Now that I’m seventeen years old, have a job, and am going to college in a little over a year, adulthood truly feels like it’s rapidly sneaking up on me. I am currently in the process of investing some of my savings in stocks, and the entire process has been a huge learning experience. As I was discussing my investments with my dad, I wondered: everyone’s heard about stocks, so why aren’t most people my age investing in them?
Although stocks might seem super grown up and almost like a foreign concept, it’s actually pretty important to start thinking about it even when you’re still in your teens. Investing sounds daunting and overwhelming, something you’ll figure out once you already have money and your life together. But the truth is, the earlier you get into it, the better off you’ll be. Stocks and investments are much more reliant on time than initial investment, so as teenagers, we have the biggest advantage!
What are stocks, anyway? Essentially, when you buy stock in a company, you’re buying a small fraction of the company. For example, imagine you buy a share of Apple or Tesla. When the company does well, the stock price goes up, and you can sell it for more than you paid, which means you profit. If the company does poorly, the stock price drops, and you can lose money. But the good thing is, over time, most companies tend to grow, so if you’re patient, your money can grow exponentially over the course of years. Dillan Gandhi (11) highlights his positive experience with investing, claiming, “Investing even a small amount of money is like investing in yourself and your future. You won’t regret it.”
Why should you start now? The earlier you start investing your money, the more time it has to grow. This is the idea of compound interest. Basically, this means that the money you earn from your investments starts to earn money itself. Being financially literate and educated now gives individuals the upper hand, especially in high school. Even investing a seemingly insignificant $100 now is better than doing nothing. Although I’m not educated enough on the stock market to tell you which stocks to buy right now, I can provide a few tips on how to begin investing!
Tips to Get Started
- Start Small: You don’t need to be a millionaire to start. Most apps let you buy a small portion of stock, sometimes as low as $1. Any start is a start!
- Do Your Research: Don’t just randomly pick stocks because of a cool logo or a friend’s recommendation. Learn about the companies you’re investing in. Are they growing? What is their business plan?
- Diversify: Don’t put all your eggs in one basket. Spread your money across different stocks or even different types of investments to help reduce risks.
- Use a robo-advisor: If you’re overwhelmed or confused about how to get started, robo-advisors can help you manage your investments automatically. Essentially, they’ll do most of your work for you, but you’ll still learn.
Why is financial literacy a big deal? Being able to understand money– how to manage, grow, and save it– will set you up for a successful future. Not only does financial literacy help with investing, but it also helps you make smarter choices with your money on a daily basis. You will become more familiar with how to save, spend wisely, and avoid bad debt. Being financially literate will instill a sense of being in control of your money and your life, rewiring your brain’s relationship with money.
