If your new year resolution is to invest money as a teenager, then this article is good for you.
I will show step by step how to make money in the stock markets as well as Alternatives to standard investing.
Table of Contents
How To Invest Money as a Teenager| Why ?
If teenagers need a reason to start investing at that early age, then main argument is to take advantage of time.
Reasons To Save Money as a teenager
Investing or saving money as a teenager may not be what comes in most of this generation minds.
Most may be more inclined to spend whatever they have into purchasing the latest trendy items to conform to their peers.
However, for the few that look forward to preparing their future, investing as a teenager may be the best resolution they will ever take.
Saving money is a mindset no matter one’s person age.
Once you get into the habit, investing quickly becomes second nature.
The Power Of investing
From that point forward, you can start making bigger plans.
What to do with the money is never a question you will dwell long on.
You will be able to finance future projects should you choose to.
Paying for graduate school is one I can think of.
How about starting your own business with your own seed money.
That can be very gratifying and brings a great sense of freedom.
Value of Compounding Returns
What may appear to a teenager investor as a small amount of money is bound to grow very fast.
Because of the compounding returns.
Imagine that the money you put away on year one will be growing on year 2, 3, etc at the pace your performance return.
This means that money that is invested early will have a lot of years to grow on its own.
One crucial implication is that even if you stop investing at some point, the money you saved early will continue to grow over time.
As an illustration, the above table and chart show how much a one-time $1,000 investment can growth over time.
I provided the data 5%, 10% and 15% yearly returns.
Investment Returns for teenagers
Those returns are very realistic in today’s environment as you will see later in this discussion.
Simply investing $1,000 once can turn into $28k over 25 years.
Looking at this number in the light of current inflation in the US, you and I cannot be impressed at all.
However, I hope you get the point compounding returns.
I will make it a point to provide further emphasis in the next section with an illustrious example.
You Can Afford to Take Risks
As a teenager investor, you will have time on your side.
This will allow you to take risk because you have time to recover or change plans.
To really show you the full power of investing at an early age, I will now provide a study of how much your money can growth if keep investing $1,000 each year.
Now you could be asking where you would take $1000 each year?
Think about your birthdays and gifts you have received over the years from family members.
These amounts easily go over $1000 per year 🙂
Instead of spending the cash, if you invest it every single year over the next 25 years, your potential return as displayed below.
Exponential Growth of Investing $1,000 a year
|Yearly Return||How Much Will $1000 Grow into after 25 years|
You will have almost $100k after 25 years assuming a 10% annual return.
Should we assume a more generous return on your $1,000 yearly investment, your account will be worth over 212k.
All you have to do is to get into the discipline of putting aside $1,000 per year over the next 25 years.
Let’s me break it down further.
To put aside $1,000 in 365 days, it comes down to $2.75 per day.
Is this a plan you can start implementing today?
Maybe you are a parent of a teenager who is reading this.
$2.75 a day is less than a cup of coffee these days.
Dare I say more?
$13 a day to become a Millionaire
If you are already well into your dream to build great wealth.
Before we jump into the fun part apart which investment can give you these types of returns,
allow me to answer a question you may already have on your mind.
Yeah, I am a mind reader on my spare time as well.
The question is: How much money do I need to invest each year to get $1 Million.
The answer is: It will take you $4700 invested each year at 15% return to amass $1 Million after 25 years!
For some parents out there, $4700 a year is less than $13 per day.
Therefore, I could title this tutorial become Millionaire with $13 per day.
What Is the Best Investment for Teenagers?
One way a teenager can start investing is by simply putting the pocket money you have away.
A cookie jar was my great scheme is saving money at first.
Then at the end of each year, I will open it to decide how I was going to spend the money or put it in a new cookie jar for the next year.
How to Start investing as a teenager
As a teenager, I was not always in the position to have someone open an investment account for me.
For most teenagers, parents or guardians can easily do so nowadays.
You can ask you parent to open an account for you if you are still a minor.
On the other hand, should you already be of age to open an account, go ahead and do so as early as possible.
The next step will be to start brushing up on investing terminology.
The best place I would recommend (I used it as an adult myself for options) is none other than Investopedia stock simulator.
Resources for Teenagers To start investing money
Here at successfultradings.com, we fully believe in education to help bridge the financial gap.
Here are a series of articles to help teenagers who are newbies to investing.
|Fractional Shares Trading on Webull|
|Top 10 Best investment Newsletters|
|How To Read Stock Charts for Beginners|
|Differences between stocks and Bonds|
|Top 7 Best Apps to Trade Stocks|
|What Is Automatic Investing|
Investing For a Brighter Future
For the parents and teenagers out there needing one last reason on start investing as a teenager:
Look at Investing early as ensuring your future where you will no longer need to work as hard because your money will be doing all the hard work.
Should Teenagers Invest in Crypto?
We know now that early adopters of Crypto have all done quite well with this investment.
Hence, many including teenagers still wonder if they should consider crypto as an investment.
From my point of observation, crypto is still at a very early stage.
Impact of Web 3.0 on Crypto
According to multiple experts, the next generation of internet called Web 3.0 will further expand the importance of crypto in our lives.
The decentralized version of the internet is bound to bring crypto technologies front and center in everything we do today.
Consequently, once can only imagine the growth we have to look forward to in the upcoming decenies.
Here is a nice video depicting the influence of Web 3.0 on crypto potential boom.
Comment son Web 3.0 Impact on Cryto Video:
Here is one of the best comments from the above video:
The more I learn about these technologies the more I am beginning to see how we are on the cusp of a revolutionary transformation. I came to this scene because “crypto go up”, but now, I am insanely excited to know that I (we) have the opportunity to get in on something monumental before it really takes off. Goosebumps
Best Stocks for a Teenager to Invest in 2022
The US stock market returns over the last 10 years or so have been astronomical with the boom in tech companies.
Here is the video comparing two of the major indexes: the QQQ and the S&P 500.
Growth stocks vs Value Stocks?
For a teenager who is investing in the stock market, growth stocks will tend to be better than value stock.
Once again, the reason for this is because the teenage investor can shift the course of their investment.
Usually, teenagers are the early adopters on new technologies.
Remember, how Facebook (sorry, I meant Meta) , Snap, twitter and some other disruptive companies started.
It was first through the lenses of teenagers.
As such, your investing research as a teenager is to keep appraised of what your peers are into.
Then, instead of buying those products if any, focus more on how you will be able to benefit as an invesor.
Let’s me give you this illustration.
Inn 2000, two friends were very much fans of iPhone.
ne bought the iPhone and the others invested 2k in AAPL stock.
Fast forward 12 years later, the second friend has over $165,000 from that single $2,000 investment.
How Much can a teenager make investing in the stock market
How many stocks in 2021 returned more than 15% ?
400 stocks out of 779 I monitor returned at least 20% this year alone!
That is over 51% of my screening watchlist.
Why is this significant you may ask?
Well, because earlier I stated that 15% yearly return was quite possible.
In the stock market is the clear answer.
We can see some common stock 1 year performance such as Ford (Ticker: F) : 136%
Moderna (Ticker:MRNA) = 43%
NVidia (Ticker: NVDA) =125% || Microsoft (Ticker:MSFT) = 51% || Apple (Ticker: AAPL) = 33%
FINAL THOUGHTS On How to Start Investing as a Teenager
My goal was to showcase the advantage of starting investing early.
I shared the numerous reasons on why and how to start investing money as a teenager.
You can achieve financial freedom in no time.