Dip Your Toes Into Investing This Summer
With the economy starting to recover, now is a perfect time to start learning about investing, and that free time you have over the summer is a great opportunity to get started.
First you will need to open Dividend Reinvestment Plan (DRP). You probably see ads for lots of these on TV (E*Trade, TD Ameritrade, etc). Personally I’d go with Sharebuilder because it doesn’t require a minimum deposit to get started (these can run upwards of $500, ouch!).
Now the safest place to invest your hard-earned summer internship money would be in a mutual fund, US Treasury bond or something equally boring, and I’m not telling you not to (technically I already have a 401k, though I didn’t set it up myself). That said, this is a summer project, and it should be fun.
First, do some research. See what companies are out there that you like which have fairly low stock prices. Do a quick Google search for “penny stocks” and you can find information about thousands of companies whose stock prices are $1 or less. Approach the situation like you would a night at the casino. You know there’s a good chance you’ll lose money, but you’re going to have fun anyway.
Invest some nominal amount in a couple of these companies you like the looks of, and see what happens. The real beauty is that you don’t have to be an Econ major to do this (though taking an intro to macroeconomics course is a great idea for anybody). Is your goal in life to have your face molded in a block of cheddar cheese? Find a company that does that and invest $50 in them. Worst case scenario; you lose $50. Best case scenario; LeBron James becomes a fan of face-cheese sculpting and endorses your company, making you fairly wealthy in the process. The big thing you have to watch out for is the trading fee. Usually you’ll pay about $10 to buy stock and $10 to sell stock, so plan carefully to keep your trades to a minimum.
The point isn’t to make a ton of money, it’s to have fun and learn a little about what makes our economy tick.
Do you invest as a college student? Share your stories in the comments!