Take stock of your financial future! The importance of financing & exploring the stock market at a young age.
Written by Adriana Rodriguez
Even just the thought of finances, money, and your future, can make you feel overwhelmed, but don’t let that stop you from understanding how to save and invest the money you earn now. Learning about your personal finances, and how to navigate the stock market is crucial for adulthood, so why not get a jump start? Your future self will thank you!
According to Investopedia.com, young individuals who invest early are more likely to see better financial returns. The truth is, when you’re young, you can afford to take more risks with your investments because you’re not yet responsible for “adult” expenses like paying a house mortgage or health insurance. You can learn to navigate the stock market, maximize your returns, and acquire stocks or funds that have the potential to appreciate over time.
To begin your financial journey, there are a myriad of resources available to you. Some U.S. high schools require students to take a financial literacy class for graduation, while others offer it as an elective. If you’re in the WONDER GIRLS program, you can also request them to offer their financial literacy workshop too! However, if your school offers the class, you should definitely take it to help you get a better understanding of the stock market and personal finances, but before you do, let’s dive into a few ways you can get a jump start:
Step 1: Do your research. If you live in one of the states that don’t require or offer a financial literacy class and lack, start by doing your own research and understanding the common terminology. You can search on Google Finance, YouTube videos, and the Stocks app on your iPhone or contact the National Association of Personal Financial Advisors to talk to a professional financial associate.
Step 2: List your investment goals. Understand why you are investing in the first place and what you want to do with the money you earn. For example, you may want to start saving for college, a car, or even a big trip for your next birthday!
Step 3: Select investments: The basis of the stock market starts with what you can invest in, such as stocks, funds, bonds, and other investments. Educate yourself on the different investments you want to buy. Young investors are recommended to buy exchange-traded funds, which allows for a bundle of assets but lowers risk and exposure while diversifying your portfolio.
Step 4: Open an account: There are a variety of apps you can use to open a brokerage account, which gives you access to the different stocks, funds, ETFs, and investments you can make. If you are under the age of 18 you may need a parent or guardian to help you set up an account. However, the top five apps for beginner investors are Fidelity, E-trade, SoFi Invest, TD Ameritrade Investment App, and Robinhood. You can also always go to your local bank for assistance from one of their financial advisors.
As you read this article you might be thinking, “I’m so young. Why do I have to start trading now?” Well, if you start investing now, the earlier you will understand the importance of strategy, saving, and patience. Begin at your pace and level. Money does not accumulate in a single second, but you can take the time to learn because the more you know the better you are prepared.