Investing for Teens
Saving money for retirement and other important expenses as you get older can be difficult, especially when you’re trying to live it up during the teenage years. When we are young, thinking about our monetary situation for the future is often the last thing on our minds. Having enough money to get through your golden years and take care of your family is definitely something you will be concerned about as you get older. The fact is, the sooner you start investing, the more money you’ll have to live on as you age. There are many different forms of investing, and most of them can offer you a great return if you do it wisely. While investing can be a bit intimidating, it’s important to understand the various types of investments available and what you can hope to gain from them.
Stocks and bonds are one of the most popular forms of investing. Simply put, you purchase stocks and/or bonds on stock exchanges, and they can later be sold at a profit, which is yours to keep. The younger you are, the more diversified, or different, your portfolio should be. Younger people can take higher risks because they still have time to re-invest if something goes wrong. The higher the risk of any kind of investment, usually the greater the return will be. Bonds are similar to stocks except that a bond is more like a small loan being given to a person, corporation, or government project. Over time, the bond earns interest and when it has lived out its full investment life, you reap the return of the interest that has been accrued on the amount of the bond. Whether you decide to work with stocks or bonds, it’s always a good idea to enlist the help of a professional who can help guide you through the steps of purchasing and selling stocks.
Another well known and popular form of investing is known as an IRA account. An IRA account is also known as an Individual Retirement Account. This form of investing is usually begun once you have a job that offers some kind of 401(k) plan. You can fund an IRA with your own money, or your company might contribute. If you do not have a job, you can still start an IRA and then continue the investment process once you enter a career. Many companies will match your contributions or help contribute a certain percentage of your overall contribution each month. The two main IRA types are traditional and Roth. They differ because of how the money is taxed, and it is a good idea to find out the terms of an IRA before you decide to invest in one. This kind of investment is easy and there is very little to no risk involved.
There are many other types of investing you can try, and each one has its own fine print, so always ask questions before you do anything with your money. Try out a few interactive trading games to get a good feel for what dealing with stocks is like. Just saving money is great, but it does not offer much, if any profit like an investment can. Being patient is the key to seeing the benefits of investment, so remember that while it seems like you’re giving your money away at first, it will be well worth it in the end when you get that final return on all of your hard work and money invested. Not only will you have money for the future, but investing can be fun as well. Check with your parents and find out if they have already started some kind of investment plan for you. If so, you can always contribute to that and watch your money grow over time.
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