5 answers
pradeep
Student
Rishikesh
1
Question
Asked
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i want to know that can i invest my money for the long term ,like 10 year. Does it stay there or I have to sell the stocks i buyed earlier
i'm a final year student. i don't earn as of now. but i do have my savings something around 6000. where and how can i invest #student #financial-aid #money
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5 answers
Crystal Lee, CPA, MPAcc
Valuations Specialist
5
Answers
Seattle, Washington
Updated
Crystal’s Answer
Hi Pradeep,
$6,000 is a lot! Good on you for saving up. Now your money can make money for you.
Hossam is correct that you will want to do due diligence (that means researching the company to see if it is a good investment) IF you are planning on investing on individual companies (like Microsoft or Starbucks). Individual stocks are more volatile and risky if you do not diversify your portfolio (buy different kinds of companies). Also something to consider is how long you're planning on holding your stocks. You say 10 years. That's a very long time, and you can make a lot of money over 10 years with just $6,000. Your approach of whether you want to trade and buy and sell stocks on a daily/weekly/monthly basis or whether you want to just buy and hold for 10 years is going to determine how much risk you are willing to take with each stock purchase. There are also other options than individual stocks to invest in (this is what I do).
To start investing, you need to open a brokerage account with a brokerage company. A brokerage account is basically a bank account, but you can buy stocks with the money you have in there. Brokerage companies include Charles Schwab, Fidelity, Vanguard, etc. You can research which brokerage you want to go with. Some have no transaction fees (meaning you don't have to pay money whenever you buy or sell stocks).
Once you open your brokerage, you move your money in there and you can start your portfolio!
Now to talk about the other options. There are mutual funds, which are essentially companies with large amounts of money who buy a bunch of different kinds of stocks. When you buy a share of a mutual fund, you are buying a tiny bit of a bunch of different companies. This automatically diversifies your portfolio and reduces your risk that you will lose a lot or gain a lot (your volatility). It will be a more stable growth. There are also different types of mutual funds. Some mutual funds invest solely in technology, some do medical instruments or healthcare. Some invest only in construction companies or energy. So you can diversify your portfolio even more by buying different types of mutual funds!
I'm the kind of person who doesn't want the stress of having to watch individual stocks, so I just buy mutual funds and ignore it. But this is not financial advice, just my own experience and approach. You should do what is more comfortable for you!
$6,000 is a lot! Good on you for saving up. Now your money can make money for you.
Hossam is correct that you will want to do due diligence (that means researching the company to see if it is a good investment) IF you are planning on investing on individual companies (like Microsoft or Starbucks). Individual stocks are more volatile and risky if you do not diversify your portfolio (buy different kinds of companies). Also something to consider is how long you're planning on holding your stocks. You say 10 years. That's a very long time, and you can make a lot of money over 10 years with just $6,000. Your approach of whether you want to trade and buy and sell stocks on a daily/weekly/monthly basis or whether you want to just buy and hold for 10 years is going to determine how much risk you are willing to take with each stock purchase. There are also other options than individual stocks to invest in (this is what I do).
To start investing, you need to open a brokerage account with a brokerage company. A brokerage account is basically a bank account, but you can buy stocks with the money you have in there. Brokerage companies include Charles Schwab, Fidelity, Vanguard, etc. You can research which brokerage you want to go with. Some have no transaction fees (meaning you don't have to pay money whenever you buy or sell stocks).
Once you open your brokerage, you move your money in there and you can start your portfolio!
Now to talk about the other options. There are mutual funds, which are essentially companies with large amounts of money who buy a bunch of different kinds of stocks. When you buy a share of a mutual fund, you are buying a tiny bit of a bunch of different companies. This automatically diversifies your portfolio and reduces your risk that you will lose a lot or gain a lot (your volatility). It will be a more stable growth. There are also different types of mutual funds. Some mutual funds invest solely in technology, some do medical instruments or healthcare. Some invest only in construction companies or energy. So you can diversify your portfolio even more by buying different types of mutual funds!
I'm the kind of person who doesn't want the stress of having to watch individual stocks, so I just buy mutual funds and ignore it. But this is not financial advice, just my own experience and approach. You should do what is more comfortable for you!
Hossam Saleh
Senior Assurance Associate
14
Answers
Cairo, Cairo Governorate, Egypt
Updated
Hossam’s Answer
Well, investing in the stock market needs serious due diligence on the companies you are investing in as there is a large risk involved when doing so. You will need to analyse the company as a whole, it's forthcoming projections, guidance on the upcoming quarters, EPS and many more key indicators that contribute in you making an investment in said company. I believe you should read about investing, maybe even join a beginner online course on how to enter the stock market just so you can get a better picture about the whole idea. If done right, it will transform your life completely.
Chetan b
Engineer
28
Answers
Pune, Maharashtra, India
Updated
Chetan’s Answer
Hi Pradeep,
Its very good that you are thinking of investing in this age, while you are just a student.
Though INR 6000 is very less, its a good start. You can select 3 "GOOD" stocks and invest 2000 each for the long term.
10 years is a good time for growing this.
When you start earning after college, you can start regular investing, for example, in mutual funds from your monthly salary, which will be beneficial in the longer term.
Also note that, investing in stocks can be risky, however, if you create a portfolio of multiple stocks from different sectors, the rick can be minimized. Never invest in just a single stock i.e. don't keep all the eggs in the single basket.
Start improving financial knowledge - about investing, creating portfolio, asset allocation, portfolio rebalancing etc.
Its very good that you are thinking of investing in this age, while you are just a student.
Though INR 6000 is very less, its a good start. You can select 3 "GOOD" stocks and invest 2000 each for the long term.
10 years is a good time for growing this.
When you start earning after college, you can start regular investing, for example, in mutual funds from your monthly salary, which will be beneficial in the longer term.
Also note that, investing in stocks can be risky, however, if you create a portfolio of multiple stocks from different sectors, the rick can be minimized. Never invest in just a single stock i.e. don't keep all the eggs in the single basket.
Start improving financial knowledge - about investing, creating portfolio, asset allocation, portfolio rebalancing etc.
ASLON VAROQUA
Digital Marketing
16
Answers
Wayne, New Jersey
Updated
ASLON’s Answer
Hi there Pradeep. There are 100 different answers to this question. It really comes down to you and your situation. For example, are you naturally a risk taker? do you naturally prefer safer routes? Do you think you will need the money in the short term or can you really forget about it for 10 years? If the market is down, will you have trouble sleeping at night? these are all things you need to consider before you start investing so you can determine how you want to invest. For example stocks are much more riskier than bonds. Index funds are less risky than stocks. etc. etc. You also should determine how much of the money you have you can live without... you wouldn't want to invest all of it knowing you may need access to cash soon enough causing you to sell during a downturn in the market.
If you do decide to invest some of your money in stocks, you should buy stocks in companies you believe in and think will be innovative enough to be around the 10 years you want to hold for. I do not recommend doing short term investing unless that's going to be your full time job. You really can not time the market, you will not know when is good to buy and when is good to sell. what is the best price etc.. you will never know that. for example Apple stock in 2018 was at an all time high at $58... people would say its too high to buy wait till it goes down.. now its at $130. see what I mean. When you invest for the long term you also have to hold yourself and not panic when the market is down. People tend to panic and start selling off which could mean you realize a loss or you lose out on future gain. You will need to have the "stomach" for that as well. I do think long-term investing is a smart choice for money you dont need access to to help you plan for your future.
Take Care.
If you do decide to invest some of your money in stocks, you should buy stocks in companies you believe in and think will be innovative enough to be around the 10 years you want to hold for. I do not recommend doing short term investing unless that's going to be your full time job. You really can not time the market, you will not know when is good to buy and when is good to sell. what is the best price etc.. you will never know that. for example Apple stock in 2018 was at an all time high at $58... people would say its too high to buy wait till it goes down.. now its at $130. see what I mean. When you invest for the long term you also have to hold yourself and not panic when the market is down. People tend to panic and start selling off which could mean you realize a loss or you lose out on future gain. You will need to have the "stomach" for that as well. I do think long-term investing is a smart choice for money you dont need access to to help you plan for your future.
Take Care.
Betty Yip, PMP, CSM
Senior Director, Technical Program Manager
73
Answers
San Francisco, California
Updated
Betty’s Answer
Hi Pradeep,
As a new investor, I would recommend a more conservative approach to investing. Stick to bonds or funds with guaranteed returns (preferably non-taxable) and low cost/risk or bank fixed deposits. The interest rate for bank certificates of deposits and high yield savings accounts are quite low now, so I would not recommend pursuing those right now. Here's an article with more information specific to India. Hope this helps!
https://economictimes.indiatimes.com/wealth/invest/top-10-investment-options/articleshow/64066079.cms?from=mdr
As a new investor, I would recommend a more conservative approach to investing. Stick to bonds or funds with guaranteed returns (preferably non-taxable) and low cost/risk or bank fixed deposits. The interest rate for bank certificates of deposits and high yield savings accounts are quite low now, so I would not recommend pursuing those right now. Here's an article with more information specific to India. Hope this helps!
https://economictimes.indiatimes.com/wealth/invest/top-10-investment-options/articleshow/64066079.cms?from=mdr