Sunday, February 1, 2015

A question about investing I answered at Yahoo Answers: "I'm 16 & want to invest in stocks?"

When would i get the money? 

There's two ways to "get the money". 

You can sell your shares. 

You can keep the shares for a long time (preferably the rest of your life) and "get the money" in dividends. 

I'm 66 years old, exactly 50 years older than you, and I have tried both methods. 

I prefer the 2nd method, living off the dividends (which get deposited into your brokerage account every 3 months). 

The 1st method, buying shares hoping the price goes up so you can sell those shares and make a profit, that's called gambling and in my opinion gambling is a ridiculous way to become wealthy. It's too easy to get wiped out. 

Some ideas for you: 
Charles Schwab is the best brokerage company there is. With them I have both a brokerage account and a checking account. For buying and selling shares the fee is $8.95 which is a good deal. 

Use the 2nd method, live off the dividends. Better yet at your age you should be reinvesting all your dividends into the same corporation that pays the dividends. Charles Schwab will do that for you automatically if you request it (Do it online and do everything else online, humans are not required). There is no fee for automatic reinvesting of dividends so you should take advantage of that.

Buy shares of corporations with a very long history of raising the dividend every year. I recommend AT&T (stock symbol is T). 

Using the method I recommended your dividend income will grow when AT&T increases the dividend every year, and your dividend income will grow when you reinvest the dividends, and also when you can afford to buy more shares. 

Watching your income grow is fun. At first it seems like very little money but if you keep at it you will eventually notice you're making big money. 

The advice I just gave you is priceless. I learned all this the hard way. You just got it for free.

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