Do you know how to invest? I don't know how. I'm still young but I want to save my money for the rainy day.

The "Motley Fool" folks give what I feel is good advice regarding the investment concept.

You might start with their 13 Steps to Investing Foolishly.


The portion of that on "Settle Your Personal Finances" is good advice even for someone who is not going to invest in the market.

Hi etok. Young is the best time to start. I hope you're at least 18. So as not to overwhelm you, I just have some pointers.
Investing is an investment of your money and a risk of that. This risk can be moderated. Now I'm not rying to scare you but A fool and his money Are Soon Parted is a true statement. What that means is learn. Don't jump on every stock tip. If it sounds too good to be true,IT PROBABLY IS. Do not go for all these systems you see on TV and internet. If they were so good they wouldn't need to sell them to you. They'd just use it and make money and not need to sell you something (system). Now someone you know says they 've purchased a stock and it's doing well for them,then that would be something to look into.

Now being young you can take advantage of the less risky options. Slow and steady growth. Cd's, Mutual funds, 401 K at work (maximized) then individual Stocks. Always read the companies Prospectus,Free and usually available online before a stock purchase.
Now the first thing you MUST do is get organized.
Get a budget calculator. Find out exactly how much you will have to invest each month.
Always ask questions.
Set goals and be diciplined.

Thank you very much!
But how can I go to those who sell the stocks? Am I to open an account, call them? etc. Sorry, I'm very much ignorant. I'm 22 by the way.

First time Stock investors here use Stock Brokers.Finding a reputable one can be a headache.
For a first time investor,I think Stocks run an element of risk,far greater than low return Bank interest for example.
Rule of thumb with investing in Stocks, Don't invest more than you are prepared to lose,and don't put all your eggs in one Basket. Many an investor have lost their lifes savings overnight with Stocks.
Same with any investment normally.The bigger the advertised interest rate return on your money,the bigger the risk.IMHO.

etok -

After you've read that Motley Fool link (or similar advise from other sites) you'll know whether you should be investing and in what medium would be best for you. Hopefully, you'll also understand the various levels of risk associated with many different investment opportunities.

If you have all your bills in order, do not carry a balance on credit cards, are "living beneath your means", and have money left over, by all means you should be allowing your "extra" money to be making more money.

Are you investing for the short term or are you able to invest with the idea of leaving it alone until you retire? Or something in between or a combination? Are you going to be an active investor watching the stocks closely or more of a passive investor choosing Index or Mutual funds and pretty much sitting back and letting your money grow over a long period?

FWIW - I use e*trade. You create an account with them, then transfer money into it and you can use that money to buy/sell stocks, funds, bonds, etc. You can also create an IRA account with them.

You will see other similar sites referenced on the Motley Fool site.

As mentioned you need to first know your finacial situation. How Much do I have now to invest and how much can I add. If you happen to have a failry large amount of cash on hand you would be best served to to buy several types of investments. Most low risk and perhaps one aggressive. When I started in stocks I said how much can I afford to lose. and not exceed that amount. When I was a man a few years younger than you I started with a savings and a CD (certificate of deposit)account (both from banks).

I always worked for my self so I never had 401K or profit sharing plan from a job. I saved ,used CD's. The CD's were comfortable for me because I could take it back in six months if I needed to. Then I entered into mutual funds as they were also pretty steady growth income. Actually mutual funds are more liquid than Cd's,I learned that later. Put in your order for money in the morning if you are short on cash, and by the time the market closes you may have a check waiting for you. Stocks, on the other hand, are much more difficult. It all depends upon what you have invested in. You can invest small increments of money at regular intervals and not have to pay a trading cost. Also a mutual fund is a collection of indidual stocks. When you invest in mutual funds, you are able to diversify and reduce your risk of losing money.

That said It is fun to invest in individual stocks and learn about all these companies. But you have to be pretty lucky to buy just one and hit it right. I've done both won and lost. But you will need to open an account in a firm. It is cheaper to trade your own. But then you must watch them. There are several good online brokerages Etrade,mentioned above, TD AMERITRADE, Scottrade or Fidelity.

I'm not saying that you should never invest in stocks, but if you are just getting your feet wet with investing it would be best to go with mutual funds! Then later you can buy. Or buy into one solid company and keep adding shares. Splits and dividend over time are your friend. An example: I purchased Monsanto Co. (NYSE:MON) in 2003 at about $8. Five years later it's $80 and had a split. So my original puchase has 10X it's value plus the double in shares at the split. Into that are the monthly shares I purchased up until it hit $20 and let it ride. It also retuns a dividend or money back at a rate. In MON case it returns (0.80%) of your total money annually. So you see it can do well.

Am I correct that 'Standard Deviation' as a measure of volatility is NOT normalized?

IOW, a fund with a NAV of $10 that varies +/- 10% will have a much lower SD than a $100 fund with a 10% variation.


Is there a good indicator of volatility that *IS* normalized?

Derf

What is the best way to invest with the least amount of risk? I've been thinking about getting a $1,000 CD through my bank, but my dad said (he is not a financial expert, just to point out) to get a mutal fund. He says you can make more on them. And I've seen this, but it mostly depends on the stock market and several other variables. And if I remember correctly, it can loose in value? Where as a CD would be stable and does not decrease in value over time.

Well a CD could decrease in real value if the rate of inflation exceeds the rate of return (4 percent interest rate less 5 percent inflation is a net loss). Then too, your original investment may not have liquidity for some time; generally the longer the term of the CD, the higher the interest---but there can be severe penalties for early withdrawal.
Certainly, a well-managed mutual fund fluctuates in value and return based on market conditions, and hence you get a better return on investment, especially if you re-invest the dividends over time. Generally mutual funds can be liquidated very quickly if you need the cash. Even though the market may go up and down, the value of the mutual stock is only important two times: when you buy it and when you sell it.
Z

A bit of reference by risk

cash and cash equivalents
Cash
Savings Accounts
Certificates of Deposit
Money Market Funds
Whole Life Insurance
Treasury Securities

Low Risk
Strip Bonds (Zero Coupon)
High Quality Corporate Bonds
Bond Funds and ETFs
Bankers’ Acceptances

Medium
Blue Chip and High Quality Stocks
Stock Mutual Funds and ETFs
Moderate Yield Bonds
Real Estate Investment Trust (REIT)
REIT Funds and ETFs
Real Estate Ownership and Rental Properties
Royalty Trusts

High
Futures Contracts
Stock Options
High Yield Bonds (Junk Bonds)
Precious Metals and Gems
Penny Stocks (Microcap Stocks)
Emerging Markets
High Risk Mutual Funds and ETFs
Short Selling
Antiques, Stamps, Coins, and Other Collectibles
Foreign Exchange Market (Currency, Forex, or FX)
Hedge Funds

o_O I'll have to look into this when I have free time. Despite being in college, I'm still a bit stupid in these terms of all of the deeper details of financial stuff....or something like that....okay, I don't even know what I'm saying.

Etok - you have had some very sound (and obviously observant) advice here - all good stuff to follow up, not forgetting your "D.D." - due diligence! Just another way of saying research your prospects THOROUGHLY - learn the terms used to assess a company's progress and prospects, look carerully at the field they operate in and check out any competition or special announcements.

There are many "advisory" stock related gurus/publications, most of them asking for a fairly hefty subscription to be given their "expertise" - you may well look into a site like www.stockgumshoe.com which give heaps of excellent analytical comment and suggestions - all totally free - he has an association with a subscription service but there is absolutely no pressure or hint of pushing for subsctiptions. He doesn't recommend stocks for investment, just points out the good and bad points and makes very knowledgeable comments that you can then either follow up or ignore, but you still have to do your own homework to a degree. In any case good luck, and don't risk more than you can afford to lose!