How to Invest: 6 Tips for Teens

There’s a famous saying that says, “The best time to plant a tree was fifty years ago, the second best time is today.” Investing is very similar. The sooner you invest, the more you will make over your lifetime. If you are a teen, the best time to invest is now. You may understandably have less money now than you will as an adult, but you can still build financial independence.


By knowing what you need to be doing with your money and time, you can make the most of your early years.


Start with these tips:


1. Do not follow the crowd. People often get ahead of themselves when they see someone succeed a certain way and want to do the same thing too. But what makes one person rich may bankrupt the next. Always read up on any investment and consider all your courses of action.


* Determine your risk tolerance. How much are you willing to lose or gain? Is the company you invest in willing to adapt and modernize as technology changes? Is it profitable in the short term? In a long time? How well is this sector going to do?


* Are you looking at the best company within the sector? Consider these before you invest your money in any business, no matter how popular.


2. Invest in the stock market. Start by opening a brokerage account. If you're 18, you can open one. If you are younger, you can open a custodial account operated by your guardian or parent on your behalf. Once you reach 18, you can take control of your investments.


* In the stock market, there are a lot of winners and losers. There are also a variety of strategies for success. The more you learn about it, the better you are at investing.


* Buy dividend stocks so you can receive a steady income monthly or annually whether your stock goes up or down, especially since you are young and have the luxury of time.


* The stock market is a long-term investment, and you are young. If you start early, it's one of the best investments you can make. Play it right and you’ll make some amazing returns.


3. Invest in low-cost index funds. While investing in stocks can earn you high returns, it is also quite risky. If they lose their value, you could lose a lot of money. So to play it safe and invest in low-cost index funds. With these, you are allowing professionals to invest for you.


* They disburse funds to all the companies that make up the index, good ones too. So if an index fund aims to track the returns of 50 companies, it will invest your money all across, reducing your risk.


* Research the cost, features, managers, and gains before picking an index to invest in.


4. Invest in retirement accounts. That may sound crazy since you're so young, but it will pay off if you do. Talk to anyone nearing retirement, and they'll tell you it is good to start working towards it now. Open a retirement account and start saving. Start small and build it as you get older and earn more.


* One thing to note is that there is little reason to invest if you need to take out student loans to pay for college. If you are not planning on going to college, then yes, investing in a retirement fund right now is a great choice.


* Investing right now would be a poor choice if you attend college. It would be better to invest in emergency funds instead and start planning for retirement as soon as you are out. Avoid going into debt at all costs.


5. Start a small business. You can become successful at any age. So start a business at school or home. Start small. Think of a business idea or find a niche. Partner with friends and expand it in time. Teenagers can start a small business like t-shirt printing, blogging, or vlogging.


* The idea is to learn the basics of doing business. You learn the process from buying to marketing to selling for profit. You can choose to invest your profits or withdraw them to finance your needs.


* As a young entrepreneur, you will have the luxury of time to try different ideas and figure out how to earn and save money.


6. Invest in yourself. You are your biggest asset. Your teenage years are crucial. They can set you up for a future where you can have fun and do the things you want. As you go through life, invest in things that interest you. Learn a new language, enhance your digital skills, and read self-help and psychology books.


* Increase your business and finance knowledge. Discover what you like and what you don't. What comes naturally to you, and what should you work harder at? Hang around successful people.


* However, you define success. You never know the opportunities you will create for yourself by just investing in things you are interested in.


The best way to get experience with investing is to start investing. So what is your source of income? Can you get a job? Can you start budgeting wisely so that you can save a little to invest? You can never go wrong when you lay the best financial groundwork for your future.

How did you like this post? If you found this article helpful to you, you may want to share it with others by clicking the social networking buttons – Thank You!


Cheers, Helene Malmsio

Related Reading: Kids and Money

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