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I am looking to start investing my money into stocks, what are some good tips to get started?

I want to become a smart investor, and I want to learn how to make my money work for me. #finance

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Paul’s Answer

It's great that you are giving this some thought at such a young age. Basically, the younger you are the more risk you can take because you have time on your side. You'll be able to ride out market volatility and allow your investment to grow through compounding. Now, to get to your question. Depending upon who you talk to you will get different responses so I suggest you wait until you talk to a lot of knowledgeable people before you do anything. Personally, if I were in high school right now I would put money in a ROTH IRA. You won't get an immediate tax deduction but your money will grow tax deferred and when you retire many years from now you won't have to pay Uncle Sam a penny. As for specific securities, unless you have both the skills and time to research individual stocks, you may want to consider a mutual fund managed by an investment professional. Mutual funds invest in hundreds of securities in a single portfolio so it would be a very convenient alternative for you. There are many different types of mutual funds available so take the time to do your research before you invest. I suggest you read Money Magazine, Kiplinger's Magazine, as well as the Morningstar website.

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Greg’s Answer

My best advice is to try to diversify your investments. What this means is to make sure that you are investing in a variety of things.

The reason that diversification is important is that it will spread out the risk that you're taking across a lot of different stocks, bonds, mutual funds etc...

It's tempting to try to "pick a stock" and have that stock do really well. Think about Tesla as an example. There are lots of stories about people making a lot of money by investing early in Tesla heavily. That's great, and it absolutely can happen. What you don't hear are the stories about people who lost a lot of money by investing early in the companies that didn't make it.

Mutual Funds or ETFs can help spread out your risk across many companies with a simple investment.

Perhaps more important is to understand the "vehicle" that your money is being invested through. Are you putting money into a 401k that your employer contributes money to as well, a ROTH IRA that gives you tax advantages for retirement, a plain old trading account with no particular benefits but that allows you complete flexibility, etc... Classic advice is to focus your money into a 401k and other Retirement Accounts (Like a ROTH IRA) because these provide tax benefits as well as the potential to make money on your investments.
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Ruth’s Answer

I highly recommend reading a A Random Walk down Wall Street, by Burton Malkiel, which is a classic. Research studies have shown over and over that investing in large passive index funds over the long term does better than the vast majority of active funds or picking individual stocks. If you really want to trade, then set aside a very small part of your money to enjoy trading - while realizing that trading costs (taxes,etc) will likely result in lower performance than those boring large passive index funds! The experts also recommend you only put your money in stocks that you will not need for 5-10 years.

Ruth recommends the following next steps:

read a A Random Walk down Wall Street, by Burton Malkiel
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