A group of teenagers in Leesburg, Virginia, is working to help young people understand finance. The Academies of Loudoun students created an organization called Financial Literacy for You (FLY), which aims to educate young people on personal finance and investing. The FLY team provides workshops and resources to help teens understand financial concepts and make informed decisions about their money.
Investing as a teenager can be a great way to start building wealth early. The stock market is widely considered the best way to build wealth, and teenagers have the #1 advantage when it comes to success in investing: time. The earlier you start investing, the more time your money has to grow.
Teens who feel ready to try their hand at investing should first get educate, with adult supervision, and then it's all about diversification. Diversification means spreading your investments across different types of assets to reduce risk. This could include stocks, bonds, mutual funds, real estate, and more.
Here are three tips for teens who want to get started with investing but don't know where to begin. First, start small. You don't need a lot of money to start investing, and it's better to start with a small amount and learn from your mistakes than to risk losing a large amount right away. Second, do your research. Read books, articles, and blogs about investing, and talk to adults who have experience with investing. Third, be patient. Investing is a long-term game, and success often comes from sticking to a strategy and not giving in to short-term market fluctuations.
If you want to invest as a teenager, you're going to need a parent or custodian to open the account (and in most cases, sign off on all the trades). One option for teens is to open a custodial account, which is a type of investment account that an adult manages for a minor. Another option is to use an app like Stockpile, which allows teenagers to invest in stocks with the help of a parent or guardian.
The app allows users to research more than 1000 stocks and ETFs, curate a portfolio based on risk rankings assigned to each security, and invest in fractional shares with as little as $5. This makes it easy for teens to get started with investing and learn about the stock market in a low-risk environment.
Which type of investment you choose will depend a lot not only on the amount of money your teenager has to invest but also their risk tolerance and investment goals. For example, if your teenager is interested in socially responsible investing, they may want to consider investing in companies that prioritize sustainability and ethical business practices.
Between crypto, meme stocks, and day trading on Robinhood, a number of investment fads have sparked the attention of novice investors in recent years. While these types of investments can be exciting, they also come with a high degree of risk. Teens should be cautious about jumping on investment bandwagons and instead focus on building a diversified portfolio that aligns with their long-term financial goals.