I'm a Young Beginner With a Goal: Where Do I Start?

Hello all,

I'm 24 and I think it's about time I really wrap my head around investing. I'm currently doing a lot of research, and I understand that this does not happen overnight - and that's the reason I'm on here is to learn from you all.

I have up to $1000.00 that I can invest right about now and I'm currently trying to explore my options of what would be best. Banking interest is so low that it just makes more sense to take a calculated risk on investing than earning pennies every year from the bank.

My goal is ideally to make some money in as shorter period as possible (I know, me and everyone else, right?). I understand that some of the best investments are for years to come, but I'm just looking to make small, smart investments. I'm a professional musician by trade, believe it or not, and one of the downers of this is a fluctuation in income - when it's great it's great, but then you can be struggling the next month. So my main goal is to basically invest well enough to have it balance out against my fluctuating income.

From what I understand (and please do correct me if I'm totally wrong on this) these are some of my best options for the small money that I have to invest:
1. Straight up buying and selling stock: simply buying stocks through a DSP and waiting/hoping it goes up, then selling for gain. I have looked into a few companies, and I feel that I could make at least a little bit of money just being smart about doing this. But doing the maths, if the stock was to peak at the highest rate in the past years I would maybe make $200.00 off of my $1000.00... I don't think I would loose value, but it's not going to sky rocket anytime soon.

2. Brokers: I understand what a broker is/what they do, but is it worth it for the amount I have? I also feel strange about putting my money in someone else's hands... granted they are a professional, but I feel like I'm a smart guy and can work hard enough to at least meet them half way. Plus I have no idea where to start on looking for a broker (I live in NYC if you have any recommendations)

3. ETF's/Mutual Funds: These have come up a lot in my research, and again, I understand the concept but people always seems to package them up like they're too good to be true. I would love someone with actual experience to talk me through these.

Thank you all in advance!

1. That's putting all of your eggs in one basket. Maybe your right...maybe not. You will be hard pressed to see some value in the stock that hasn't already been priced in by players with more resources.
2. Brokers? What do you mean putting your money in someone else's hands? If you put your money in a broker like TDA it's the same as putting it in the bank, you get a debit card, a check book and it earns small interest. Only they let you trade with it. If you mean giving your money to a financial adviser or some such...ye you could, but expect mediocre to dismal returns while paying a fee for the privilege and you will never learn anything....but seeing that you are here I'm guessing this isn't what appeals to you.
3. ETF's and Mutual funds? You can trade in and out of an ETF but a mutual fund is a fee based investment where you expect to just leave your money and hope they don't get hit by a bus....which they do....search Google for avg mutual fund return for 2008 vs S&P.

Your problem as I see it at this point is capital. 1k is difficult to do much with. With trading fees it's nearly impossible to spread your risk around or move around enough to get ahead.
If I woke up in your shoes (and I was 16 months ago) I would spend every available moment soaking up info and paper trading in Thinkorswim and save up 2500$ and learn to trade with options. Through learning how to trade options strategies I have been able to maintain well over 20 positions at a time. Using options allows you to define your risk and spread it around using the most liquid and trade-able stocks like AAPL, FB, TWTR and ETF's like USO,SLV,SPY instead of taking long shots on junky stocks and hoping for the best.

Starting with 2500$ I was able to make over 1000 trades in 2014. I learned more from that than a lifetime of school, books and financial advisers. Right now the most important thing to do is learn. I believe you will have difficulty drawing income from 1000$ for any duration in any scenario.

Peachy, I’m in the same boat as you. Mid-twenties and don’t have access to a great deal of money. Pretty much no matter what you do, you need a broker to purchase financial products. There are ways you can purchase stock directly from a company and eliminate the broker, but from what I understand it is difficult and only possible in certain circumstances.

I’ve read articles where $1000 is used as basically the absolute bare minimum to start trading with, but even then when you take a hit it becomes a bigger deal than it would/should be if you had a bigger account. Also, I’m pretty sure where I read that was directed at economics students. Also, if you have more money you can diversify your risk over multiple positions. It’s just a matter of volume. If you go and buy 10 shares of a $10 stock in the best of circumstances you need that stock to move %10 just to cover your broker fees and commissions. Compare that to buying 100 shares of the same $10 stock, and a %1 gain would cover your broker fees, everything after that %1 gain is your profit. But like AC said, all eggs in one basket is bad money management and liable to get you burnt. Not only that but with $2000(sometimes more depending on the broker) you will be able to access margin and thus have more buying power.

AC is keen on his options and he may very well be right, but I’m still trying to learn the markets to a basic level before I go adding a whole extra layer to them like options. I have been learning for months and the more I climb up this mountain the bigger I realize it is. In the fall I thought “Pfft, I’ll be trading in the markets come spring!” The more I’m at even using just fake numbers, the less I know when exactly I’ll believe I’m going to actually trust myself with my own money. Even just today, seeing how some seemingly minor statement by the Fed tanked the markets catches me off guard. They already said they were gonna raise interest rates but they say “patience” is needed in this market today, and every fickle bastard flat out unloads their shares. Was watching the stock I had decided I would buy struggle to do really anything but ever so slowly trend downwards away from my entry the whole day, and then the friggin’ thing fell off a cliff come 3’0 clock. Yea, definitely still learning.

Why would anyone want to buy shares directly from a company. I've never heard of that but there is a lot I don't know haha. Trading from a platform is instantaneous and you can set your limit order to what suits you and in liquid markets there might only be a bid ask spread of a penny or two. The electronic markets provide the liquidity you need to get a fair deal going in and out.

I tell people it's really all about what your goals are. Are you trying to produce regular income? Or invest for retirement? Personally, I don't trust handing my money over to a manager, but I also don't have the time to track stocks day to day.

For me personally, I'm trying to build enough income to replace what I make from work. So, I purchase heavily discounted blue chip stocks that provide a great dividend return. Then, I sign up for DRIP to reinvest those dividends to acquire more stocks. I'm not trying to make it big, or even beat the market. I just want a steady stream of income I can use to support my family, that doesn't require a lot of my time.

Find a strategy that works around your goals.