When to start investing in the stock market?
Investing requires capital, and the fastest way to get the capital is to develop good saving habits. Investing is an ongoing process to help you accumulate wealth, so to take advantage of compounding, the earlier you start, the better.  I can suggest a few pointers to get you started on the investing journey. Godspeed! :)
Congratulations on getting started in life! John Malloy's (American) research suggests that you should take some time to get used to living on your own, make some friends, and settle into your community.  During this time, you can build up an emergency fund.  If/when the stock markets do not seem to be in a bear market, you can follow user3771352's advice to buy stock ETFs. Do you hope to get married and have children in the next few years?  If so, you should budget time and money for activities where you make new friends (both men and women).  Malloy points out that many Americans meet their spouses through women's networks of friends. "Markets are amoral. If you don't buy stock in a company that has high growth/earnings, someone else will. By abstaining you will actually make it cheaper for someone else who is interested in making money.  Investing in ""socially responsible"" funds will only ensure that you have less money to make a moral difference in the world when you decide to transition from working to philanthropy. Edit to clarify -- You aren't interested in buying individual stocks directly, that leaves you with two general options: You can make a statement with your investment now, or you can take the better returns and make a difference with your money later." Investing in the stock market early is a good thing.  However, it does have a learning curve, and that curve can, and eventually will, cost you. One basic rule in investing is that risk and reward are proportional.  The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead.  Given that, don't invest money you can't afford to lose (you mentioned you're on a student budget). If you want to start with short but sercure investments, try finding a high-interest savings account or CD.  For example, the bank I use has an offer where the first $500 in your account gets ~6% interest - certainly not bad if you only put $500 in the account.  Unfortunately, most banks are offering a pittance for savings rates or CDs. If you're willing to take more risk, you could certainly put money into the stock market.  Before you do, I would recommend spending some time learning about how the stock market works, it's flows and ebbs, and how stock valuations work.  Don't buy a stock because you hear about it a lot; understand why that stock is being valued as such.  Also consider buying index funds (such as SPY) which is like a stock but tracks an entire index.  That way if a specific company suddenly drops, you won't be nearly as affected.  On the flip side, if only 1 company goes up, but the market goes down, you'll miss out.  But consider the odds of having picked that 1 company. "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." 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. "First, you need to figure out what your objectives for the money are.  Mostly, this boils down to how soon you are going to need the money.  If you are, as you say, very busy and you don't need the money until retirement, I'd suggest putting your money in a single target date fund, such as the BlackRock LifePath fund.  You figure out when you are going to retire, and put your money in that fund.  The fund will then pick a mix of stocks, bonds, and other investments, adjusting the risk for your time horizon. Maybe your objectives are different, and you want to become an trader.  You value being able to say at a BBQ, ""oh, I bought AAPL at $20"", or ""I think small caps are over valued"".  I'd suggest you take your $50,000, and structure it so you invest $5,000 a year over 10 years.  Nothing teaches you about investing like making or losing a bit of money in the market.  If you put it all in at once, you risk losing it all - well before you've learned many valuable lessons which only the market can teach you. I'd suggest you study the Efficient-market hypothesis before studying specific markets or strategies." Before jumping into stock trading, do try Mutual Funds and Index funds, That should give you some good overview of the equity markets. Further, do read up on building a balanced portfolio to suit your need and risk apetite. This would help you decide on Govt. bonds and other debt instruments. "You asked for advice, so I'll offer it.  Trying to time the market is not a great strategy unless you're sitting in front of a Bloomberg terminal all the time. Another person answering your question suggests the use of index funds; he's likely to be right. Look up ""asset allocation.""  What you want to do is decide that you want your portfolio to contain, for example: If one of your stock holdings goes up far enough that you're out of your target asset allocation ranges, sell some of it and buy something  in another asset class,s so you're back in balance.  That way you lock in some profit when things go up, without losing access to potential future profits.  The same applies if something goes down; you buy more of that asset class by selling others. This has worked really well for me for 30+ years." The standard advice is that stocks are all over the place, and bonds are stable. Not necessarily true. Magazines have to write for the lowest common denominator reader, so sometimes the advice given is fortune-cookie like. And like mbhunter pointed out, the advertisers influence the advice. When you read about the wonders of Index funds, and see a full page ad for Vanguard or the Nasdaq SPDR fund, you need to consider the motivation behind the advice. If I were you, I would take advantage of current market conditions and take some profits. Put as much as 20% in cash.  If you're going to buy bonds, look for US Government or Municipal security bond funds for about 10% of your portfolio. You're not at an age where investment income matters, you're just looking for some safety, so look for bond funds or ETFs with low durations. Low duration protects your principal value against rate swings. The Vanguard GNMA fund is a good example. $100k is a great pot of money for building wealth, but it's a job that requires you to be active, informed and engaged. Plan on spending 4-8 hours a week researching your investments and looking for new opportunities. If you can't spend that time, think about getting a professional, fee-based advisor. Always keep cash so that you can take advantage of opportunities without creating a taxable event or make a rash decision to sell something because you're excited about a new opportunity. I've read a nice rule of thumb somewhere that you should consider: You should invest (100-YOURAGE)% of your money in stock The rest should be something less volatile and more liquid, so you have some money when the stock market goes down and you need some money nevertheless. So you would start with buying about 75% stock and balance your stock percentage over time by buing more secure assets to keep the stock percentage at the desired level. At some time you might need to  sell stock to rebalance and invest in more secure assets. Before putting any significant money into stocks, I would recommend spending at least a year paper trading.  It is amazing how much money you can lose trading stocks when you don't know what you are doing! Don't over think about your choices. The most important thing to start now and keep adjusting and tuning your portfolio as you move along in your life. Each individual's situation is unique. Start with something simple and straight forward, like 100 - your age, in Total Stock market Index fund and the remaining total bond market index fund. For your 401k, at least contribute so much as to get the maximum employer match. Its always good if you can contribute the yearly maximum in your 401k or IRA. Once you have built up a substantial amount of assets (~ $50k+) then its time to think more about asset allocation and start buying into more specific investments as needed. Remember to keep your investment expenses low by using index funds. Also remember to factor in tax implications on your investment decisions. eg. buying an REIT fund in a tax advantaged account like 40k is more tax efficient than buying it in a normal brokerage account. "Remind yourself that markets recover, usually within a few years. If you believe this and can remind yourself of this, you will be able to see the down cycles of the market as an opportunity to buy stock ""on sale"". No one knows the future, so many people have found investing on a regular schedule to be helpful. By putting in the same amount of money each period, you will end up buying fewer shares when the market is up, and more when it is down. As long as your time horizon is appropriate, you should be able to wait out the ups and downs. Stocks are volatile by their very nature, so if you find that you are very concerned by this, you might want to consider whether you should adjust the amount of risk in your investments, since over time, most people lose money by trying to ""time"" the market. However, if your investment goals and requirements haven't changed, there likely isn't any need to change the types of assets you are investing in, as what you are choosing to invest in should depend on your personal situation. Edit: I am assuming you want to be a long-term investor and owner, making money by owning a portion of companies' profits, and not by trading stocks and/or speculation." Fake stock market trading may teach you about trading, which isn't necessarily the same thing as investing. I think you need to understand how things work and how to read financial news and statistics before you start trading. Otherwise, you're just going to get frustrated when you mysteriously win and lose funny money. I'd suggest a few things: Also, don't get into individual stocks until you have at least $5k to invest -- focus on saving and use ETFs or mutual funds. You should always invest in around a half dozen diversified stocks at a time, and doing that with less than $1,000 a stock will make it impossible to trade and make money -- If a $100 stock position goes up 20%, you haven't cleared enough to pay your brokerage fees. While there are lots of really plausible explanations for why the market moves a certain way on a certain day, no one really knows for sure.  In order to do that, you would need to understand the 'minds' of all the market players.  These days many of these players are secret proprietary algorithms.  I'm not quibbling with the specifics of these explanations (I have no better) just pointing out that these are just really hypotheses and if the market starts following different patterns, they will be tossed into the dust bin of 'old thinking'. I think the best thing you can explain to your son is that the stock market is basically a gigantic highly complex poker game.  The daily gyrations of the market are about individuals trying to predict where the herd is going to go next and then after that and then after that etc. If you want to help him understand the market, I suggest two things.  The first is to find or create a simple market game and play it with him.  The other would be to teach him about how bonds are priced and why prices move the way they do.  I know this might sound weird and most people think bonds are esoteric but there are bonds have a much simpler pricing model based on fundamental financial logic.  It's much easier then to get your head around the moves of the bond markets because the part of the price based on beliefs is much more limited (i.e. will the company be able pay & where are rates going.)  Once you have that understanding, you can start thinking about the different ways stocks can be valued (there are many) and what the market movements mean about how people are valuing different companies. With regard to this specific situation, here's a different take on it from the 'priced in' explanation which isn't really different but might make more sense to your son: Pretend for a second that at some point these stocks did move seasonally.  In the late fall and winter when sales went up, the stock price increased in kind.  So some smart people see this happening every year and realize that if they bought these stocks in the summer, they would get them cheap and then sell them off when they go up.  More and more people are doing this and making easy money.  So many people are doing it that the stock starts to rise in the Summer now.  People now see that if they want to get in before everyone else, they need to buy earlier in the Spring.  Now the prices start rising in the Spring.  People start buying in the beginning of the year... You can see where this is going, right?  Essentially, a strategy to take advantage of well known seasonal patterns is unstable.  You can't profit off of the seasonal changes unless everyone else in the market is too stupid to see that you are simply anticipating their moves and react accordingly.