We’ve all had those fantasies of getting into a DeLorean and going back in time. We think about all the little changes that we’d make in our lives. If you’re like me and have invested in the brain, then maybe you wish you would have gone back in time and started investing earlier.
This is exactly what I was thinking when I had a chance to meet with the son of one of my friends. Her son had recently turned 16 but had been mowing lawns “since he was a kid.” Haha. The son had talked to a cousin recently who had told him about how he needed to start investing. Intrigued, he told his mom to contact that investment guy that she had mentioned in the past. In case you’re not sure who he was referring to, that investment guy was me. If you are ready to begin your investing journey, make sure you check out our guides such as our Online Investing for Newbies for your reference! There are not many things that excite me more (with the exception of In-N-Out Burger) than seeing a young investor get started for the first time. The fact that this investor was the ripe age of 16 makes it that much more exciting. With any new investor, I walk them through the process of explaining what a stock is, how that relates to a mutual fund, and how easy it is to get started investing by buying mutual funds. One tool that I use is Thomson Reuters which is a database of almost 30,000 different mutual funds that exist. One mutual fund that I use for hypothetical purposes is not the best mutual fund in the world. In fact, it’s an average mutual fund and by average I mean that when you look at how it compares to other mutual funds in its peer group it’s been pretty middle-of-the-road. I like showing this mutual fund, for two reasons:- It gives us a good variety of market conditions since the fund was established in the late 60s.
- By showing an average mutual fund, I’m not showing the best, I’m not showing the worst, I’m just showing a possible scenario of what it looks like to make money in the stock market.
hey jeff im a 16 year old and i saw your post and i thoughjt it was really intresting and i always wante to
invest but i never knew how and im still a little confused and i still dont know how to do it but i would like to learn how to invest like you did with this 16 year old.
How can you turn 900 dollars into more money I want to save and invest and a do a lot more for myself and family with time what do I do? Email me the answer please and thanks I’m really struggling with life
Hi Mark – There’s no magic secret. Invest the money with a robo-advisor, like Betterment, and make regular contributions to increase it. Over the years your financial situation will improve.
I really like this idea. Been following your videos on YouTube for financial advice. Saw this videos and seems like a great way to put money away for my kids college fund.
Thanks Jose.
This is a very motivating post! I’ve recently become discouraged because my 401k, roth ira, and other taxable brokerage accounts were down between 1 and 3% or so, haha. This just goes to show I need to just sit back at let time and compounding factors do there job and not worry so much!
A great lesson! When I was 18, I read The Motley Fool’s Investment Guide for Teens, which covered similar lessons. Unfortunately I was from a poor family and already taking on considerable student debt at the time, but the lessons stuck with me, and 11 years later I have a positive net worth and a good head start on my retirement investments, despite those early student loan decisions. I totally agree that it’s best to show this sort of thing to any teen, regardless of whether they have the money to invest right then, since the lesson will stick with them (it did with me!).
I only wish someone had shown me this when I started my first business, at age 6! Alright, maybe 6 is too young for understanding investments, but if I had saved up the money from my little newspaper (seriously, that’s what it was), I could have had a few hundred dollars in a savings account when I was a teenager, and then could have learned about where to start investing it.
@ Stephonee A positive net worth is quite the accomplishment, especially coming from what sounds like a mountain of debt. Great work!
Great post! I also love talking with younger people about investing and saving and how important it is to start at a young age. Hopefully you made an impression and set this kid in the right direction to having financially stability once he grows up.
It’s no wonder that compounding interest is considered as the 8th wonder of the world. I wish I could have saved earlier than I started but everyone wishes that way. It’s so important to explain this concept to your kid(s) so they can take advantage of this powerful tool.
Best way to start investing is to . . . start investing! I had started young, but was too ambitious. I wish I had followed technique like you described above when I was 16 instead of gambling on risky stocks. Good advice!
-DP
Would you recommend actually doing this with a kid’s money? Say a seven year old with $300 to $400 from allowance, birthday gifts, etc? Obviously they would keep a percentage of their money as cash to do whatever they want and are cool with the idea… It kills me that my son has a wad of cash sitting rolled up in a jar, I would love for it to be working for him.
@ Adrienne Would I? I did! 🙂
I’ve already bought my oldest son (he’s 8 now) some stock so he can keep up with the share price. Once he gets a bit older, we’re going to invest into some mutual funds so he can track the growth.
Thanks for your response! I’ve been thinking about this for quite a while but have run into too many naysayers. I appreciate the encouragement; it’s on the to do list for the weekend now!
May I ask… Did you put the account in your son’s name or keep it with yours, knowing it’s his? And if A, did you go with betterment or anyone in particular?
@ Adrienne I had to open a custodial in my name with him as the beneficiary. When he’s 18 it will legally be his.
The stock was purchased through the brokerage firm I clear though. One perk of being a financial advisor. 😉
I have a son who will be 3 years old in March… I would love to teach him the value of money as early as possible. When did you start talking to your son about saving/investing?
Would you encourage them with a match maybe once a year? if they put in $100 then you toss in another $100?
I’m glad to hear that some people are encouraging their kids to save and invest, and that you were able to help this kid get started. Great story!
I think the biggest lesson here is the saving piece in general. If you start early and continue to contribute you can end up with a nice amount in the end. A good lesson to be teaching all 16 year-olds.