Adulting: Investing for Teens


Amber Roldan

With the multitude of pathways available to invest, teenagers can put their money to good use as soon as they turn 18. No matter how small the amount, spending money to receive money in the long run can provide teenagers with a general understanding of investing in the future.

Elyssa Abbott, Editor-in-chief

Investing can seem intimidating to teenagers, especially for high school seniors that plan to enter college and begin adulthood this year. Investing at a young age will likely not make you an overnight millionaire, but becoming familiar with the process can help for future investments. However, certain rules and guidelines allow people to begin investing at 18 years old and may limit the amount invested each year.

The best ways to invest young consist of opening a high-yield savings account. Although the stock market can produce a promising outcome, it does require strategy and a general understanding of the companies one plans to invest in. A high-yield savings account allows saving to grow rapidly compared to a typical savings account. Sallie Mae and Affirm both offer high-yield savings accounts with various annual percentage yields and without an initial deposit to open. 

The nature of stocks may dishearten teenagers, but starting small with an index fund or investing in a well-known company, such as Coca-Cola can still provide a return. The first step consists of learning how to invest in the stock market and developing an understanding of how it works. Index funds allow investors to hold shares in a variety of companies, which means a lower risk and typically lower fees. Index and mutual funds also tend to grow steadily and investors can easily predict the trends. 

For those that recently opened checking accounts and want to begin investing, a micro savings account offers investing a little amount over time. Acorns, the most popular micro savings app, links to a checking account and for every purchase made will invest the change the user chooses to round up. For example, if you purchase a meal for $9.50 and choose to round up to the nearest dollar, the app invests 50 cents. Over time, this amount can grow and users can receive a return, which on average stands at about 10 percent.

Lastly, the perfect option for a teenager for a long time investment, an IRA (Individual Retirement Account) or Roth IRA helps teenagers who desire to put their money to good use. At the age of 18, people can begin allocating money through these accounts that builds over time and will grant them a plan for retirement. Depending on income, IRA’s only allow a certain amount deposited each year. The difference between a traditional IRA and Roth IRA consists of the fact that a Roth IRA does not tax the earnings in the account. Account holders can withdraw the amount at any time after five years, but then taxes will apply. 

The massive investment world provides those interested with a multitude of options of how to grow your money. The first step consists of learning about investing and choosing the path best suited for your lifestyle and needs. Starting sooner than later, even just a little amount, can equate to a less stressful retirement or earning a valuable return from the stock market.