre-tax instead of Roth) I'd suggest the OP makes sure (s)he has ample liquidity before investing. 3-6 months is a good guideline. You may provide an excellent backstop for your kids, but many are not as lucky as they are.

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Feb 2, 2018

Well, I need to tread very lightly here. That said, there are a few schools of thought as follows:

  1. place the first $5k into a simple S&P index fund. Depending on which broker house you go with, they will all have a similar fund to pick from. Make certain to look at their past performance as well as the expense ratio. A broad-based SPY index fund should not run you more than 30 - 50 bips (basis points)/year as an expense ratio (the amount of money the fund will charge you to hold this position).
  2. Buy 5 - 10 shares of well-established, DGIs (dividend growth investment stocks), such that they enjoy the benefits of not only compounding growth from long-term holding, but they are also getting paid a dividend to hold the position. Set the account of for DRIP (dividend reinvestment program) such that all the dividends are used to buy more shares. They will truly see the miracle of compounding once they've held a position for 3 - 5 years and have several more shares, just because they reinvested the dividends they've been receiving.

Do this across several different asset classes such that they learn diversification. Using the DRIP process, rotate through each position manually, buying another share every time enough money has been amassed, so that they learn to access their account occasionally and check on things. There are some long-term winning sectors that should serve you well, such as large-cap tech, finance, consumer durables, consumer discretionary, etc. etc. Quality over quantity, and I would never invest in penny stocks or anything you don't understand.

If you need some good names of some DGIs, try going to the site SeekingAlpha and searching for said acronym, or search the web. You will find a whole host of articles, as well as various lists that talking heads put together.

I may not suggest specific positions or plans to you, so hope the info I provided helps in some small fashion. Best of luck and good for you. Getting an 18 year-old to understand the importance of delayed gratification is monumental. Well done.

Feb 12, 2018

just my advice, take it as you will.

2000 is not a ton of money obviously but I think the greatest benefit to investing in college is that you can learn alot- by putting your money where your mouth is, you'll actually be motivated to undertake significant due diligence and gain a better understanding of what to look for when evaluating a company. And then you'll either make money, stay stagnant, or lose money- but regardless, you'll learn a lot (assuming you actually put the time in, otherwise just go throw 1000 on red at the local casino and you'll probably have more favorable odds.)

My recommendation would be make a mock portfolio for now, but actually take it seriously. And then wait for the next market dip/recession. This will require patience, but if you can actually wait it out you can make a lot of money. in the meantime, sustaining a mock portfolio will teach you the ins and outs of investing so that when the next market crash happens you'll be able to capitalize.

Feb 2, 2018

Hopeful,

I disagree. Trying to time the market is a fool's errand. If my 18 year old puts $2500 in a S&P index fund for the next 50 years plus, do you think it will make a tinker's damned bit of difference whether he went by a mock portfolio until a dip? I think NOT.

The name of the game is to get in, get in now, and DCA (dollar-cost-average) your way to a better cost basis on the positions you choose. I prefer a broad-based SPY exchange fund for the first $2500 - 5k, but will allow my 18 year old his input.

Investing is a lifelong endeavor. Trying to do things for your children is anathema to what will help them. Make them part of the discussion. Make sure they understand why they are doing what it is they choose to do. Make sure they look at the long term, not 2 - 5 years down the road. One of the biggest tools you may teach your children their entire life.

Feb 12, 2018

I don't disagree with that. The difference between our perspectives is yours is more oriented towards making money and mine is more oriented towards learning. Neither are wrong, I just prefer to take the learning route instead of the risk route.

Money is important to have as a college student. It's a completely different ballgame - so actually yes, I do think it will make a tinker's damned bit of a difference.

Also good to keep in mind that not everyone is a parent on this site...

Feb 12, 2018

This doesn't really apply to you now, but if you ever plan on going to graduate/business school and won't have it paid for by work, open a 529 plan for yourself. Depending on where you live you might be able to deduct contributions from state taxes, and the income won't be taxed when you use it to pay for school related things. Most of the available portfolios and funds are pretty shitty usually, but not too terrible.

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Feb 2, 2018

529s should be opened by parents, if at all possible, even if only $10/month. Pre-tax dollars going into a fund that grown tax-free, if used for higher education, is a no-brainer for those who give a half a damned about their children's future, and for those who can afford it. Presume anyone reading this thread has the wherewithal to afford maxing out a 529, or at the very least, starting and contributing to one.

Jan 30, 2018
dm100:

529s should be opened by parents, if at all possible, even if only $10/month. Pre-tax dollars going into a fund that grown tax-free, if used for higher education, is a no-brainer for those who give a half a damned about their children's future, and for those who can afford it. Presume anyone reading this thread has the wherewithal to afford maxing out a 529, or at the very least, starting and contributing to one.

I definitely agree in principle. But if you live in certain states (Virginia, for example) there are insanely affordable ways for paying for college (at least in 2018). For example, community college and CLEP tests ---> 4-year in-state (UVa, William & Mary, VT engineering, et al). I think many parents need to be clear that unless they are rich the out-of-state/private schools are an economic waste, especially without scholarships (a few rare exceptions may exist, such as Harvard, Yale, Stanford, MIT and a few others).

I also think in the next 2 decades radical new forms of education will take shape that are much more "democratic" and affordable.

Feb 13, 2018

I'm in a somewhat similar situation as a college student with a small portfolio. Follow what @Fugue and just use a low-cost broker.

Pick an industry you are interested in and learn how the firms work. Check and see how recommendations, news, results, predictions, and competitors' performances affect specific stocks. Think of this 2k as a way to learn so that you don't fuck up with 200k in the future.

But if you will be needing the money for tuition/miscellaneous expenses I'd suggest index funds for lower risk.

Feb 13, 2018
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Feb 14, 2018
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"Work ethic, work ethic" - Vince Vaughn
Feb 17, 2018
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Feb 21, 2018
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Feb 18, 2018
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just a monkey trying to find his way in the finance jungle

Feb 19, 2018
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raftradingsolutions dot com