young investors

young investors questions and answers

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Q: How much would cost to build an ICE HOTEL ?
A team of young investors is planning on building an ice hotel in Switzerland , with around 30 rooms, a wedding chapel, a bar, an ice club, rooms with jacuzzi and fireplaces. We need a company that could help us in designing this ICE HOTEL , and building it.

A: So you are doing this without researching the cost of it properly?? Is that not the first thing you would look into?

Q: How does one seek investors?
Hi. I have an idea for a company that I would like to start. I will be in manufacturing. I realize that the initial cost is well beyond my financial ability. I know I want to hold a conference and get these people on my side, but how and where do I find these rich investors? I already have everything laid out of what I am going to present to them, but I do not know where they are. If I sound young and naive, I apologize, I am only 19, but I have big dreams and big ambitions, plus the will power to do it. I am going to give up the next 10 years of my life to do this. Added: Furthermore, do I have to pay for them to come to Pennsylvania and put them up in hotels, since that is where I live. Or am I better off going one on one with them and travel to where they live? I keep on thinking on this as I type it, this is the one part I never really put too much thought into. Unfortunatly. Would I be better off video conferencing many of the investors?

A: As a professional 'angel' investor (exactly the type of person you're looking for) let me take a stab at answering the question, even though the answers are not necessarily what you want to hear. To begin with, the previous answer, while well-meaning, contains quite a bit of basically wrong information along with some useful tidbits, so take it with a very big grain of salt. Now, to your question: the financing world is much, much more complex and challenging than you can possibly imagine. Investors have much better things to do with their time than come down and listen to you pitch your idea, especially when you have no experience at all in starting or running a business. The number of businesses seeking funding that actual receive investments is much, much less than 1%(!) The other 99 businesses that you would be competing against for funding are (I can assure you) equally exciting opportunities, but run by people with many years of business experience, detailed operating and financial plans, and a great deal of their own money invested. While your enthusiasm will serve you well throughout your business life, the absolute best advice that anyone can ever give you is: PUT YOUR BUSINESS IDEA ON THE BACK-BURNER FOR NOW, GO TO COLLEGE, AND DEVELOP THE SKILLS THAT YOU WILL NEEED TO ULTIMATELY CHANNEL YOUR ENERGY INTO A SUCCESSFUL COMPANY! That said, once you get to college, you will find that many schools these days have entrepreneurial clubs and even business plan competitions, where mentors and advisors will help you with your ideas, and you will learn about all the thousands of things (quite literally) that you will need to do to start a business. To get some background, by all means pick up a couple of good books on the subject (and there are hundreds.) I've included Amazon links to two of them below. The first is a great book called "The E-Myth Revisited", which is probably the most important book you'll read because it discusses WHY you want to start a business, and how you have to think about it. The second link is to "Start Your Own Business" by the editors of Entrepreneur magazine. It is an 800 page book that tells you (at least once-over-lightly) absolutely everything you need to know about starting a business...including how to find financing (which is what you were asking in the first place.) Good luck with your entrepreneurial ambitions, but PLEASE, for your own sake, make the first investment in yourself by going to college for the next four years. It will pay off in spades down the road, I promise you!

Q: Is it irrational to make principal payments on a mortgage?
Since historic stock returns are greater than after-tax mortgage rates, why ever pay principal on a mortgage? Perhaps risk-averse investors might want to pay off their mortgage. However, shouldn't young investors (who can tolerate some risk) avoid paying down principal on their mortgage? Shouldn't young investors take an interest-only mortgage and put all their savings into the stock market? If so, why does everyone seem to believe that building home equity is a good thing? Building home equity seems like a bad idea to me because paid off principal earns no return and also you lose some mortgage-interest tax deduction.

A: Because the ability to save $1,000 EACH MONTH is very enticing.....us little people dream of having 90% of our income go where WE WANT IT TO GO....... Once my home is secured......I'd love to invest......but not while carrying a huge mortgage and monthly payment..... With NO monthly mortgage payment......we could actually do what we want for a living....not what pays the most.....very enticing......

Q: What are the best stocks to buy at the moment?
I am a young investor just starting out(im not going to say how young, but im legally not eligible to my bank account.) Are there any stocks that are promising at the moment. I have $250 to work with, and would like to start investing over the summer. Thanks!

A: I would recommend looking at a DRIP Plan. They are seldom recommended by brokers due to the low rate of commissions received. However, these reinvestment plans can be very powerful long-term investments. Studies have shown that DRIP's are one of the best strategies on Wall Street. They are inexpensive and easy to start. New investors to the stock market should definitely consider a DRIP Plan. Companies like Toyota, Royal Canadian Bank, Sony, Bank of America, General Electric and many other Blue Chip Stocks can be purchased through your DRIP Plan, with as little as 1 share in most cases. These long-term plans are great for beginners as well as veterans. Check them out. You will have to get your parents to be the custodians of the account if you decide to open it. Best of Luck

Q: What are some good, low stocks to buy around three dollars a share or lower that have been up in the past?
Please help me I am a young investor that wants to make some $$$ I will give you a best answer for nameing some.

A: axl, they make axles for gm, if they hold together it should go up alot its at like a 1.50 now its been up in the 30.00 range not to long ago

Q: Landlord Wanting To Evict Tenants On Lease So I Can Sell The Property?
Hello. I'm a young investor, owning an investments properties in Brisbane. I just can't afford to keep, its sending me out the back door, dipping into savings to meet the repayments. I want to get the tenants out of it so I can do a little work to and sell but they have another 8 months left on the lease. How can I get them out? Thanks for reading.

A: you mean how can you get these people to abandon their home? you mean how can you legally tell somebody they're out of a home because you have to dip into saving to live up to your end of the bargain? how would you react if they said, we don't want to pay rent because we have to dip into our savings to do it. maybe your a real nice landlord and let them slide . . but i doubt it: you want to make these people uproot their lives because it suits you better. and what even makes you think you ought to be able to do it? just the fact that as a "young investor" you happen to have a better accumulation of capital than they do. i'm sure you did alot of hard work to get that investment, but does that give you the right to act like some type of fuedal lord? chances are, you "own" plenty of property that the bank has far more equity than you do. but the bank doesn't get to foreclose just because they're not making money on your debt. the law protects you, and you suppose it doesn't protect your tenants is because you are an elitist who thinks renters don't have rights. they do. and you'd be best to negotiate something with them. but your scum anyway. as the dead kennedy's sang: lets lynch the land lord!

Q: how do i successfully research stocks for myself?
I wish to start testing the stock market waters because I know being a young investor can be beneficial. At this point, I'm only slightly familiar with 'volume', the three types of stocks (penny, growth, blue chip), and the two general methods of making money (dividends and stock prices rising). But everything else -- especially detailed researching is extremely foreign to me. I'm tempted to just take internet advice, but I know that is not the most secure way to decide where to place my money. Yet besides reading opinion articles, I don't know which pieces of information about the company to search for, and furthermore, I have no idea about how to put these pieces of information together to form a comprehensive opinion about a stock. Any tips about researching stocks -- especially how company history etc-- plays into the mix are welcome. Thank you all in advance!

A: I hate to bring you the bad news but, it is very hard to SUCCESSFULLY research stocks by yourself. Unless you have a degree in finance; like I do. The best thing you can do is to invest your money in a DIVERSIFIED PORTFOLIO. Don't try to buy one stock because you've heard some news of it and it seemed interesting, or if the stock was recently upgraded by big name investment banking firms like Goldman Sachs, Morgan Stanley, or Bear Sterns. The fact of the matter is that it is VERY RISKY to do that. You can lose a lot of money that way. It's too risky and not worth it. Imagine how you would feel if you invested $5000 in a stock and then it drops down to $2500 in a week. Best thing to do is to build a portfolio of stocks (using several industries) which are diversified and carry a very low risk. There should be at least 14 stocks in your portfolio. Ideally, there should be 30, but not many people can have enough money to buy 30 different stocks. However, if you really want to learn how to research stocks, then I suggest studying applied equity valuation methods such as the EP or the DCF models.

Q: Guaranteed 60% return after 3 yearsinvest in the hottest global real estate. How could I find the INVESTORS?
I am from Chicago and I am investing in East Indian reality. With a guaranteed 60% return after 3 years. I am looking for Investors from all over the world .Depending on the amount of money pooled I will buy the real estate property in the fastest growing Indian cities. I will provide all the details of the deal from the documents to the pictures and videos of the property. I will give you the geographic location(Google satellite link) of the property showing the distances from the upcoming Govt. projects. The real estate business is rising at an alarming rate. Believe me the economy of this country is still young and there is a big future awaiting for investors in India. I know you understand about what I am saying, but you might have wondered how could I guarantee that return. OK here is the answer, If I get 100% return after 3 years, how risky will it be to return 60% of it? SO MY QUESTION OVER HERE IS HOW AND WHERE COULD I GET THE INVESTORS?? No, This is no scam. People meet me and know my details before I invest their money. Ok what is the other way to attract investors.

A: Once you "guarantee" a return, everyone knows its a scam.

Q: If i invest in a stock and decide to sell it will there be fees on it?
I am a young investor !

A: Yes, you must pay fees to buy and sell stock. Traditional brokerage firms charge a percent of the transaction total on each buy AND on each sell called a commission. This commission can be as high as 10% (or more) but averages in the 4% to 7% range. Online brokerage firms such as E*Trade and ScotTrade charge a flat fee. ScotTrade charges $7 per transaction, while E*Trade charges $12.99 per transaction for small investors and $7.99 per transaction for large investors. And then if you make any money on the trade, you have to pay capital gains taxes on the profit. Profit is determined as the gain minus the fees. So, a small investor using a traditional brokerage firm to help them to make their stock picks,that charges 5%, for example, invests $2000 in a stock with a share price of $2/share will pay $100 in fees to buy the 1000 shares. Now that small investor sells the stock when it gets to $2.25/share. The gain would be $225, but the commission on the sale would be 5% of $2250 or $112.50. So the profit would be $37.50, which you would get to pay roughly 30% in capital gains taxes on, leaving you with $26.25 (plus the original $2000) for your efforts. On the other hand, the investor that uses ScotTrade would have a profit of $236 and $165.20 (plus the original $2000) left after taxes. The investor with ScotTrade would have to make their own stock picks. Good luck!!

Q: What are the best choices for a Roth IRA?
I'm 21, getting my M.B.A. as well as working part time. What are some really great Roth IRA investment choices?..somthing that will grow and exceed my expectations over time. Please help a young investor! Why is Vanguard and T Rowe better than Td Ameritrade??

A: Since you're quite young, I recommend, for starters - until you learn how investing in the stock markets work, Vanguard's Total Stock Market Index. It's very diversified and has an extrememely low expense ratio (what you're being charged for them to service your account). An index fund is not actively managed by anyone - it's a copied benchmark (standard). Given that you could be with them for the next 60 to 70 years, that small expense will mean that more of your money will be working and building for you compared to other mutual funds' expenses. A small amount of 1% or 2% that sounds so insignificant, can add up to 10s of thousands of dollars over the course of 60-70 years. Once you are established (filling out 3-4 pages of paperwork and sending it in with a check can be a once-in-a-lifetime event) with them, you can continue to learn more about mutual funds and then purchase/exchange to other funds - in your 20s, 30s and 40s you really don't need bonds. If you feel you need bonds, go for a Value stock fund instead which remains somewhat stable and has a yield to pay dividends. I also recommend their Total International Index fund - very diversified and very low expenses - anything over .75% is too much. Total Stock Market Index charges .19% and Total International Stock Index is .32%. In the future, more growth will be overseas than in the U.S. For someone your age, you won't likely see any of the Social Security that you're paying each paycheck, with lifespans on the rise there will be far more elderly people drawing far longer than President Roosevelt ever could have imagined. Start saving now and discipline youself to max out the Roth IRA each year so you will not have to rely on Social Security in your senior years. Strive to max out the 401(k) offered by your employers too or at least contribute up to the limit for matching - if/when you leave their employment, you can rollover the 401(k) to a Traditional (taxable when withdrawn) IRA. Good Luck!

Q: How does one write a company portfolio when the business is a very young startup company?
Speicifically if the audience is for a potential business partner and investor.

A: If the company is a young startup company, you won't have much of a portfolio to show. It would help if the company was converted from a sole-proprietorship or a partnership in which case you can write about the past results. In any case, in the absence of any history, you have to concentrate on your business plan, your profit and cash forecasts, your clientele, confirmed contracts to-date, experience of the directors and their networking abilities, etc.

Q: I would love to become the next Turtle Trader, Do any big time traders invest in young blood anymore?
I loved the story back in the 80's about the Turtle commodities traders that were hired as part of a bet that traders could be made rather than born. I wish an investor would give me a million dollars to invest in futures for them, considering I already do it for myself for far less. Such a fairy tale story can't possibly exist anymore. Or does it? yeah i already trade full time, i was just dreaming thats all.

A: You don't need to be given the $, grow it yourself, first via virtual trading on optionsxpress.com, then once you've honed your skills to the point of beating say a great mutual fund ie CGMFX (+79% in 2007) then go for it for real with however much seed capital you have and you'll get there...

Q: As a young adult, where can we find the best deals on clothes? Inexpensive, for work and going out?
I'm a young investor. As part of my effort to abide by the guidance of my mentors- and as a a girl who loves shopping- I'd like to get some insight on where we'll all head if and when the money starts slowing down. I love abercrombie as much as the next girl, but who can afford $50 shorts with gas and food so expensive? So, where will we all go instead? my favorites are Wet Seal and TJ Maxx..others? thanks!

A: Citi Trends, Wal Mart, and Target. OMG FOREVER 21! Nice price!

Q: What should a young investor do?
I have been researching what type of investment is right for me for quite some time! its actually getting quite exausting because everytime i think i got it, somebody else tells me something on the contrary. so im looking for some good solid advice! what would you recomend i do for a short term investment with $2000? and also, would you recomend long term over short term? any advice would be very helpfull!! i have heard everything from, buy $2k worth of a penny stok and when it triples or even better, sell and make the possible 4k to 10K off of it. i have heard contact a broker and also try to put that away each yr in a IRA. So please tell me wha my best short term and long term options are! thank you for your help.

A: If you have been researching this question for a while, surely you must have some idea of the risk you want to take in return for the possible reward. Right now is not the greatest time to jump into anything other than maybe a CD for a short term investment. Too much risk. I know that CDs are not paying squat but less than squat is better than a possible big time loss especially when you are talking short term.

Q: I am a young investor and I am wondering if BUYING as Lease Option would benefit many sellers right now?
I've bought and sold over 13 parcels of land(including houses) the past few years, pretty much purchasing through a hard money lender, and then reselling to make a profit. I am still holding on to a few of them, and have a family who give me great leads to finding tenants. They ALWAYS give me tenants that are super clean, and pay on time. So I am wanting to pick up a few more through lease option, and Im just wondering how I can make a deal look presentably good to a SELLER, with this sort of purchase option. Thanks

A: stop flipping; create a REIT and put 15-25 homes into it. finding good housing deals is easy now. I can guide you.