Now that I have a job, should I invest in the stock market?

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I may be moving into some very cheap accommodation (or not, it hasn't been finalised yet). This will leave me with surplus income. Should I put it into the stock market?

I'm tempted to just save for a new gaming desktop to replace the one that was stolen but perhaps the stock market would be better. Some of my friends are going for investment properties but I think stock might be better.

I still have some difficulty convincing myself to do it. If I don't spend the money on myself now, if instead I buy stock, I may have more money later.

Here's the problem, if it's better for me to do that now, live in austerity and play the market, then what if I make some money but then find it's more profitable to reinvest rather than spend it? And what if I reinvest again?

If it's more profitable for me to reinvest and reinvest, I worry that I'll grow old without spending the dividends, only reinvesting them. If I die an old man, with a huge stock portfolio but I never spent any of it on myself, lived my whole life in austerity, then it would be the same as if I had been poor my whole life because I never would have bought stuff for myself.

Am I wrong in this? Am I overthinking it? Are such investments a necessity for me?

How much do you have saved? You really should enough savings to keep you going for six months or so in case of emergencies.

But, if you have money beyond that.

I'd suggest investing in a broad low cost index fund.
http://www.morningstar.com/funds/XNAS/VTSMX/quote.html
Here is an example of one of the more popular funds--the expense ratio is just 0.17% for a $3000 minimum investment.

Problem is, you can have "market corrections" and see the value of your holdings drop by 25% or more. This hasn't been an issue for me because I invest in broad indexes and can wait it out. But, if you invest in the stock of one company--it may never recover. Or, if you need the money right now, you can get stuck with heavy losses.

Stock markets are more of a hobby if you don't have a lot of money to put into it.

As the previous poster said: make sure you have enough money stored away to either replace your car, your most expensive device you really need (your washing machine, for example) or to pay half a year of living (rent/mortgage+food and minimal travel) at any one time, just in case.

I myself keep 10% of my 'spendable' income (after taxes, insurance and rent) in a separate account, which i then use for a new gaming pc (as an example), and the other 90% i live off (food, fuel, new games, fun things like festivals/shows), augmented by my separate account; if i have to use my emergency fund to pay for something, i don't do the thing, unless it's an emergency.

The best investment for a young working person is a Roth IRA. Take some of your earned income and use it to open up a Roth IRA at a company like Vanguard or Fidelity. A S&P500 Index fund is a cheap and efficient investment. Start early, contribute every year and you will have a nest egg for your old age.

The stock market is not a game for amateurs. They will eat you alive. Buy index funds and re-balance when your positions get out of whack. Investing is not gambling. You should read about asset allocation models. Keep your costs and tax liability as small as possible.

That's exactly what it is. The only difference is that it's more socially acceptable than playing craps.

I do agree with you on Roth IRAs, however, since you contribute after-tax income and don't have to pay any taxes when you withdraw the money.

Pineapplehead, you are correct. There is no guaranteed return with financial instruments. Risk is always present. Whether it is from inflation, recession, disruptive technologies or outright fraud.

Card counting in blackjack has a positive return. That is why the casinos will kick you out.

Many people conflate investing with picking a winner and fall prey to cheats and fraud. Investing should be the efficient allocation of resources to maximize your risk weighed returns.

Let's say you buy a house, with 20% down. That is the equivalent of a 5 to 1 leverage. A small change in the value of the property is multiplied by a factor of 5. Is it a good investment? That really depends. Home ownership should be about putting down root, providing for your family and being a good citizen. Most people do not see it that way.

The Japanese have a saying: "The big guy always wins, the not so big guy is allowed to win once, all others are not allowed to win."

Understanding the game makes it possible to reduce your risk and earn a decent return on your money. The rules of this game make sense to me. The rules of the social world does not.

I spent ten years as a programmer in the hedge fund industry and learned a few things. When the dice are loaded, use it to your advantage. Otherwise, let the professional do the fighting.

Long term investing with broad indexes generally works because on average, over long periods of time, companies productively use the money you have invested. Professional investers, no matter how skilled, typically have to focus on short time frames--they need to turn a profit early and often.

Are you the same person who posted about buying a house too, now that you have a job?

This job must be very high paying for you to so instantly have the kind of money it takes to do either of these things right away.....

First priority after ANYONE secures steady employment is:

1) Make sure it IS steady.....a lot of things can happen and you might not be there six months down the line.

2) While you are settling into working life, immediately start saving whatever percentage you can of "surplus" income after mandatory expenses (by mandatory I mean housing, bills, other payments, taxes etc).

You should be focused on saving right now, after just getting a job. As others have said, the ideal is to make sure have put away at least two months living costs or ideally much more. It's good to have a safety net/cushion of money you could live on for a while should you ever lose your job or in fact need to quit.

That's the priority before jumping into house buying and stock investment.

You need a "oh s**t" fund of cash with enough in your account to cover you for at least 8 months before you can think of investing in equities. After that, built up a cash position in your brokerage account and start building a portfolio of large-cap, mid-cap, and small capital ETFs. Then start educating yourself on how the market works. If you think you have the time and discipline to put effort to research individual stocks, then start selling off your ETFs then buy individual stocks. Limit your holdings to no more than 5 companies at a time. Damn well make sure you're portfolio is diversified.

my father-in-law, who made a boatload on stocks, wisely advises never to put any money you might need into stocks. if you truly have excess cash and are tired of mutual funds, according to motley fool, for a reasonable amount of diversification, hold at least ten different stocks. with regards to allocation, half stocks and half bonds, reallocated every six months, is a balance that's historically done well.

Excellent advice, my approach is similar. I use index funds. Which include domestic large, medium and small cap equities plus foreign equities. I have the equivalent of bond index funds, different maturities and credit grades. Part of my money is in non dollar dominated assets, with the occasional sector bet.

The portfolio is rebalanced when the asset allocation drifts too far from my target model. IRAs are a good vehicle for rebalancing. There is no tax liability for those transactions.

The objective is to minimize the transaction costs. In a period of low returns, even a few basis points start to add up.

I strongly believe that we need to starve the Wall Street Beast. Low cost index funds is a good place to start.

A possible advantage to investing at a young age is to determine your particular risk tolerance--you won't really know until you have been through the ups and downs of the market to know what you can take. Much better to start investing early so you can plan ahead--the worst thing you can do is to wait until the last moment to save up for retirement--and then discover you can't handle stocks when the market takes a turn the worse. There are folks to have saved up enough for retirement without venturing into the stock market.