How to start investing/thinking about money as a young person?
"There are books like, ""The Millionaire Mind"" that could be of interest when it comes to basics like living below your means, investing what you save, etc. that while it is common sense, it is uncommonly done in the world.  Something to consider is how actively do you want your money management to be?  Is it something to spend hours on each week or a few hours a year tops?  You have lots of choices and decisions to make. I would suggest keeping part of your savings as an emergency fund just in case something happens.  As for another part, this is where you could invest in a few different options and see what happens. There would be a couple of different methods I could see for breaking into finance that I'd imagine: IT of a finance company - In this case you'd likely be working on customizations for what the bank, insurance or other kind of financial firm requires.  This could be somewhat boring as you are basically a part of the backbone that keeps the company going but not really able to take much of the glory when the company makes a lot of money. Brains of a hedge fund - In this case, you may have to know some trading algorithms and handle updating the code so that the trading activities can be done by a computer with lightning speed.  Harder to crack into since these would be the secretive people to find and join in a way." "I think ""Rich Dad Poor Dad"" is a good read for understanding the basics of personal finance in a non-technical format before actually starting investing."
In your own example of VW, it dropped from its peak price of $253 to $92. If you had invested $10,000 in VW in April 2015, by September of that year it would have gone down to $3,600. If you held on to your investment, you would now be getting back to $6,700 on that original $10,000 investment. Your own example demonstrates that it is possible to lose. I have a friend who put his fortune into a company called WorldCom (one of the examples D Stanley shared). He actually lost all of his retirement. Luckily he made some money back when the startup we both worked for was sold to a much larger company. Unsophisticated investors lose money all the time by investing in individual companies. Your best bet is to start searching this site for answers on how to invest your money so that you can see actual strategies that reduce your investment risk. Here's a starting point: Best way to start investing, for a young person just starting their career? If you want to better illustrate this principle to yourself, try this stock market simulation game. Hopefully this $1000 is just a start, and not the last investment you will ever make. Assuming that, there are a couple of big questions to consider: One: What are you saving for? Are you thinking that this is for retirement 40 or 50 years from now, or something much sooner, like buying a car or a house? You didn't say where you live. In the U.S., if you put money into an IRA or a 401k or some other account that the government classes as a retirement account, you don't pay taxes on the profits from the investment, only on the original principal. If you leave the money invested for a long period of time, the profits can be many times the original investment, so this makes a huge difference.  Like suppose that you pay 15% of your income in state and local taxes.  And suppose you invest your $1000 in something that gives a 7% annual return and leave it there for 40 years. (Of course I'm just making up numbers for an example, but I think these are in a plausible range. And I'm ignoring the difference between regular income tax and capital gains tax, etc etc. It doesn't change the point.) If you put the money in a classic IRA, you pay 0% taxes the year you open the account, so you have your full $1000, figure that compound interest for 40 years, you'll end up with -- crunch crunch crunch the numbers -- $14,974. Then you pay 15% when you take it leaving you with $12,728. (The end result with a Roth IRA is exactly the same. Feel free to crunch those numbers.) But now suppose you invest in a no-retirement account so you have to pay taxes every year. Your original investment is only $850 because you have to pay tax on that, and your effective return is only 5.95% because you have to pay 15% of the 7%. So after 40 years you have -- crunch crunch -- $10,093. Quite a difference. But if you put money in a retirement account and then take it out before you retire, you pay substantial penalties. I think it's 20%. If you plan to take the money out after a year or two,  that would really hurt. Two: How much risk are you willing to take? The reality of investment is that, almost always, the more risk you take, the bigger the potential returns, and vice versa. Investments that are very safe tend to have very low returns. As you're young, if you're saving for retirement, you can probably afford a fairly high amount of risk. If you lose a lot of money this year, odds are you'll get it back over the next few years, or at least be able to put more money into investments to make up for it. If you're 64 and planning to retire next year, you want to take very low-risk investments. In general, investing in government bonds is very safe but has very low returns. Corporate bonds are less safe but offer higher returns. Stocks are a little more. Of course different companies have different levels of risk: new start-ups tend to be very risky, but can give huge returns. Commodities are much higher risk. Buying on margin or selling short are ways to really leverage your money, but you could end up losing more than you invested. Mutual funds are a relatively safe way to invest in stocks and bonds because they spread your risk over many companies. Three: How much effort are you willing to put into managing your investments? How much do you know about the stock market and the commodities market and international finance and so on, and how much are you willing to learn? If your answer is that you know a lot about these things or are willing to dive in and learn a lot, that you can invest in individual stocks, bonds, commodities, etc. If your answer is that you really don't know much about all this, then it makes a lot of sense to just put your money into a mutual fund and let the people who manage the fund do all the work. If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging).  The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly.  The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what.  If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect.  It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now.  But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows.  (Happily, I speak from experience on this point!) http://www.socialsecurity.gov/retire2/agereduction.htm As a general rule of thumb on average you'll gain a similar amount of total money over time whether you start withdrawing early or not. Yes you get less money on each check, but you're also going to get more checks a whole since it's based on how long you live.  I personally don't try and adjust how I manage my money based on what decisions the government MIGHT make, but I also am fairly young so don't quite have the heightened concerns regarding social security others might have. I've pretty much always lived and invested assuming it wasn't going to be there at all by the time I retire. "The power of compounding interest and returns is an amazing thing.  Start educating yourself about investing, and do it -- there are great Q&As on this site, numerous books (I recommend ""The Intelligent Investor"", tools for small investors (like Sharebuilder.com) and other resources out there to get you started. Your portfolio doesn't need to include every dime you have either. But you do need to develop the discipline to save money -- even if that savings is $20 while you're in school. How you split between cash/deposit account savings and other investment vehicles is a decision that needs to make sense to you." "There are many questions and good answers here regarding investment choices. The first decision you need to make is how involved do you intend to be in investment activity. If you plan to be actively investing by yourself, you should look for questions here about making investment choices. If you intend to be a more passive investor, look for posts by ""Bogleheads"", who focus on broad-focused, low cost investments. This is the optimal choice for many people. If you are not comfortable managing investments at all, you need to figure out how to find a competent and reasonably priced financial advisor to meet with and guide your investment strategy. This advice generally costs about 1-2% of your total managed assets annually." "Is this amount an adequate starting amount to begin investing with? Yes. You can open an account at a brokerage with this amount. I'm not sure I would invest in individual stocks at this point. Which services should I use to start buying shares? (Currently my bank offers this service but I'm willing to use other sources) I can't make UK-specific recommendations, but I'd compare your bank's fees to those of a discount broker -- as well as the variety and level of service available. I would like to regularly increase the amount invested in shares. Is it worth doing this in say £200 increments? Take a look at the fees associated with each investment. Divide the fee by the increment to see what percent you'll lose to fees/commissions. Keep in mind that you have to gain more than that percentage to start earning a positive return on your investment. If you have access to fee-free automatic mutual fund investments, and you can commit to the £200 amount on a regular basis going forward, then this can be a completely free way of making these incremental investments. See also this answer on dollar cost averaging, and my comment on the other answer on that question for how fees impact returns. When buying shares should I focus on say two or three companies, or diversify more? I would diversify into two or three different index funds. Read up on asset allocation. For example, you might invest 1/3 of your balance into S&P 500 index fund, bond index fund, and MSCI EAFE index fund (but that's just a rough example, and not necessarily good for you). I highly recommend ""The Intelligent Asset Allocator"" by William Bernstein for excellent info on diversification and asset allocation." See an advisor but with a healthy level of skepticism. Question why they make the recommendations they do.  If you have debt, no the interest rate.  If CAGR &gt; interest, invest instead of immediately paying off debt.  In reality, invest the most you can.   You're young and try to live your life like you would've without the inheritance.  The longer you let that money grow in an investment untouched (and honestly that amount of money is a huge gift/surprise at your age) the more you'll thank yourself in the end.  Max out a Roth IRA - your advisor can explain that to you.  Also, you can afford to invest super aggressively since you're so young.  You could also find a variable life insurance contract to act like a Roth and grow a death benefit to continue leaving a legacy in your family line.  Sorry for the advisory vomit.  I'm sorry for the loss that led to this inheritance, but that's a great opportunity and there are a ton of options and none of them are wrong.  Best of luck!