Should a high-school student invest their (relative meager) savings?
You should invest in that with the best possible outcome.  Right now that is in yourself.  Your greatest wealth building tool, at this point, is your future income.  As such anything you can do to increase your earnings potential.  For some that might mean getting an engineering degree, for others it might mean starting a small business.  For some it is both obtaining a college degree and learning about business. A secondary thing to learn about would be personal finance. I would hold off on stocks, at this time, until you get your first real job and you have an emergency fund in place. Penny stocks are worthless, forget about them. Bonds have their place, but not at this point in your life.   Saving up for college and obtaining a quality education, debt free, should be your top priority. Saving up for emergencies is a secondary priority, but only after you have more than enough money to fund your college education. You can start thinking about retirement, but you need a career to help fund your savings plan.  Put that off until you have such a career. Investing in stocks, at this juncture, is a bit foolish.  Start a career first.  Any job you take now should be seen as a step towards a larger goal and should not define who you are. "You have a few correlated questions here:  Yes you can. There are only a few investment strategies that require a minimum contribution and those aren't ones that would get a blanket recommendation anyway. Investing in bonds or stocks is perfectly possible with limited funds. You're never too young to start. The power of interest means that the more time you give your money to grow, the larger your eventual gains will be (provided your investment is beating inflation). If your financial situation allows it, it makes sense to invest money you don't need immediately, which brings us to: This is the one you have to look at most. You're young but have a nice chunk of cash in a savings account. That money won't grow much and you could be losing purchasing power to inflation but on the other hand that money also isn't at risk. While there are dozens of investment options1 the two main ones to look at are: bonds: these are fixed income, which means they're fairly safe, but the downside is that you need to lock up your money for a long time to get a better interest rate than a savings account index funds that track the market: these are basically another form of stock where each share represents fractions of shares of other companies that are tracked on an index such as the S&P 500 or Nasdaq. These are much riskier and more volatile, which is why you should look at this as a long-term investment as well because given enough time these are expected to trend upwards. Look into index funds further to understand why. But this isn't so much about what you should invest in, but more about the fact that an investment, almost by definition, means putting money away for a long period of time. So the real question remains: how much can you afford to put away? For that you need to look at your individual situation and your plans for the future. Do you need that money to pay for expenses in the coming years? Do you want to save it up for college? Do you want to invest and leave it untouched to inspire you to keep saving? Do you want to save for retirement? (I'm not sure if you can start saving via IRAs and the like at your age but it's worth looking into.) Or do you want to spend it on a dream holiday or a car? There are arguments to be made for every one of those.  Most people will tell you to keep such a ""low"" sum in a savings account as an emergency fund but that also depends on whether you have a safety net (i.e. parents) and how reliable they are. Most people will also tell you that your long-term money should be in the stock market in the form of a balanced portfolio of index funds. But I won't tell you what to do since you need to look at your own options and decide for yourself what makes sense for you. You're off to a great start if you're thinking about this at your age and I'd encourage you to take that interest further and look into educating yourself on the investments options and funds that are available to you and decide on a financial plan. Involving your parents in that is sensible, not in the least because your post-high school plans will be the most important variable in said plan. To recap my first point and answer your main question, if you've decided that you want to invest and you've established a specific budget, the size of that investment budget should not factor into what you invest it in. 1 - For the record: penny stocks are not an investment. They're an expensive form of gambling." At your age (heck, at MY age :-)) I would not think about doing any of those types of investments (not savings) on your own, unless you are really interested in the investment process for its own sake, and are willing to devote a lot of time to investigating companies in order to try to pick good investments. Instead, find a good mutual fund from say Vanguard or TRP, put your money in there, and relax.  Depending on your short-term goals (e.g. will you expect to need the money for college?) you could pick either an index fund, or a low-risk, mostly bond fund. "IMHO It is definitively not too early to start learning and thinking about personal finances and also about investing.  If you like to try stock market games, make sure to use one that includes a realistic fee structure simulation as well - otherwise there'll be a very unpleasant awakening when switching to reality... I'd like to stress the need for low fees with the brokerage account! Sit down and calculate how much fees different brokers take for a ""portfolio"" of say, 1 ETF, 1 bond, 1 share of about $500 or $1000 each (e.g. order fee, annual fee, fee for paying out interest/dividend).   In my experience, it is good if you can manage to make the first small investing steps before starting your career. Real jobs tend to need lots of time (particularly at the beginning), so time to learn investing is extremely scarce right at the time when you for the first time in your life earn money that could/should be invested. I'm talking of very slowly starting with a single purchase of say an ETF, a single bond next time you have saved up a suitable amount of toy money, then maybe a single share (and essentially not doing anything with them in order to avoid further fees). While such a ""portfolio"" is terrible with respect to diversification and relative fees*, this gives you the possibility to learn the procedures, to see how the fees cut in, what to do wrt taxes etc. This is why I speak about toy money and why I consider this money an investment in education. * An order fee of, say, $10 on a $500 position are terrible 4% (2 x $10) for buying + selling - depending on your local taxes, that would be several years of dividend yield for say some arbitrary Dow Jones ETF. Nevertheless, purchase + sale together are less than 3 cinema tickets." The advice to invest in yourself is good advice. But the stock market can be very rewarding over the long pull. You have about 45 years to retirement now and that is plenty long enough that each dollar put into the market now will be many dollars then. A simple way to do this might be to open a brokerage account at a reputable broker and put a grand into a very broad based all market ETF and then doing nothing with it. The price of the ETF will go up and down with the usual market gyrations, but over the decades it will grow nicely. Make sure the ETF has low fees so that you aren't being overcharged.   It's good that you are thinking about investing at a young age. A rational and consistent investment strategy will lead to wealth over the long pull. "Is investing a good idea with a low amount of money? Yes. I'll take the angle that you CAN invest in penny stocks. There's nothing wrong with that. The (oversimplified) suggestion I would make is to answer the question about your risk aversion. This is the four quadrant (e.g.,  http://njaes.rutgers.edu:8080/money/riskquiz/) you are introduced to when you first sit down to open your brokerage (stocks) or employer retirement account (401K). Along with a release of liability in the language of ""past performance is not an indicator..."" (which you will not truly understand until you experience a market crash). The reason I say this is because if you are 100% risk averse, then it is clear which vehicles you want to have in your tool belt; t-bills, CDs, money market, and plain vanilla savings. Absolutely nothing wrong with this. Don't let anyone make you feel otherwise with remarks like ""your money is not working for you sitting there"". It's extremely important to be absolutely honest with yourself in doing this assessment, too. For example, I thought I was a risk taker except when the market tumbled, I reacted exactly how a knee-jerk investor would. Also, I feel it's not easy to know just how honest you are with yourself as we are humans, and not impartial machines. So the recommendation I would give is to make a strong correlation to casino gambling. In other words, conventional advice is to only take ""play money"" to the casino. This because you assume you WILL lose it. Then you can enjoy yourself at the casino knowing this is capital that you are okay throwing in the trash.  I would strongly caution you to only ever invest capital in the stock market that you characterize as play money. I'm convinced financial advisors, fund managers, friends will disagree. Still, I feel this is the only way you will be completely okay when the market fluctuates -- you won't lose sleep. IF you choose this approach, then you can start investing any time. That five drachma you were going to throw away on lottery tickets? transfer it into your Roth IRA. That twenty yen that you were going to ante in your weekly poker night? transfer it into your index fund. You already got past the investors remorse of (losing) that money. IF you truly accept that amount as play money, then you CAN put it into penny stocks. I'll get lots of criticism here. However, I maintain that once you are truly okay with throwing that cash away (like you would drop it into a slot machine), then it's the same whether you lose it one way or in another investment vehicle." "Between 1 and 2 G is actually pretty decent for a High School Student.  Your best bet in my opinion is to wait the next (small) stock market crash, and then invest in an index fund. A fund that tracks the SP500 or the Russel 2000 would be a good choice. By stock market crash, I'm talking about a 20% to 30% drop from the highest point. The stock market is at an all time high, but nobody knows if it's going to keep going.  I would avoid penny stocks, at least until you can read their annual report and understand most of what they're claiming, especially the cash flow statement. From the few that I've looked at, penny stock companies just keep issuing stock to raise money for their money loosing operations.  I'd also avoid individual stocks for now. You can setup a practice account somewhere online, and try trading. Your classmates probably brag about how much they've made, but they won't tell you how much they lost.  You are not misusing your money by ""not doing anything with it"". Your classmates are gambling with it, they might as well go to a casino.  Echoing what others have said, investing in yourself is your best option at this point. Try to get into the best school that you can. Anything that gives you an edge over other people in terms of experience or education is good. So try to get some leadership and team experience. , and some online classes in a field that interests you." "If you're not rich, investing money will produce very small return, and is a waste of your resources. If you want to save until you die, then go for it (that's what investment companies want you to do). I suggest invest your money in building a network of friends who will be future asset for you. A group of friends helping each other have a much higher prospect of success. It has been proven that approximately 70% of jobs have been obtained through networking. Either through family, or friends, this is the vast majority. I will reiterate, invest on friends and family, not on strangers who want to tie down your money so they can have fun for the moment, while you wait to have fun when you're almost dead. Added source for those who are questioning the most well known fact within organizations, I'm baffled by the level of ignorance. Linkedin Recruitment Blog ...companies want to hire from within first; only when there are no   appropriate internal candidates will they rely on referrals from   employees (who get a bonus for a successful  hire) and people who will   approach them through informational meetings. The latter category of   jobseekers (you) have the benefit of getting known before the job is   ""officially posted."" For those who believe loaning money to friends and family is a way of losing money -> this is a risk well worth taking -> and the risk is much lower than loaning your money to strangers -> and the reward is much higher than loaning your money to strangers." "Nobody has mentioned your ""risk tolerance"" and  ""investment horizon"" for this money. Any answer should take into account whether you can afford to lose it all, and how soon you'll need your investment to be both liquid and above water. You can't make any investment decision at all and might as well leave it in a deposit-insured, zero-return account until you inderstand those two terms and have answers for your own situation." If you have no immediate need for the money you can apply the Rule of 72 to that money.  Ask your parent's financial advisor to invest the money.  Based on the rate of return your money will double like clockwork. At 8% interest your money will double every 9 years.  45 years from now that initial investment will have doubled 5 times.  That adds up pretty fast.  Time is your best friend when investing at your age. Odds are you'll want to be saving for a college education though.  Graduating debt free is by far the best plan.
"It's a good question, but it turns into a general 'how to invest' question.  You see, the cliche of ""invest the difference"" simply point to the ripoff the other two answers discuss. And it doesn't specify how to invest, only that this money should be put to work as long term investments.  The best answer is to find the asset allocation appropriate for your age and risk profile. It can be as simple as a low cost S&P ETF, or as complex at a dozen assets that include Stocks, both Domestic and Foreign, REITs, Commodities, etc. It's not as if the saved funds get segregated in a special account just for this purpose, although I suppose one can do this just as others have separate funds for retirement, emergency, vacation, college, etc." Check out Khan Academy if you get a chance - they have a large suite of finance/capital market video clips that cover a lot of the basics of financial theory in short, manageable clips that might be suitable for someone in high school. A lot of people on here will likely disagree with me and this opinion.   In my opinion the answer lies in your own motives and intentions.   If you'd like to be more cognizant of the market, I'd just dive in and buy a few companies you like.  Many people will say you shouldn't pick your own stocks, you should buy an index fund, or this ETF or this much bonds, etc.  You already have retirement savings, capital allocation is important there.  You're talking about an account total around 10% of your annual salary, and assuming you have sufficient liquid emergency funds; there's a lot of non-monetary benefit to being more aware of the economy and the stock market.  But if you find the house you're going to buy, you may have to liquidate this account at a time that's not ideal, possibly at a loss. If all you're after is a greater return on your savings than the paltry 0.05% (or whatever) the big deposit banks are paying, then a high yield savings account is the way I'd go, or a CD ladder. Yes, the market generally goes up but it doesn't ALWAYS go up.  Get your money somewhere that it's inured and you can be certain how much you'll have tomorrow. Assuming a gain, the gain you'll see will PALE in comparison to the deposits you'll make.  Deposits grow accounts.  Consider these scenarios if you allocate $1,000 per month to this account.   1) Assuming an investment return of 5% you're talking about $330 return in the first year (not counting commissions or possible losses). 2) Assuming a high yield savings account at 1.25% you're talking about $80 in the first year.   Also remember, both of these amounts would be taxable. I'll admit in the event of 5% return you'll have about four times the gain but you're talking about a difference of ~$250 on $12,000.  Over three to five years the most significant contributor to the account, by far, will be your deposits.   Anyway, as I'm sure you know this is not investment advice and you may lose money etc. &gt;Also, I don't know if we should actually Invest in the market or just discuss and learn about the finance market in general.  Since you're in highschool I would say that discussing and learning about it is more than enough.  Some other things you can cover are budgeting, compounding interest, retirement accounts and advantages of them, credit scores, and credit in general.  &gt;What are some good ways to attract people to join the club  Advertise it and provide informative handouts that explain what will be discussed and taught.  Maybe get a math teacher involved to help explain certain things. "I would like to add my accolades in saving $3000, it is an accomplishment that the majority of US households are unable to achieve. source While it is something, in some ways it is hardly anything.  Working part time at a entry level job will earn you almost three times this amount per year, and with the same job you can earn about as much in two weeks as this investment is likely to earn, in the market in one year.   All this leads to one thing:  At your age you should be looking to increase your income.  No matter if it is college or a high paying trade, whatever you can do to increase your life time earning potential would be the best investment for this money.   I would advocate a more patient approach.  Stick the money in the bank until you complete your education enough for an ""adult job"".  Use it, if needed, for training to get that adult job.  Get a car, a place of your own, and a sufficient enough wardrobe.  Save an emergency fund.  Then invest with impunity. Imagine two versions of yourself.  One with basic education, a average to below average salary, that uses this money to invest in the stock market.  Eventually that money will be needed and it will probably be pulled out of the market at an in opportune time.  It might worth less than the original 3K! Now imagine a second version of yourself that has an above average salary due to some good education or training.  Perhaps that 3K was used to help provide that education.  However, this second version will probably earn 25,000 to 75,000 per year then the first version.  Which one do you want to be?  Which one do you think will be wealthier?   Better educated people not only earn more, they are out of work less.  You may want to look at this chart." "Between ""fresh out of college"" and ""I have no debts, and a support system in place which because of which I can take higher risks."" I would put every penny I could afford in the riskiest investment platform I was willing to.  Holding onto money in a bank account is likely to cost you %1-%2 a year depending on what interest rates are and what inflation looks like. Money invested in a market could loose it all for you or you could become an overnight millionaire. Loosing it all would suck but you are young you will bounce back. Losing it slowly to inflation is just silly when you are young.  If there is something you know you have to do in the next few years start to save for it but otherwise use the fact that you are young and have a safety net to try to make money." "Congratulations. The first savings goal should be an emergency fund.  Think of this not as an investment, but as insurance against life's woes.  They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time.   This should go into a ""high interest"" savings account or money market account.  Figure three to six months of expenses. The next goal should be retirement savings.  In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA.  The goal should be about 15% of your income.  You should favor a 401k match over just about anything else, and then a ROTH over that.   The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget.  Otherwise you might just end up as a broke person with a real job (not fun).  Part of your budget should include savings, spending, and giving.  All three areas are the key to building wealth.   Once you have all of those taking care of the real fun begins.  That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice.  Then you can dream some with any money left over (after expenses of course).   Do you want to retire early?  Invest more for retirement.  Looking to buy a home or own a bunch of rental property?  Start educating yourself and invest for that.   Are you passionate about a certain charity?  Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours.  Budgeting is a key concept, and the younger you start the easier it gets.   While the financiers will disagree with me, you cannot really invest if you are borrowing money.  Keep debt to zero or just on a primary residence.  I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest.  Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor.  A cursory study of millionaires will indicate some surprising facts:  most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers.  Building wealth is about behavior.  Giving to charity is part of that behavior.  Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver.   This may seem difficult to believe, but I ask that you try it." Your long-term saving targets will include retirement, kids' college, house, etc. Medium-term might be your college, or a car. Short-term might be a vacation somewhere or a new laptop. In all cases saving, then spending money you do have is better than spending money you don't have. I think that's the first takeaway of this truism. However, I also believe 10% is said as a retirement target. Retirement is very important and this advice is stressed by many financial planners because it's very easy to underestimate how expensive it is. By the same token, it's recommended that you spend 2 months' salary on an engagement ring, and that particular truism can be traced back to a DeBeers ad. I personally don't know whether 10% as a retirement target is sage - it sounds right but I haven't followed it for a variety of reasons. Please corroborate against multiple sources and apply to your own financial person. You have a comparatively small sum to invest, and since you're presumably expecting to go to college.university soon, where you may well need the money, you also have a short timescale for your investment. I don't think anything stock-related would be good for you -- you need a longer timescale for stock market investments, at least five years and preferably ten or more. I don't know the details of Australian savings, but I'd suggest just finding a bank that is giving a good interest rate for a one-year fixed-term savings account. Are you working? Does your employer offer a 401(k) and if so, is there any match?  Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending.  Good luck. Edit  - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college.  Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal. "I'd first put it in CDs or other short term account. Get through school first, then see where you land.  If you have income that allows you to start a Roth IRA, I'd go for that, but keep it safe in case you actually need it back soon. After school, if you don't land a decent job fast, this money might be needed to live on. How long will it last if you take a few months to find work?  If you do find a good job, moving, and setting up an apartment has a cost. Once you're there, I'd refer you to the many ""getting started"" Q&As on this site." "Well, I understand this forum is about money but I think you would be far better off if you invest the money in your daughters education or something similar that can bring much more significant future gains. I am a big fan of compound interest and investing in stocks but $700 sitting until she's 21 wont grow into a significant amount. When she's 21, what would you ""hope"" she'd spend the money on? something valuable like education right? so why don't you take the first step now so she will get a much bigger return than the monitory value. If I were you I'd invest in a home library or something similar." As a 20 year old who has just started earning enough to save, I suggest showing them the different types of lifestyles they could live in the future if they started saving now versus what their life would be like if they didn't save at all. Try showing them actual dollar values as well so it's not just an arbitrary idea. "This may be a great idea, or a very bad one, or it may simply not be applicable to you, depending on your personal circumstances and interests. The general idea is to avoid passive investments such as stocks and bonds, because they tend to grow by ""only"" a few percent per year. Instead, invest in things where you will be actively involved in some form. With those, much higher investment returns are common (but also the risk is higher, and you may be tied down and have to limit the traveling you want to do). So here are a few different ways to do that: Get a college degree, but only if you are interested in the field, and it ends up paying you well. If you aren't interested in the field, you won't land the $100k+ jobs later. And if you study early-childhood education, you may love the job, but it won't pay enough to make it a good investment. Of course, it also has to fit with your life plans, but that might be easier than it seems. You want to travel. Have you thought about anthropology, marine biology or archeology? Pick a reputable, hard-to-get-into, academic school rather than a vocation-oriented oe, and make sure that they have at least some research program. That's one way to distinguish between the for-profit schools (who tend to be very expensive and land you in low-paying jobs), and schools that actually lead to a well-paying future. Or if your interest runs more in a different direction: start a business. Your best bet might be to buy a franchise. Many of the fast-food chains, such as McDonalds, will let you buy as long as you have around $300k net worth. Most franchises also require that you are qualified. It may often make sense to buy not just one franchised store, but several in an area. You can increase your income (and your risk) by getting a loan - you can probably buy at least $5 million worth of franchises with your ""seed money"". BTW, I'm only using McDonalds as an example. Well-known fast food franchises used to be money-making machines, but their popularity may well have peaked. There are franchises in all kinds of industries, though. Some tend to be very short-term (there is a franchise based on selling customer's stuff on ebay), while others can be very long-lived (many real-estate brokerages are actually franchises). Do be careful which ones you buy. Some can be a ""license to print money"" while others may fail, and there are some fraudsters in the franchising market, out to separate you from your money. Advantage over investing in stocks and bonds: if you choose well, your return on investment can be much higher. That's generally true for any business that you get personally involved in. If you do well, you may well end up retiring a multimillionaire. Drawback: you will be exposed to considerable risk. The investment will be a major chunk of your net worth, and you may have to put all your eggs in none basket. If your business fails, you may lose everything. A third option (but only if you have a real interest in it!): get a commercial driver's license and buy an 18-wheeler truck. I hear that owner-operators can easily make well over $100k, and that's with having to pay off a bank loan. But if you don't love trucker culture, it is likely not worth doing. Overall, you probably get the idea: the principle is to use your funds as seed money to launch something profitable and secure, as well as enjoyable for you." If these are children that may be employed, in a few years, it may well be worth walking them through some basics of the deductions around employment, some basic taxes, uses of banks, and give them enough of a basis in how the economy of the world works.  For example, if you get a job and get paid $10/hour, that may sound good but how much do various things eat at that so your take-home pay may be much lower?  While this does presume that the kids will get jobs somewhere along the way and have to deal with this, it is worth making this part of the education system on some level rather than shocking them otherwise. Rather than focusing on calculations, I'd be more tempted to consider various scenarios like how do you use a bank, what makes insurance worth having(Life, health, car, and any others may be worth teaching on some level), and how does the government and taxes fit into things. While I may be swinging more for the practical, it is worth considering if these kids will be away in college or university in a few years, how will they handle being away from the parents that may supply the money to meet all the financial needs?