As a teenager, the prospect of money is exciting and creates a sense of responsibility. That’s why we have put together some investment tips for teens. It is expected that a teenager will want to be more in control of finances as they grow. However, they need guidance on spending, saving, and investing to make the most out of their income. On the flip side, most teens will want to spend their money on new clothes, trips, and hanging out with peers. As such, when it comes to financing and investment, you should strike an ideal balance between investment and living out your teens to the fullest. Here are some smart investment tips for teens:
Start Early
One of the first investment tips for teens is to simply start early. Regardless of age and investment, it is always advisable to start early to increase your potential for higher returns. For example, if you start investing $10-$30 per month into a retirement account when you are 18 years old, you could have an upwards of $40,000 by the time you retire. Consider a retirement account like a 401(k)
Be Consistent
Investing can be a daunting but rewarding journey. Consistency is probably one of the most important investment tips for teens. Returns can take time to start showing, and teenagers can get discouraged. However, investment needs to be a habit and not a one-day or a one-year thing. Teenagers need to keep track of their investments so that they can know what they are doing right or wrong. Consistency also helps to understand the rules of the trade that can improve important in making future investment decisions. The best way to remain consistent is by working with a mentor. A mentor could be a senior relative, your parent, or a financial advisor. Mentors can offer you invaluable advice, and they help you stay motivated during your investment journey.
Access the Risks and Rewards
Risks and rewards are necessary considerations when it comes to investment. For teenagers seeking their first investment, it is important to play it a bit safe at the beginning until you learn your trade. For example, you can invest in a low-risk index fund. An index fund is a pool of varying stocks that are indexed and accessed over time.
Such an investment will help you understand the investment world better and how to avert common risks.
Set Goals
For most teenagers, the idea of investment means putting in money and getting profits. While this could be true, it cannot be achieved without clear and concise goals. That’s why setting goals is one of the best investment tips for teens. Start by coming up with long term specific goals you are investing in. Remember, it's never too early to start investing in any goal, including retirement, furthering your education, or saving for a house. Next, break down these goals into smaller actionable goals that you can achieve in a month or a year. For example, you can set an amount that you want to set aside every month and year.
Diversify your income
The excitement of a first job can deter you from looking at more income-earning avenues. As such, if it is possible and fits well into your schedule, you can start exploring new avenues such as freelance writing and modeling to supplement your income. Diversifying your hustle does not only afford you more disposable income but leaves you with a lot more to invest. Finally, diversifying will help you learn more in different fields of business, which will certainly have a positive impact on your future.
Invest in learning more about finance
It's often said that money is a game, and the more you play it, the better you get. As such, set aside some money and take up some online finance courses, for example, on LinkedIn. Learning more about finance helps you understand the most profitable industries to invest in, and keeps you in the know in regards to upcoming investment trends.
In a nutshell, it's never too early to start investing. The above investment tips for teens will come in handy as you seek your first investment opportunity.