What To Do With Money When You're Young

So you are a young person with some extra money and you don't know what to do with it, but you know you can get rich by spending it wisely. Congratulations! The sooner you start to investing, the sooner you will be able to become financially free.

Let's say you have a $500 - $1,000 to invest and need know the best place to put your money. What you really want to know is how you can use that money to make more money, right? Unfortunately, there is not one right answer, just a lot of opinions and different advice. Before you invest, do your research, understand that in the short term you may lose some money, but in the long run it will make money, and then take action. Here are some places to start:

* Stocks: Investing in individual stocks can be considered a bit more risky, particularly when considering the stock type and sector. Penny stocks, for example, can be a great way to loose all your money very quickly. High quality, blue chips are more likely safer bets - in general. Learn to understand how stock prices are valued and spread your risk across a few stocks that you plan to own for a few years. A subscription to www.morningstar.com may be your greatest investment, which can help you understand investing and quickly screen for the investment that is right for you.

* Mutual Funds: A mutual fund is an investment with a financial organization that manages a portfolio of stocks or assets. Since mutual funds invest in a number of stocks, your risk is spread and the value of the fund is reflected in the performance in the securities the fund owns. Be sure to look for funds that have a minimum initial investment that is in line with what you are able to spend. Consider the fees as well, which can eat up your profits. A good fund to start with may be an index fund, which tracks one of the major stock indexes such as the S&P 500. This would provide a relatively safe, yet consistent return on your investment.

* Start a Part-Time Business: Do you want to become really wealthy? Most of America's wealthiest people are all business owners. Researchers claim that 1 in 10 business fail, so 9 out of 10 succeed! Why not start now at building your first business? Think about what you already do with your time and how you can turn that into a cash-generating business that will return your money several times over.

* CDs: A certificate of deposit is a perfect place to stash your cash if you want guaranteed returns and can afford to stash your money away for relatively short periods of time. Depending on the interest rates, you can generally make 5 - 10 percent on your money in a year, but you won't be able to make any withdrawals without a paying a penalty. BankRate will show you the best deals.

* Prosper.com: At Prosper, you get to be the banker and loan other people money at a rate you negotiate.

The important thing is to just do it and get started as soon as you possibly can. You will learn more about investing by actually trying it yourself than by reading how to invest. If you lose some money, that is okay because that is to be expected. Only invest what you can afford to lose, and diversify properly by buying a mutual fund and you will minimize your loses. You will likely make many mistakes throughout your investing career. Better to lose some now and gain experience so when your income increases with age you already have the experience to turbo-charge your wealth. You cannot put a price tag on experience.

Most importantly, try to find an experienced money mentor that can help teach you the basics. You will learn there are multiple ways to make money, and you just want to find the one that you enjoy, understand and is right for you.