Teenagers commonly seek new ways to make adequate amounts of money. A common money-making trend is teen investing, which has proven profitable for many. Learning how to manage money through investments also helps teenagers develop skills that they will carry into their working life, such as wealth management and market knowledge. As Investment Portfolio Manager Barbara A. Friedberg explained, “Long term investors who build up a portfolio of dividend-paying stocks or funds have one of the best ways to earn passive income” (Friedberg, 2023).
Teenage investing has many benefits that persist into your career. Learning how to compound money early can lead to accumulated wealth over time. According to financial advisor Michael Gahalla, “The earlier you start, the better off you are. It’s also part of a bigger idea of being financially responsible and having your money work for you.” Developing your knowledge of the market will help you become financially independent and responsible for the rest of your life. Americans struggle to save their money and invest properly due to a lack of knowledge in the subject. According to financial planner Jeff Rose, "American savings have dropped to the lowest point in years. Specifically, the survey found that 50% of Americans had less than $600 in savings…” (NASDAQ, 2021). Starting early also leads to more time to compound interest, so the earlier you start, the better!
Golden emphasizes profits in the long run and how volatility in the short run doesn’t lead to consistent profits. According to David Golden, an economics teacher at Northside College Prep, “I would encourage teenagers to think about the long term…. never put your eggs in one basket, spend your time understanding specific industries. Ultimately, I would encourage young people to get comfortable in getting into ETFs (exchange traded funds).” He also recommends diversification of your portfolio and not investing all your money into a single stock. ETFs are a great way of practicing this strategy as ETFs are baskets of stocks that trade on the same index. Therefore, by investing in a singular ETF, you invest in a whole market, which proves to be much stabler than a singular stock.
Choosing to invest your money is an amazing way to earn money as a teenager and obtain new skills that you will carry into your life. Go for it!