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Join the Investing Club

So, you’re wondering what to do with those hard-earned bucks that have been rolling in now that you are a member of the working class. If you have thought about investing in the stock market, but have no idea where to begin, joining an investment club may be for you.

Show Me the Play Money  
If you are under 18 and you want to invest, your parents will need to set up an account for you. But if you just want to learn the ins-and-outs of the market, you might want to think about hooking up with a student investment club where no actual money is invested. Instead, members follow selected stocks and take turns researching potential investments.

Check with your school’s activity coordinator to see if there is a club already offered. If not, start one yourself — that’s what 16-year-old Athena Yang did. After gathering 15 like-minded students at Clear Lake High School in Houston, Athena asked a teacher to sponsor the club and they were on their way. Now 30 students meet once a month to compare gainers and losers. Individual members or teams pay a small monthly fee for the chance to compete against each other to see who invested their virtual balance for the highest rate of return. The monthly fees are used to help the club do cool stuff.

Keeping Cash under the Mattress
Athena says they recently held a party for a member who took his initial “investment” of $10,000 and turned it into $15,000 by picking some hot stocks. When even the hot stocks cooled down and one member chose to keep his investment as cash. The club’s stock picks did so poorly that month that he gained more cash than the rest of the group and was declared the honoree at the next month’s party.

Despite the recent downturn of the stock market, members of Athena’s club have been encouraged by their experiences, and what began as a virtual exercise has become a reality. Most members have now opened their own investment accounts.

If “Clubbing” is not Your Thing  
If you want to get your feet wet without the benefit of 15 or so of your closest friends sharing in your victories (and defeats), there are other roads that lead to Wall Street. Check with your local investment firms to see if there are any financial consultants that specialize in youth investments.

When Devon Green, 9, was ready to place a percentage of her earnings from her recycling business in the stock market, she met with a certified financial planner who not only helped her set up her investment fund, but made sure that the companies Devon invested in were environmentally friendly. 

Devon watches her investments closely, and even though they aren’t gaining like she hoped, she will hang on for long-term gains. “The market may go down, but it will go up again,” says Devon.

Slow and Steady May be More Your Style  
If you aren’t comfortable with the risk factor in the stock market, you may want to consider a more stable route. D.J. Wright, a financial consultant of Solomon Smith Barney, suggests investing in a Roth IRA, or Individual Retirement Account.

D.J. says wage-earning teens can sock away as much as $2,000 per year and the best part is, the money can be withdrawn without a penalty as long as the interest earned stays in the account for five years. When you reach the age of 59 ½ , the balance can be taken out without having to give any over to Uncle Sam in taxes.

However you choose to drive your money down Wall Street, it is never too early to learn all you can about the market and prepare for the day when you are ready to plunk down some cold, hard cash into the sometimes fickle fingers of the investment world