What to do with extra cash of $1000-$2000?

[BrendonA]

Hey everyone,

I am wondering what will you do if you had an extra of $1000-$2000 if you were me.

I'll roughly tell you about my situation - I am a 19yo student with extra cash sitting in my bank and I do not want to see it wasted just like that. I'm currently sort of 'researching' on what to do with it and I'm looking at options such as putting it into a fixed deposit account etc.(But doesn't seem likely as of what I know, there's a minimum of $5000 for that).

I'm still new to investing and am keen to learn more about it before I actually start (interested to enter the stock market in the future). I might even use the extra cash above to kick start my investing journey. So, I'm thinking that as I'm reading up, I'll put the extra money above into some fixed income instrument first.

Any suggestions or advice?

Thanks in advance!!

[d.o.g.]

I'm still new to investing and am keen to learn more about it before I actually start (interested to enter the stock market in the future). I might even use the extra cash above to kick start my investing journey. So, I'm thinking that as I'm reading up, I'll put the extra money above into some fixed income instrument first.

Any suggestions or advice?

Thanks in advance!!

Buy "The Intelligent Investor" and read it a few times. Once you understand it completely you will know what to do. Until then, leave the rest of the money in the bank.

If you try to invest without sufficient background knowledge, you will acquire the necessary knowledge the hard way - by losing a lot of money.

Note that even if you can invest into a safe fixed income instrument paying 10% annually (which is basically impossible today) it generates $200 annually on your capital of $2,000. You would be better off working a part-time job during the holidays. That would teach you about the real world, boost your EQ as you interact with customers, colleagues and bosses, and also give you some extra money. Furthermore it will drive home how hard money is to earn, and give you an appreciation of why saving is even more important than investing. Remember: if you don't save, you have nothing to invest!

[piggo]

My advice? Spend it all, have fun as a student!

1-2k is as good as next to nothing by the time you start working... Have fun, make friends, do whatever makes you happe. But be sure you know what to do when you start working

[sgd]

1-2k cannot do anything lah.

When I started out my first stock was 1-2 lots kamunting berhad listed on the CLOB wah it was such a struggle to even try to make $200 profit becos the punters were buying and selling huge positions and speculating for 2-3 cents profit and they were making thousands of dollars.

and that's what you going encounter - punters who have deep pockets and also leverage vs you with only 2k.

keep the money in bank earn vanilla 0% be a good student study hard the easiest and best way to make money is earn it from a regular job

[corydorus]

Stock Investment at Study Phase may demotivate you to pursue academic excellence if money comes easy in bull for some individuals.
I would say have fun as student ...

[weijian]

Hi BrendonA,
It is NEVER too early to start - You can have fun (without using the 1-2k u already have) and learn some serious money management/investing skills, at the SAME time.

Do take comments like 'it is too little $ to make a difference' or 'it is nothing' with a pinch of salt. Yes, the comments are true if it applies for them but it is definitely NOT true with regards to you. Remember, everyone's situation/portfolio is unique and one can't compare apple to oranges. Or how do u compare the hunting skills of a young tiger to that of the leader of the pack? In my belief, how one manages a modest sum of 1k will be testimony of how he/she will similarly manage a bigger sum of 1mil in future.

As you continue to grow your savings (ammunition), you need to grow your capacity to use them wisely as well. This means taking d.o.g's advice to invest on yourself with reading and embark upon your journey of self exploration and self improvement.

For a start, you could use some of your cashflow to invest in some books (capex). Many more prudent folks will recommend borrowing it at the library but i would recommend you to spend some $ and buy it - so that u can re-read it again and again, and more importantly, using your own $ to buy it will show you how badly u want it. Have fun!

[Musicwhiz]

I am wondering what will you do if you had an extra of $1000-$2000 if you were me.

Any suggestions or advice?

Hi Brendon,

d.o.g's advice is sound - buy and read some books on investing, especially The Intelligent Investor and Common Stocks and Uncommon Profits. The terms inside may be rather technical for your age but read the commentaries if you can to get a basic understanding of what proper investing entails.

At 19 it would be good if you could learn basic personal finance skills first, such as saving, budgeting and spending within your means. This is so that such good habits are with you even after you graduate and enter the workforce. Like what d.o.g. mentioned, if you don't save, you cannot invest!

I started out at the age of 28 with about $5,000 as my initial investment which has since grown over the years. But more importantly, I also read up and experienced real investing with real money as I was also earning it at the same time.

What you can do is to take up some additional jobs (like tuition) in your spare time and save more money to give you a good head start once you graduate. Continue to read, observe, learn and analyze; and cultivate an interest in financial news, financial statements and numbers in general. Investing is a game of numbers and the more you understand the numbers and ratios the better it is for you.

All the best on your learning journey!

[sgd]

I'd agree with Cory, if winning money becomes easy then there's a danger that 19 year old may lose interest in study for any career. Since is so easy why not just stay home to become a day trader.

[jeremyow]

Hi Brendon,
You can start reading some good investing books as mentioned by some of the others in this forum. Discover for yourself whether investing is something you like or not. Do not just force yourself if you find investing is not to your liking even though we know it is better to become an investor who knows how to invest than a non-investor.

I have friends who just cannot appreciate investing their money, not to say that they have not tried to learn investing. Studying financial numbers and businesses just do not interest them at all. At least you can start off by reading some investment books to see for yourself whether you like investing as a hobby.

Investing is a really lucrative hobby provided one really likes it. It definitely teaches one much more than the making money aspect, and the principles of investing will train one to become a matured thinker in making rational decisions throughout his life.

One can either become absorbed and keep having fun learning about investing to become a better investor or just read a little bit about it going in with the wrong mindset to see it only as a tool for making money with no actual love for it. For the latter, it does more harm than good for it makes one overestimate his ability to invest soundly when he only knows a little bit here and there because his motive in going into investing is only for making money and not truly keen on learning the investing well and becoming a better investor.

A successful investor is one who lives and breathes investing in his/ her life. Making money then becomes a natural outcome and testimony of the investor who lives and breathes investing.

[pianist]

i read an article somewhere that says that if the world moves its attention more away from cash/finance/GDP numbers, human beings would have found cure to AIDS earlier, sent people to live in moon earlier.

money is just an illusion, albeit a persistent one.