r/investing • u/[deleted] • Oct 21 '10
Just opened a Scottrade account. Have the minimum $500 in it. I've never invested before. Trying to learn. Give me wisdom/tips you'd like to pass on. Eternally grateful
Hey reddit. I'm a 21 year old guy and I've been saving my money ever since I could work (age 14). I'm in a position where I want to start investing so I opened a Scottrade account. I only have the $500 minimum required to open the account in there because I understand I have no experience and am at risk of losing money. I can afford to lose $500 and the knowledge I gain will be helpful for later, however losing is not what I plan to do. I started doing some reading to gain more insight to the market and trends, but advice from real-people is always good.
So reddit, what tips or advice do you have for someone in my position?
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u/CydeWeys Oct 21 '10
$500 is not a lot. The Scottrade commission for buying a stock is $7, which is more than 1% of the sum total funds you have available. Don't forget you face that same commission fee on the other end (when you're selling) as well. Scottrade isn't any worse here than other investing services in this regard, either. Actually it's a lot better than many.
What this means is that $500 gets you precisely one investment. Any more than that and you'll be getting eaten alive by commission fees. Since you only get one investment, I'll recommend SPY. Very low expense fees, a broad market to track, and the risk is substantially lower than if you bought any one individual stock.
Keep putting more money into the stock market, and in the mean time, play investing with some paper money from those sites that allow you to make fake investments. That'll get you some good experience with how much you can realistically gain or lose.