Before reading this article, I suggest reading the one I wrote previously, which is titled The Basics of Banking; it really breaks down the most basic parts of dealing with personal money and the advantages of savings/investments. In this article, I want to discuss the smartest investments you can make as a high schooler. A lot of people don’t realize that there are a lot of innovative things you can do with your money that are very low risk and can pay off big time in the future. Starting these investment accounts and other types of interest-collecting funds in high school gives you a lot of time to allow the money to compound and your balance to increase. 

The first thing I want to discuss is what investing really is. Investing is putting your money into something with the hope of a financial return. It’s one of the best ways to build wealth and save for your financial goals from retirement to your dream home. While most people start investing as adults, investing as a high schooler can give you a head start on saving for the future and learning vital money lessons. Investing may seem complicated, but getting started is easier than you’d think.

Investing gives you an opportunity to grow even more wealth thanks to compound interest, and you can also gain financial literacy skills from a young age. Some of the best investments include high-yield savings accounts, stocks, and bonds.  

A high-yield savings account (HYSA) is the most basic way to start earning a return on your money. Savings accounts have been around for a long time, but more and more financial establishments now offer high-yield savings accounts, which offer a higher interest rate than a standard account. With a higher interest rate, your funds will grow more than they would in a typical savings account. However, even savings accounts with high yields have very low rates of return compared to other investments (Erin Gobler). The best part about having a high-yield savings account is that there is pretty much zero risk. The money is insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).

A stock is a way to take a piece of ownership or equity in a publicly traded corporation. When you own a stock, you become a shareholder and part-owner of the company. Investors can earn money from dividends that companies pay to their shareholders as well as through capital gains when the value of the stock increases. “You could take a small piece of your portfolio and pick one or two stocks as a way to learn how to follow and evaluate individual stocks,” Jessee from The Balance said. “Consider picking one or two companies you’re familiar with, so it’s easier to follow and relate to.” A great way to help yourself better understand the stock market is to make a virtual trading account. This can give you an idea of how the stock market works without putting any money at risk.

Lastly, a bond is a type of debt security. When you purchase a bond, you’re essentially lending money to the issuing company or government entity. While bonds might not necessarily be as exciting as stocks, they’re generally more stable investments, meaning they help create a well-diversified portfolio. Bonds provide a fixed income from the interest payments the bond issuer makes throughout a set period of time.