There's no shortage of Foolish followers on our Motley Fool Twitter feed asking about great stocks for investors who are just starting out. Thankfully, we also have a surplus of friendly Fools willing to offer great ideas for starter stocks.
[Any] advice for a young(er) person? I'm almost done college and hardly have any money ... but I feel like there's a better way!
Here are a few more suggestions for great companies and investing strategies from our Foolish panel of investors. Remember, these aren't surefire recommendations -- just ideas to inspire your own further research.
Every little bit helps
Jason Moser, Motley Fool Inside Value research analyst
I remember my days as a young investor quite well. (Hey, who are we kidding? I'm still young.) I think the most important thing for those young and just getting into the game is to go slowly. This is a marathon, not a sprint. Having steady income is a tremendous plus, and taking a little bit of it every month to "pay yourself" is a wonderful way to start investing.
Dollar-cost averaging makes an excellent way to do so effectively. Set a specific amount to invest each month, either automatically in an account or on your own, and stick to your purchases on a consistent basis. Some months' prices will be better than others, but spreading out your investments over time will ensure that you average into a reasonable price over the long term.
As far as actual investment vehicles, index funds like the SPDR Trust
Let someone else do it
Alex Dumortier, Fool contributor
For young investors with a steady income, the stock market is a smart risk. I'd go so far as to say that stocks should very often form the bedrock of a young investor's portfolio -- but not at all times, or at any price! (Right now, the broad market looks somewhat expensive.)
I'd focus on well-managed mutual funds or low-cost index funds. Sure, individual stocks are a more fun, but unless you really enjoy investing, I think your time is better spent investing in your own skills and knowledge, and in your personal and professional relationships.
Finally, if you have a steady income, you should try to make regular contributions to a retirement plan (assuming you have no debts). Contribute early and contribute often!
I have two ideas for young investors, both of them exchange-traded funds (ETFs) -- open-end funds that trade like stocks. Vanguard Dividend Appreciation ETF
Stay on target
Anand Chokkavelu, CFA, Fool editor
I think all but the most advanced investors should make indexing -- buying the market, rather than making individual stock picks -- the base of their portfolios. A target retirement fund is the easiest way to do this. These funds automatically change their allocations as you near retirement age. Vanguard's target funds are my favorite, because of their low fees and sterling reputation. As an example, a 25-year-old planning on retiring in 40 years would choose the Vanguard Target Retirement 2050 Fund (VFIFX).
Now, let's build on that base with a pair of individual stocks. If want to get your investing feet wet with a solid company trading at reasonable prices, Wal-Mart
You've got questions, we've got answers!
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