It’s Never too Late to Start Investing as a Teenager!

There comes a point in every teenager’s life when they stop depending on their allowance money and start earning on their own. Once your teen gets his/her first few paychecks, this gives you a chance of teaching him/her about investing.

Yes, there’s no doubt that investing is a complex task but it doesn’t always have to be so. When you teach your teen about investing and let him take a few baby steps, you will definitely not expect him to become a millionaire hedge fund manager. However, when a teen starts learning about investing, he/she also gets numerous money lessons that play a vital role in their growing years.

Even if a teen wishes to make a career in the stock market, he/she has to know the ins and outs of this unknown world. Here are few tips shared by experts.

Know how to use an investment returns calculator

One of the foremost things to do while introducing your teen to investing is making him understand the value of timing in the market. Using an online investment calculator can simulate various investing scenarios. Once you use these calculators, you can personalize variables like the total amount you are going to invest in a month, the number of years you wish to invest and the anticipated rate of return.

Due to the theory of compound returns, this is particularly vital for teens as it teaches that the only way to accumulate funds are by starting early.

Buy any stock

When you’re new to the investment world and you have just started to learn trading, it is highly educational if you could pick individual stocks and watch them grow over months. This will help a teenager get a clear idea of how the stock market works. This lesson is worthier than the relative gains that one could have earned by utilizing automated investing services.

Hence, you should consider allowing a teen to purchase some stocks of a company of their choice. Let them check and monitor the performance of that stock and assist them in understanding why those stocks lose or gain in value.

Invest in mutual funds

Since the mutual funds are handled by a professional money manager, the individual investor need not have 100% knowledge on how and when to invest. All they need is to provide the funds. This option is often perfect for retail investors as it gradually incorporates a perfect savings habit.

In spite of the gaining momentum of products like mutual funds, conventional instruments like fixed deposits haven’t lost their importance among Indian investors. The reason behind their popularity is that they promote assured returns and disciplined savings regardless of market conditions.

The entrepreneurial and ambitious Indian teenagers often bank on their savings instrument to finance an array of dreams like starting a new business or funding a higher level of education.

Though you wouldn’t want your teen to blow his entire savings on experimental ventures still it is beneficial to teach them the basics of investing. This can help them learn the most vital money lessons of life.