Investing as a minor can be a challenging but rewarding experience. As a minor, you may not have access to the same financial resources or opportunities as an adult, but there are still ways you can begin investing and building your financial future. Here are some tips on how to invest as a minor:
Start Investing As Soon As Possible
The earlier you start saving, the more time your money has to compound and grow. Start by setting aside a small portion of your allowance or any other money you earn, maybe from your lemonade stand or summer job, and consider opening a savings account specifically for investing.
Investing can be confusing, especially if you’re starting. Take the time to research and learn about different investment options, such as stocks, mutual funds, or real estate. Many online resources are available, including websites and apps that can help you get started. There are also a lot of good investing books that can teach you how to invest properly, starting with The Intelligent Investor, Rich Dad Poor Dad, Beating the Street, and many others. Another fun way to learn about investing and the stock market is through movies and documentaries, easily accessible resources that can teach you how things function in real life.
Look for Low-Risk Investment Options
As a minor, your investment budget is limited, so choosing low-risk options that won’t jeopardize your savings is essential. Consider investing in a diversified portfolio of mutual funds or index funds, generally considered less risky than individual stocks. Diversification is key, in our opinion; as the great Warren Buffet said, “Don’t Put All your Eggs in One Basket” – words to live by for an investor.
Get Permission From a Parent or Guardian
As a minor, you may not be able to open your own brokerage account or make investments on your own. However, you can still invest with the help of a parent or guardian. You can open a jointly owned brokerage account along with one of your parents, or a more frequent choice would be a custodial account. Talk to your parents about your investment goals and ask their permission to invest your money.
Consider Alternative Investments
If you’re not interested in the stock or bonds, there are other ways you can invest as a minor. Consider starting a small business, investing in real estate, or crowdfunding. These options may not be as simple as buying stocks, but they can provide unique investment opportunities and help you build valuable skills.
Something worth mentioning is although investing is a good thing, you always have to be smart about it, especially when you are a minor. Read, learn, listen and educate yourself, try following the footsteps of some of the greats of Wall Street, but we are very careful because investing can be addicting, and it is a gamble if not done properly.
Investing as a minor can be intimidating, but it’s also an excellent way to build financial literacy and set yourself up for a bright financial future. By starting early, educating yourself, and looking for low-risk options, you can begin building your investment portfolio and taking control of your financial future.