Young Ones, Go Forth and Speculate

To be clear, if you're buying stocks in your 20s, you shouldn't be investing to gradually build up your "nest egg," a phrase that for some reason grates on me like the sound of fingernails scraping across a chalk board. This is the typical route followed by most personal finance gurus, and as far as I'm concerned, it's a dead-end.

With maybe $2,000 to invest a year, you won't make serious money in the market unless you take enormous risks. It's much more likely that you'll get wiped out, but since you won't have a lot of money on the line, it's a worthwhile risk.

In fact, if you're in your 20s and don't have much money to invest, I don't see any point to anything other than speculation.

Let's say you have $2,000, and you're taking a more conservative approach. You set up a diversified portfolio of five stocks from different sectors, and you follow Jim Cramer's advice, spending one hour a week on the necessary homework for each stock, or five hours of homework total each week. (I've spent too long working for Jim on "Mad Money" to believe that you can skimp on the homework and not get torn to pieces by the market.)

Doing that five hours of homework each week, you're going to have to invest 260 hours a year to do the minimum amount of work. In a good year, you might be up 20%, which is just $400 if you start with $2,000. It's not worth the effort. Even if you start with $5,000 you'd only be up $1,000 for the year, meaning you earned $3.85 for every hour of homework you put into your responsible, diversified portfolio. Start with $10,000, and you just barely do better than the minimum wage.