Investing, whether as a kid or an adult, may be daunting, but it is simpler to start than you think. All you really need is a few dollars to start and pour into a company as you watch the graph go up and down. However, the alternative tends to be more rewarding as you dig a little deeper and get wrapped up in the intricacies of not only the stock market but the whole world.
For starters, you will need a phone or computer, a parent for help and guidance, and a curious mind. Hence, when beginning, it is always good to ask questions. Whether that be online or with a parent, asking questions throughout the process is imperative for a clear understanding of the subject and learning more. Making money is fun, but the only way you can do it is to learn and do research.
Next, you may want to look at the many different options for investing, and some kid-friendly ones can be ETFs, stocks or even bonds, before deciding which one you would like to use.
For starters, ETFs, or exchange-traded funds, are essentially a collection of investments like bonds or stocks that are traded on a stock exchange just like stocks are. ETFs are less volatile and more stable than stocks, meaning there is less risk than stocks, which translates to lower margins of profit or failure.
Next, stocks represent the ownership of a company that you buy into, depending on how many shares you own. Stocks are traded on the stock market, where many companies are publicly traded and anyone can buy a share and own part of the company. Additionally, stocks are prone to being more volatile, meaning there is more risk involved, where you may gain more money and also lose more as well. Therefore, researching companies that you may know, like Disney, will give you the information you need to see whether the company is doing well and if you want to trust your money with their company to make a profit.
Lastly, bonds are loans that you give to the government in return for a small amount of profit. Also, bonds are typically held over longer periods, where your money can appreciate to an even larger amount. Bonds are safer than stocks to buy, though patience is rewarded as money takes time to mature.
When placing your first investment, ensure that you monitor it to determine whether it is going up or down in value while also looking at the news surrounding the company. Though those aren’t the only indicators of whether to hold the stock or sell it, looking at the company itself is essential in determining whether it continues to grow even while the share goes down in value. Holding or even buying may be a good option, contrary to selling immediately.
Overall, investing is an exciting venture that takes you through real life and how to make money through different strategies. Hence, research is important to gauge which investments will be more rewarding in the long run. Through time, many questions, and even conversations with other people you will hone your skills, and even if you lose money, you will gain knowledge of how to improve.
Paul Raskin is a rising sophomore at Golda Och Academy who has always been intrigued by the ins and outs of the investment world, stemming from his father.
