It’s exciting to get your first paycheck, but it’s even more thrilling when you grow your money over time. Investing is the way to do this. Investing can be confusing, but it doesn’t have to be.
No one expects you to be a millionaire by the time you’re 20. But the more you learn about money while you’re a teenager, you will reap huge rewards later when you start saving for more important things. Below are some great tips for getting started.
Study an Investment Returns Calculator
One of the most powerful things you can do when investing is to understand how much money you can earn overtime.
There are a ton of calculators online that will let you enter the amount you plan to invest each month, the number of years you plan to invest, and the expected rate of return. You can try our rate of return calculator here (add a link).
Buy a Stock (Any Stock)
Although you should avoid the practice of “picking stocks,” it can be a great tool for learning when you first start investing.
Choose a stock from the company of your choice and learn how shares go up and down, and why.
If you are under age 18, your parent(s) can be the one(s) buying and selling the stock, or they could set up a custodial account.
How Do I benefit from buying stocks?
When you invest in buying a stock, you own part of a company. When the company does well, you do well, and vice versa.
It can be awesome to say that you are a part-owner of The Clothing Brand Supreme, McDonald’s, or Netflix. And it’s even more exciting watching that investment rise in value.
Set aside a certain percentage of your paycheck to buy more shares. Some shares of stock may lose value in the short term but usually, go up over time. And who knows? Maybe those few shares of stock now could result in millions of dollars down the road.
Open a High-Yield Savings Account
High–yield savings accounts are bank accounts that earn you a higher interest rate for deposits than a traditional savings account.
An online savings account pays a higher interest rate than your local brick-and-mortar bank. One popular option is Ally Bank.
Online savings accounts encourage you to save. Most of the time, they don’t allow you to withdraw money using an ATM card, and many won’t even let you write checks. You can deposit a portion of your paycheck into this account and get started on the road to savings.
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