Ever wondered how you could start investing as a teenager and build real wealth for your future?
I started investing at 7, and I’ll show how you can start investing today with just $25 – and set yourself up to become a millionaire!
And don’t worry, no boring stuff. Just real, actionable steps for teen investing!
Teen Investing 101: Why Start Young?
Imagine planting a tree. The sooner you plant it, the bigger it grows. That’s what investing early is like.
When you invest, your money earns more money – and then that money earns even more money. This is called compound interest, and it’s like money magic.
Let’s say starting at age 15, you invest just $25 a month. That’s less than a trip to the movies.
If your investments grow by 11% a year, you could have over $100,000 by the time you’re 50. But if you wait until you’re 30 to start investing the same amount? You’d have less than $20,000.
While your friends are spending their money on the latest trends, you’ll be building wealth without doing much at all.
Time is our biggest superpower, which is why I started investing when I was just seven.
If you want to know more about my investing journey, let me know in the comments.
How to Start Investing as a Teen: A Step-by-Step Guide
Step 1: Open a Custodial Account
Because you’re under 18, you can’t open a regular brokerage account yet. But don’t worry – there’s a solution: a custodial account.
This is an investing account opened by a parent or guardian for you, but it’s still your money. You get control of it when you turn 18 or 21, depending on the state you live in.
Wait till the end to find out exactly how to open a custodial brokerage account.
Step 2: What to Invest In: Skip the Stock Picking
Now that you’ve opened your account, what should you invest in?
You might think investing means picking the next Apple or Amazon. But here’s the truth: even the pros mess that up all the time.
That’s why most smart investors – even Warren Buffett – recommend something called an index fund.
Think of it like ordering a pizza that’s already made instead of trying to cook one from scratch.
An index fund is one investment that includes hundreds – sometimes thousands – of different companies. You’re buying a little piece of all of them at once, so if one company tanks, you’ve still got the others holding things up.
The most popular index funds follow the S&P 500 index, which includes the 500 biggest companies in the U.S like Apple, Amazon, Google, and more.
You can also look at total stock market funds, which are even more diversified. It’s like investing in the whole US economy.
So instead of trying to pick a winning stock, just invest in the whole market. It’s safer, smarter, and way less stressful.
I’ll let you in on a little secret. When I started investing as a 7 year old, I only bought individual stocks. But I quickly learned that index funds are the best choice, and have never looked back.
Step 3: Start Small, Stay Consistent
You don’t need thousands of dollars to invest. Some apps and brokerages let you invest just $5 or $10.
So start with whatever you can right now, whether it’s from an allowance, birthday money, or a job.
Then set up automatic monthly investments, even if it’s a small amount – say $25. This way, you invest the same amount every month, no matter what the market’s doing.
This is called dollar-cost averaging, and over time, this strategy helps smooth out the ups and downs of the stock market.
Step 4: Keep It Simple – And Don’t Panic
Once you are investing, the key is to leave it alone. Don’t try to time the market, don’t jump on trends, and don’t freak out when the market drops.
Think long-term. Remember, investing is like growing a tree, not flipping a switch.