Investing for Teens: How to Make Your Money Work for You
When you hear the word investing, you might think it’s something only adults do. But the truth is, teens can start investing too—and the earlier you begin, the more money you can make over time! Investing is one of the best ways to build wealth, and you don’t need a lot of money to get started.
If you’ve ever wondered how people grow their money beyond just saving, this guide will help you understand the basics of investing and how you can start making your money work for you.
What is Investing and Why Does It Matter?
Investing is when you put your money into something—like stocks, bonds, or real estate—with the goal of it increasing in value over time. Instead of just saving money in a bank where it earns little interest, investing gives your money a chance to grow much faster.
The key reason to start investing early is compound interest. This is when your investments earn money, and then that money earns even more money over time. The earlier you start, the more time your investments have to grow.
For example, if you invest just $100 today and let it grow at 8% per year, in 30 years, it could turn into over $1,000—without adding anything extra!
How Can Teens Start Investing?
Good news: You don’t need a lot of money to start investing! Here are a few simple ways to get started:
1. Open a Custodial Investment Account
If you're under 18, you’ll need a custodial account (like an UGMA or UTMA account) that a parent or guardian helps manage. Some popular investment apps and platforms that offer custodial accounts include:
Fidelity Youth Account
Greenlight Invest
Acorns Early
2. Invest in Index Funds or ETFs
Instead of picking individual stocks, beginners should consider index funds or ETFs (exchange-traded funds). These investments spread your money across many companies, reducing risk while still allowing you to grow your wealth.
Some of the most popular index funds track the S&P 500, which includes big companies like Apple, Google, and Amazon.
3. Buy Fractional Shares
Don’t have hundreds of dollars to buy a full share of a company like Tesla or Microsoft? No problem! Many investment apps allow you to buy fractional shares, meaning you can invest as little as $1 into big-name stocks.
4. Use a Robo-Advisor for Automatic Investing
If you don’t know what to invest in, robo-advisors like Betterment or M1 Finance can automatically invest your money for you based on your risk level and goals.
5. Start a Business and Reinvest Your Profits
If you’re already making money from a side hustle (like selling art, tutoring, or mowing lawns), consider reinvesting some of that income into stocks or index funds. This way, your money makes more money!
Common Investing Mistakes to Avoid
Before you jump in, here are some mistakes to watch out for:
Investing money you need right away (Investments take time to grow—don’t put in money you’ll need soon!)
Chasing “hot stocks” or trends (Stick to steady, long-term investments.)
Panicking when the stock market goes down (Markets go up and down—think long-term!)
Final Thoughts
Investing might seem intimidating at first, but once you get started, it’s actually pretty simple. The key is to start small, stay consistent, and think long-term. Even if you invest just a few dollars now, your future self will thank you.
