Every minor and teenager at some point in time stops relying on allowances and start earning money on their own. The first paychecks are exciting for them and they are the best opportunity to start teaching them about investments. It would be better if you can teach your children how to invest in stocks under 18 years of age.
Investing is a complex affair but you never expect a teen to become a millionaire in a few days. If they can gain complete knowledge of investment in their teen years, they can learn about the more complex things in later life and it would be useful for them as they grow up. Here we are going to discuss the types of investment that every parent can start for their teenager.
Types Of Investment Every Teenager Can Do
The investment types mentioned here are simple to understand and will help your teenage child to learn the money lessons conveniently
- Buying A Stock – Indeed, teens should not get addicted to picking stocks; however, someone who is just starting to learn about investments should pick individual stocks and watch them grow over the months. It will help them to learn how the market works and they would understand why the shares lost value or gained. When your teenage child learns how to invest in stocks under 18, they would be able to manage their brokerage account.
- Invest In Low-Cost Funds – Once your teenage child receives the basic understanding of stocks and the market, they should move onto mutual funds. They can even go for exchange-traded funds. These types of funds would allow a teenager to spread the investment risk by investing in a broad set of stocks. Funds that give broad exposure to the stock market at low expenses are the best options for a teenager.
- Open A High-Yield Savings Account – You should teach your teenage children that it is not a wise decision to put all the money in stocks. Keeping some cash is good, but that cash has the potential to earn some yield. Therefore, you can search for an online savings account that offers high-interest rates in comparison to the market rate. These types of savings accounts are created to encourage savings and your teenage child can make the most out of it.
One of the effective things that you can do to introduce investment to teenagers is help them to use an online calculator that can stimulate the various investing scenarios. After all, the best way to accumulate larger sums is to start early.