College kids today, always wanting to grow up too fast. They're barely out of high school and they want to get tattoos, pierce several appendages, move from watching R-rated movies to engaging in R-rated activities, and collect Social Security. Heck, some of them even want to own stocks.
Well, we won't comment on the age-appropriateness of all those behaviors -- except the last one. Here's a question we received via email at Fool HQ: "I'm a freshman in college. Should I wait until I graduate to start investing?"
And here's our answer: To begin with, you're never too young. Time is your best friend.
If you're between 18 and 21, depending on your state, you're old enough to open a brokerage account of your own. If you're younger than that, ask your parents to open an account for you.
This is the Open Sesame to the eighth wonder of the world: compound interest. A mere $150-a-month investment can make you a millionaire while you're still in your 50s (we know, that sounds old -- but it's really not).
But not so fast, Fool-To-Be! There are a few caveats (those are the dark fish eggs that are eaten on crackers with champagne) before you sip that bubbly.
First question: Are you out of debt? Have you managed to resist the crush of credit card offers? More important, whether or not you've accepted them, have you managed not to run up a mountain of credit card debt?
If you're paying something like 18% interest (or 15% or 9%) on your credit card balance, you're not yet ready to invest. Even if your investments beat the market, you're going to have a tough time stanching that flow of red ink if you carry high-interest debt. You're running a relay race with 18-pound weights on each ankle. You're hurling an 18-pound dumbbell like a Frisbee and hoping it'll fly across the quad. You're applying for a job with an 18-legged thingy hanging off your nose. Get it?
Pay the debt down before you put one penny into the market.
Next: Do you have some emergency money stashed away? Do you have that nest egg to tide you over during a storm? Alternatively, do you still have the option of flying home to the now-empty nest of your parents for some aid and comfort should life take an unexpectedly harsh turn? Remember that money you invest in the stock market should be invested for at least five years, and preferably 10 or more. You don't want to be forced to withdraw it during a sudden downturn, taking a loss.
Finally: Do you know what to do with the money? Don't take your second cousin Howie's advice and sink it into his Cajun Red-Hot Toilet Seats venture in a Louisiana bog. You want to be invested in the stock market, in great companies. A good place to start is in an index fund, which matches the overall performance of the stock market (or a portion of it, depending on the index).
Or, if you really know what you're doing, you can begin investing in individual stocks. But whatever you do, do it as soon as you're ready -- but no sooner. You want to take advantage of time, but not before you've stopped letting credit card companies take advantage of you.