Five Smart Tips for Young Investors

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It is estimated that over one and a half million students will graduate from college in the next year or so.  The vast majority of them will have little or no savings and a pile of debt from credit cards, student loans, or other sources.  Unsurprisingly, very few of them have any interest in or knowledge about investing.

Several leading analysts have even posed that the recent turmoil and upheaval in the markets both in the United States and around the world is causing an entire generation of future investors to shy away from the stock market.  This, however, is an ideal time for people to start learning about investing for the future and a great chance to get started trading and saving for retirement.  Here are a few tips to help young people, especially recent graduates, get over their fears and start preparing for their future.

1)      Cheap information is everywhere. The internet is an incredible resource, and for the most part everything you need to learn about investing or personal finance is available somewhere.  FinancialHealthGuy.com, Yahoo! Finance, SmartMoney.com and WalletPop.com are all great sources of financial information.  If there seems to be far too much, many financial planners offer youth discounts or hourly rates to go over specific questions.

2)      Start early – the sooner the better. Investing as a whole acts similarly to compound interest.  Putting in a smaller amount sooner will give you great benefits.  If you wait until later in life, you will have to invest vastly greater amounts to have the same amount of money to retire and live on. The sooner you begin investing, the less you need to put away each year to have the same results!

3)      Talk to people! Ask around – you are bound to know someone with a good head for investing or who has a friend of a friend… You get the idea.  People are the greatest resource there is for someone starting any new venture, and investing is no different.  Pay particular attention to successful people older than you – the odds are that they know a thing or two!

4)      Read up. Read often.  Read everything. There are hundreds, even thousands of books out there about investing.  Many are targeted towards specific niches, but even more are written just for people like you – someone getting started in the investment world and not sure where to begin.  Benjamin Graham’s The Intelligent Investor is a long-standing favorite among some of the best investors in the world, and is definitely worth a read, but at the very least read something and absorb as much as you can.

5)      Don’t be afraid! One of the first things that any good investment advisor or book will tell you is that there is an element of risk involved in investing.  Just like gambling, don’t start out investing more than you can afford to lose.  However, there are well-established ways to reduce that risk and ensure that you get great returns. If you live paycheck to paycheck, investing may not be practical or even possible – but if you can put even a few hundred dollars a year into an investment account, your retirement years will be vastly more comfortable.  And you never know – maybe you’ll get lucky, pick the next big stock, and strike it rich!

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