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.
Like @millerum06, whose question kicked off the previous part of this article, @Iris_Hamilton recently asked us:
[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 (NYSE: SPY ) are a wonderful way to get started. If you're looking for exposure to stocks in particular, I would look for something offering relative stability and recurring revenues to go along with a nice dividend. Coca-Cola (NYSE: KO ) fits this bill nicely.
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 (NYSE: DVY ) tracks the Dividend Achievers Select Index, a group of high-quality dividend stocks. Vanguard Emerging Markets Stock ETF (NYSE: VWO ) tracks the MSCI Emerging Markets Index. Both are among the lowest-cost funds in their category, and both look set to produce an honest return over the next several years.
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 (NYSE: WMT ) is tough to go wrong with. If you're looking for a riskier play, check out investment research provider Morningstar (Nasdaq: MORN ) . It's been high on my watch list for a while, because I like its managers' measured growth moves (including getting into the opportunity-rich debt ratings business). Morningstar will get really interesting to me if its stock price slips into the $30s.
You've got questions, we've got answers!
Thanks to Iris_Hamilton and all the Fools who've sent us questions via our Twitter feed. If you've got questions about investing or personal finance, we'd love to help. Tweet them to us @TheMotleyFool, or leave a comment in the box below!