Under 30 and Managing a Portfolio

The biggest mistake young investors make is modeling their portfolio on what their parents are doing with theirs.  Investing before your thirtieth birthday is a huge advantage, and as a young investor you have different needs than older investors.  Your investment strategy will be slightly different from the over-50 crowd of investors.  Developing your own portfolio based on your specific needs is a valuable learning opportunity that you'll miss out on if you simply model your own investments after your parents (as well as the potential to earn more money!)

Picking The Right Stocks

All investors should put thought and effort into choosing the right stocks- those that are likely to earn you money.  As an under-30 investor, however, you have less to worry about than someone who is closer to retirement.  As a younger investor, you can take a little more risk with your investment than someone who is hoping to preserve their nest egg, as you have many years before you retire.

That's not to say you should focus on all high risk stocks.  It's no secret that high risk stocks can lose the most money, but they also pose the biggest chance for a large financial gain.  Higher risk stocks are not the same as "bad pick" stocks.  You may want to select a few higher risk stocks with great potential for a large financial gain, and a few medium risk stocks, and divide your investments accordingly.

Knowledge is Power

An investment portfolio is more than just an opportunity to increase your investment into a financial gain.  For the under-30 group, investments are a powerful, educational tool that will teach you methods and strategies to becoming a better investor.  As you make decisions on what to invest in, keep track of what actions result in good returns, and what actions result in bad returns- and that way you'll be able to replicate the actions that earn you money and avoid those that don't.

If investing was easy, everyone would do it and everyone would have tons of money- right?  Use online resources and information from the stock world to help you understand how it all works.  Check with your broker on things that you can't make sense out of- that is what he or she is there for!  Choosing a broker that is willing to assist you in the learning process is essential to becoming a savvy investor.

Making the Leap

When you finally pick a stock that you want to invest in (after careful research and planning, of course!) make sure you consider what the commissions and fees are going to cost you.  It's an awful feeling to find out you would have made a reasonable sum of money on your investment if only you had remembered to consider the amount you would be paying in various fees and commissions to make that investment.  While the ultimate goal is to have a diversified portfolio, when you are starting with lower sums of money to invest, you may actually be better off placing your entire initial investment into a single stock instead of spreading the investment out over several different stocks- you will pay less in fees that way.