Expert: Paul Henneman - 9/9/2004

Question
I am 17 yrs old and under my own custody,going to college, and living under my own roof. I have a very low income. But am currently seeking a job. I would like to know what my possibilities are at this point.

Answer
Dan,
  Thank you for your question!
  Congratulations on thinking early. The best thing you can do is avoid the problem that keeps the vast majority of young people in this country from gaining a favorable financial position: Debt. Resist the temptation to spend on credit cards, or other loans such as new cars. Debt keeps over 80% of people from an early, comfortable retirement.
  Here is another figure: $200 saved each month starting from when you are 22, assuming standard return rates over the long term, will leave you with over 1 million dollars when you retire. It does not take a huge income to have a wealthy live style later in life, just planning. At 17 you have time. Concentrate on keeping expenses low and do not go into debt. Student loans are of course ok if needed to get you through school, the additional income you can earn by completing a college degree is an excellent investment. Begin to think ahead and try to plan for that $200 a month investment schedule by the time you are 22. If you can start earlier, great. Or if you can invest more, even better. If you double the $200 to $400 a month for example, the way interest compounds over time your ending amount will be far more than doubled, approaching 5 million.
  Some good resources to read and begin learning about successful investing: "Investing for Dummies", available at most major bookstores and online at www.amazon.com Also Barron's "Dictionary of Finance and Investment Terms" is great to have on hand.  Some good websites: www.motleyfool.com, www.morningstar.com, yahoo.finance.com
  The key to successful investing is patience, discipline, planning, and research. Make investing and your financial well being a hobby, read up, and always think ahead. If you can't buy something in cash, it makes no sense to buy it in credit and ring up debt. A single credit card is good for emergencies only. But not every day use.
  I would suggest a money market account at first to start saving. The best I have found is www.NetBank.com This works like a savings account, but does pay a small amount of interest. There is no risk as you can't lose any money like you can in the stock market. After you learn more ("Investing for Dummies" will help), consider mutual funds as a next step. Finally, after you have some experience, stocks can further enhance the returns of any portfolio, but carry some risk. yahoo.finance.com is a great, free service where you can begin practicing and track your mutual find and stock ideas to see how they do over time. The more you do this the better.
  I hope this helps! PLease do not hesitate to follow up with me if I can be of any additional service. I would be happy to answer any specific questions, or discuss any investment ideas you may have.

Sincerely,
Paul Hennemna
President
ValuEngine,Inc.
www.ValuEngine.com
www.VEInstitutional.com