How should I begin investing real money as a student?
"Without knowing what you are trying to achieve - make a bit of pocket money, become financially independent, invest for retirement, learn trading to become a trader - I'll give you a few thoughts ...  The difficulty you will have trading with $400-600 is that brokerage will be a high proportion of your ""profits"". I'm not sure of the US (assuming US rather than AU, NZ, etc) rates for online brokers, but UK online brokers are the order of £6-10 / trade. Having a quick read suggests that the trading is similar $6-10/trade. With doing day trades you will be killed by the brokerage. I'm not sure what percent of profitable trades you have, but if it is 50% (e.g.), you will need to make twice the brokerage fees value on each profitable trade before you are actually making a profit. There can be an emotional effect that trips you up. You will find that trading with your own real money is very different to trading with fake money. Read up about it, this brief blog shows some personal thoughts from someone I read from time to time. With a $10 brokerage, I would suggest the following Another option, which I wouldn't recommend is to leverage your money, by trading CDFs or other derivatives that allow you to trade on a margin. Further to that, learn about trading/investing Plus other investment types I have written about earlier." I like your enthusiasm and initiative. However, there are a few things you need to consider that you haven't yet thought about. First, it is important to remember that trading with fake money is not the same as trading with real money.  In the fake world, you have $100k.  With this fake money, you can do reckless things with it, such as put it all on one stock.  If you lose, it costs you nothing, so you don't have an emotional attachment to it.  With real money, it will feel different, and that is something you haven't experienced yet. Second, you mentioned that you are good at making picks.  With all due respect, I suggest that you aren't old enough to make that determination.  You haven't been trading for long enough to determine if you are doing well at it.  :)  That having been said, I don't want to completely discourage you from trying something new. Third, you mentioned long-term investing, but you also said that you need to make your money back quick and mentioned trading daily.  Those things aren't really compatible.  I wouldn't consider what you are doing as long-term investing.  With the type of investing you are doing, picking individual stocks and hoping for the value to go up in a relatively short time-frame, it is similar to gambling.  The risk of losing is very much there, and you shouldn't be investing money this way that you aren't prepared to lose.  If you need the money for something soon, don't put it in the stock market. Never forget this.  What can happen is that you start with small amounts of money, do well, and then, thinking that you are good at this, put in larger amounts of money.  You will eventually lose.  If you put in money that you need for something else, you have a problem. If you are trying this out for education and entertainment purposes, that is great.  But when it starts to get serious, make sure that you are aware of the risks.  Educate yourself and be smart. Here is what I would suggest: If you want to try this short-term day-trading type investing, and you understand that the money can easily be lost, I would balance that with investing in a more traditional way: Set aside an amount each month to put in a low-expense index mutual fund.  Doing this will have several benefits for you:  As for your specific questions about stock trading with small amounts: Yes, you can trade with small amounts; however, every time you trade, you will be paying a commission.  Even with a discount broker, if you are trading frequently, the commissions you will be paying will be very significant at the dollar amounts you are talking about.  The only way I can see around this would be to try the Robinhood app, which allows you to trade without paying sales commission.  I have no experience with that app. I started my account with $500 so I know where you're coming from.  For the words of caution, in about 2009 we entered a pretty significant bull market.  During this period you could basically buy almost any big name company and do pretty well for yourself.  So don't be too cocky about your ability to pick winners in the middle of a bull market.  Over the last few years you'd have to try pretty hard to consistently pick losers. I absolutely think you should put real money in the game when you have this sort of interest.  However, at your $400-600 level broker fees will eat any sort of active trading or short term profit you could muster.  Stock trading is not a great way to make money in the short term.  If you're looking to save for something specific you should put that money in a zero risk savings account.   You should do more research on brokers.  Find the lowest possible trade commission at an organization where you can meet the account opening minimum.  A $10 commission is 11% more than a $9 commission. "I think you have a really good idea, kudos to it. It will be difficult to break eve, and while you stressed the fact that you are ready to part with this money, it would be interesting for you not to part with this money just for the sake of trading. You will be frustrated because you are ""winning"" and breaking even or even losing money in the process. Think about that. For somebody with limited experience the derivatives market carries a very high risk also as everything in this matters carries high or very high yield. Trading futures on margin can actually work but I think you will need a bit more money. Check the mini contracts of infinity futures and calculate the commissions. You will be paying more for a contract, yes. you will need more money for your maintenance margin, yes, but if you day-trade and you have a cheapo broker this will be substantially lower. Gold contracts pay about 10 to 1 so a mini contract of 33 ounces will pay you 33 dollars per 1 dollar move. Your commissions will be about 4/5 usd in a discount broker and you will need to pay some exchange house fees, maybe about 15% of your trade will be fees. Check the contract specs and costs. As somebody said before, they wouldn't recommend trading on margin but with an account of that side I wouldn't know anything else. Trading physical gold on margin could also be an option. Just my 2 cents."
"As a former professor, I have few questions:  1. When it comes to the things you listed, how to **filter** things, how to **build a structure and methodology** to handle tasks, how to **research and elaborate** on the knowledge needed, **motivation**, **social and personal traits**, and seeking **feedback** (including self-critic), what percentage of this is taught or can be taught in school, and what percentage of this is part of the personality you already have and cannot be taught? Can ""motivation"", for example, be taught in school?  2. When it comes to practical and current knowledge needed in the workplace, is it coming more from what was taught in college, or is it more from self study and experience gained in the first few weeks at a real work environment?   3. Do colleges and universities fail students when needed? When I was teaching, and from professors I currently know, the guidelines are very strict as for the possibility of failing a student. Few of my students should never ever be accepted to college, definitely should have failed my classes as clearly they do not have the capability to handle the real requirements, bad and immature personalities, zero chance to improve, etc. I was prevented from failing few of them.  Lastly, I do think kids should go to college, but traditionally, colleges and universities were mostly(!) to demand high standards, tough acceptance, and fail those who can't handle the requirements. Thus, those fewer who got degrees deserved those degrees and almost always benefited from those degrees as for getting work, good compensation for their work and succeeding in their work." "This is regular income to you (unless you meet some very narrow health-related field exceptions.) There's no ""claiming of income"" by you, it should be included on your W-2 as regular income where it will be subject to employment and income tax. Think of it like a bonus. It will bump up your income and make it look like you earn more money (because you did). There's no special tax break for you or your employer for paying off your pre-existing student loans. Talk to your student loan servicer to find out how the extra money will affect your income-based repayment plan next year. They should be able to tell you, or at least estimate for you, how it will change your future payments. Armed with that knowledge you can then decide whether or not to take the money from your employer. Naively, it would seem dumb to turn down free money, but there are some weird incentives out there." "Some thoughts: 1) Do you have a significant emergency fund (3-6 months of after-tax living expenses)? If not, you stand to take a significant loss if you have an unexpected need for cash that is tied up in investments. What if you lose/hate your job or your car breaks down? What if a you want to spend some time with a relative or significant other who learns they only have a few months to live? Having a dedicated emergency fund is an important way to avoid downside risk. 2) Lagerbaer has a good suggestion. Given that if you'd reinvested your dividends, the S&P 500 has returned about 3.5% over the last 5 years, you may be able to get a very nice risk-free return.  3) Do you have access to employer matching funds, such as in a 401(k) at work? If you get a dollar-for-dollar match, that is a risk-free pre-tax 100% return and should be a high priority. 4) What do you mean by ""medium"" volatility? Given that you are considering a 2/3 equity allocation, it would not be at all out of the realm of possibility that your balance could fall by 15% or more in any given year and take several years to recover. If that would spook you, you may want to consider lowering your equity weights. A high quality bond fund may be a good fit. 5) Personally, I would avoid putting money into stocks that I didn't need back for 10 years. If you only want to tie your money up for 2-5 years, you are taking a significant risk that if prices fall, you won't have time to recover before you need your money back. The portfolio you described would be appropriate for someone with a long-term investment horizon and significant risk tolerance, which is usually the case for young people saving for retirement. However, if your goals are to invest for 2-5 years only, your situation would be significantly different.  6) You can often borrow from an investment account to purchase a primary residence, but you must pay that amount back in order to avoid significant taxes and fees, unless you plan to liquidate assets. If you plan to buy a house, saving enough to avoid PMI is a good risk-free return on your money. 7) In general, and ETF or index fund is a good idea, the key being to minimize the compound effect of expenses over the long term. There are many good choices a la Vanguard here to choose from. 8) Don't worry about ""Buy low, sell high"". Don't be a speculator, be an investor (that's my version of Anthony Bourdain's, ""don't be a tourist, be a traveler""). A speculator wants to sell shares at a higher price than they were purchased at. An investor wants to share in the profits of a company as a part-owner. If you can consistently beat the market by trying to time your transactions, good for you - you can move to Wall Street and make millions. However, almost no one can do this consistently, and it doesn't seem worth it to me to try. I don't mean to discourage you from investing, just make sure you have your bases covered so that you don't have to cash out at a bad time. Best of luck! Edit Response to additional questions below. 1) Emergency fund. I would recommend not investing in anything other than cash equivalents (money market, short-term CDs, etc.) until you've built up an emergency fund. It makes sense to want to make the ""best"" use of your money, but you also have to account for risk. My concern is that if you were to experience one or more adverse life events, that you could lose a lot of money, or need to pay a lot in interest on credit card debt, and it would be prudent to self-insure against some of those risks. I would also recommend against using an investment account as an emergency fund account. Taking money out of investment accounts is inefficient because the commissions/taxes/fees can easily eat up a significant portion of your returns. Ideally, you would want to put money in and not touch it for a long time in order to take advantage of compounding returns. There are also high penalties for early disbursements from retirement funds. Just like you need enough money in your checking account to buy food and pay the rent every month, you need enough money in an emergency fund to pay for things that are a real possibility, even if they are less common. Using a credit card or an investment account is a relatively expensive way to do this. 2) Invest at all? I would recommend starting an emergency fund, and then beginning to invest for retirement. Once your retirement savings are on track, you can begin saving for whatever other goals you may have" "This is the best tl;dr I could make, [original](https://www.newyorker.com/news/john-cassidy/a-new-way-to-learn-economics) reduced by 86%. (I'm a bot) ***** &gt; A group of economists from both sides of the Atlantic, part of a project called CORE Econ, has put together a new introductory economics curriculum, one that is modern, comprehensive, and freely available online.  &gt; In many countries, groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems.  &gt; In his highly popular &amp;quot;Principles of Economics,&amp;quot; Harvard&amp;#039;s N. Gregory Mankiw begins by listing a set of ten basic principles, which include &amp;quot;Rational people think at the margin,&amp;quot; &amp;quot;Trade can make everybody better off,&amp;quot; and &amp;quot;Markets are usually a good way to organize economic activity.""   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6zkgmk/a_new_way_to_learn_economics/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~208302 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **economic**^#1 **students**^#2 **CORE**^#3 **more**^#4 **curriculum**^#5" "For most, confidence comes with knowledge and experience. To understand more about how investing works, read articles about types of investments that you're interested in and browse the questions on this site. To gain experience, start with a ""paper money"" trading account. Most brokers will allow you to apply for a ""fake"" account so you can practice trading with simulated money. Once you've built up some confidence, you may wish to start investing a small amount of real money." "Your questions seek answers to specifics, but I feel that you may need more general help. There are two things, I feel, that you need to learn about in the general category of personal finance.  Your asking questions about investing, but it is not as important, IMHO, as how you manage your day-to-day operations.   For example, you should first learn to budget.  In personal finance often times ""living on a budget"" equates to poor, or low income.   That is hardly the case.  A budget is a plan on how to spend money.  It should be refreshed each and every month and your income should equal your expenses.  You might have in your budget a $1200 trip into the city to see a concert, hardly what a low income person should have in theirs. Secondly you need to be deliberate about debt management.  For some, they feel that having a car payment and having student loans are a necessary part of life and argue that paying them off is foolish as you can earn more from investments.  Others argue for zero debt.  I fall in the later.  Using and carrying a balance on high interest CCs and having high leases or car payments are just dumb.  They are also easy to wander into unless you are deliberate.   Third you need to prepare for emergencies.  Engineers still get laid off and hurt where they are unable to work.  They get sued.  Having the proper insurance and sufficient reserves in the bank help prevent debt. Now you can start looking into investments.   Start off slow and deliberate with investing.  Put some in your company 401K or open some mutual funds on the side.  You can read about them and talk with advisers, for free, at Fidelity and Vanguard.  Read books from the library. Most of all don't get caught up in too much hype.  Things like Forex, options, life insurance, gold/silver, are not investments.  They are tools for sales people to make fat commissions off the ignorant.      You are fortunate in that Engineers are very likely to retire wealthy.  They are part of the second largest demographic of first generation rich.  The first is small business owners.   To start out I would read Millionaire Next Door and Stop Acting Rich.  For a debt free approach to life, check out Financial Peace University (FPU) by Dave Ramsey (video course).  His lesson on insurance is excellent.   I am an engineer, and my wife a project manager we found FPU life changing and regretted not getting on board sooner.  Along these lines we have had some turmoil, recently, that became little more than an inconvenience because we were prepared." "First off, I highly recommend the book Get a Financial Life.  The basics of personal finance and money management are pretty straightforward, and this book does a great job with it.  It is very light reading, and it really geared for the young person starting their career.  It isn't the most current book (pre real-estate boom), but the recommendations in the book are still sound.  (update 8/28/2012: New edition of the book came out.) Now, with that out of the way, there's really two kinds of ""investing"" to think about: For most individuals, it is best to take care of #1 first.  Most people shouldn't even think about #2 until they have fully funded their retirement accounts, established an emergency fund, and gotten their debt under control. There are lots of financial incentives for retirement investing, both from your employer, and the government.  All the more reason to take care of #1 before #2! Your employer probably offers some kind of 401k (or equivalent, like a 403b) with a company-provided match.  This is a potential 100% return on your investment after the vesting period.  No investment you make on your own will ever match that.  Additionally, there are tax advantages to contributing to the 401k.  (The money you contribute doesn't count as taxable income.) The best way to start investing is to learn about your employer's retirement plan, and contribute enough to fully utilize the employer matching. Beyond this, there are also Individual Retirement Accounts (IRAs) you can open to contribute money to on your own.  You should open one of these and start contributing, but only after you have fully utilized the employer matching with the 401k.  The IRA won't give you that 100% ROI that the 401k will. Keep in mind that retirement investments are pretty much ""walled off"" from your day-to-day financial life.  Money that goes into a retirement account generally can't be touched until retirement age, unless you want to pay lots of taxes and penalties.  You generally don't want to put the money for your house down payment into a retirement account. One other thing to note:  Your 401K and your IRA is an account that you put money into.  Just because the money is sitting in the account doesn't necessarily mean it is invested.  You put the money into this account, and then you use this money for investments.  How you invest the retirement money is a topic unto itself.  Here is a good starting point.  If you want to ask questions about retirement portfolios, it is probably worth posting a new question." "The way I've implemented essentially ""value averaging"", is to keep a constant ratio between different investment types in my portfolio. Lets say (in a simple example), 25% cash, 25% REIT (real estate), 25% US Stock, 25% Foreign stock. Lets say I deposit a set $1000 per month into this account. If the stock portion goes up, it will look like I need more cash & REIT, so all of that $1000 goes into cash & the REIT portion to get them towards their 25%. I may spend months investing only in cash & the REIT while the stock goes up. Of course if the stock goes down, that $1000 per month goes into the stock accounts. Now you can also balance your account if you'd like, regularly selling stock (or the REIT), and making the account balanced. So if the stock goes down, you'd use the cash & REIT to purchase more stock. If the stock went up, you'd sell the stock, and buy REIT & leave more in cash."