I'll second pretty much what 1more4me said. I don't disagree with any of it, but would add a bit of my own take on things. I also commend you on your interest at your young age in investing, though I am seeing more young people expressing interest. My granddaughter has always been a saver but got frustrated last year when she finally paid attention to what the bank was paying her for her money and asked me to help her with a portfolio, so much of my advice is the same I gave her. She finished the year up 14.8%, much better than the 1/4% the bank was paying her.
First learn the difference between 2 terms you'll hear constantly...."trading" and "investing". Both are valid terms and vocations. Traders are constantly buying and selling stocks (trading) happy with small gains on each trade. In theory, if you make just 1% on a trade each day (assuming a 365-day year), your portfolio would've grown by more than 365% when compounded. At 16 you don't want to be a trader...it's a lightning fast environment with a lot of risk. It's all based on news and rumor, and by the time you as the small individual investor hears the news, it's already ancient history to the experienced traders...you'll always be behind the curve. In the movie Wall St. you may remember the conversation when Michael Douglas' character tells him it's information that will make him valuable...accurate information before anyone else has it. When Charlie Sheen's character tells him of some "news", he makes the comment that it's not news....it's already history. So forget "trading".
The other position is investing. Investing deals with a longer term approach and at 16, you have a long term to deal with. This is where my advice is focused with my granddaughter...at 20...she like you has a long time to work toward an early, comfortable retirement. In assisting her, we set a target for her portfolio of trying to hit a 15% return each year. Why 15%? No real reason other than an investment (of any amount) with a 15% return, compounded will double every 4 yrs 8 months. So, if you invest $100 in Jan of 2013, in Aug of 2017 your $100 is now worth $200. That other $100 you didn't have to work for. It's called the Rule of 72, LEARN IT. In effect you can use it to determine how much time it will take for an investment to double in value given the return and time. The formula is simply 72 divided by the rate of return...in the case of my granddaughters portfolio...she began with $12k she took from her savings and opened a brokerage acc't with last Jan. While we came in just a tick short of our goal, she didn't do bad. So if we assume we'll only manage 14.8% over the time, we divide 72 by 14.8 and it means her 12K will be 24k in Sept of 2017 rather than Aug...that 2-tenths of a point means an extra month to double her investment. There are other "Rules" that use a different number than 72 but I've always found that one to be pretty good for my purposes.
Probably the best overall advice I can give you is STAY OUT OF DEBT!!!!! Ask yourself....who resides in the larger building, you or your bank? Ninety percent of Americans could be wealthy....the other 10% it will never happen for because they'd rather let the gov't take care of them. But that 90%, have the capacity to become wealthy....all it takes is a job....IF, YOU DON'T HAVE DEBT TO SERVICE. As I said, my granddaughter has always been a saver....so far, she has no debt....she's working two jobs while attending college full-time...one to pay for college, the other a part-time job to keep building her savings. Her parents thankfully have the capacity to help her out if need be, and they do with small stuff, but she resolved to do it herself...more power to her. Too many young people are coming out of college with minimal job prospects and a mountain of school loan debt...avoid it if at all possible.
I'm going to end this here and prepare a private email....it's going to be too long for the boards here and boring to most....I'll keep a copy of the email so I can send it to anyone else interested....I'll probably send it tonight or the morning.
Lol.
