It is very difficult to think about the future while you are still in high school. And generally speaking, this is not something that is natural for people of that age. But the world has changed and now everything has to be done earlier than before. Fifty years ago, it was enough to finish high school and graduate at college and you would have a job with a stable income until retirement. This is no longer the case, so even when you are under 18 it is not too early to start thinking about investing that will give you a more secure future.
By investing at an early stage of life, not only will you be able to make much more money than your peers over the next 10 or 20 years, but there are other benefits as well. You will learn a lot about the stock market, learn to control your finances, and be disciplined. That is why it’s absolutely something you should be doing, and if you’re reading this as a parent of a teenager, then it is the right time to motivate him to start investing. Read reasons to invest in the stock market if you’re under 18 and find out why now is the time to start thinking about the future.
1. You don’t have any real expenses
At the very least, you have no compulsory expenses such as bills, mortgages, loans, and the like. All your expenses are related to entertainment, such as going to the cinema, buying a new gaming console, and the like. All of this will change significantly when you become an adult, so right now is the ideal time to invest. You have no expenses and even if you lose money, you will not find yourself in debt. While you probably only have a few hundred dollars a month at your disposal, that’s more than enough. You just have to think smart and spend a little less, and invest the surplus you have left. You should do that because later, when you have a child, for example, you may not be able to reduce costs and have extra money at your disposal. So take advantage of this period of life where parents pay everything for you and take advantage of it, avoid spending everything on fun.
2. Long recovery time
You have your whole life ahead of you, even if you lose all your money, the recovery time you have at your disposal is very long. You may lose money due to your mistake or simply unfavorable market movements, but this will not have a significant negative impact on the rest of your life. You certainly don’t even have a lot of money at your disposal, so you can’t lose much either. Also, you will not be able to have your own brokerage account but you will have a custodial account supervised by your parents, so they will not allow you to make wrong moves either. Learn more about custodial accounts at Loved.com and tell your parents what they need to do.
On the other hand, if you lose money at the age of 40, you don’t have a recovery time in front of you, because your child will soon have to go to college and the like. And it is also very likely that you will lose much more because you will invest your savings and the like.
3. Good financial habits
Even if you don’t make any money by investing in the stock market or you end up in a small deficit compared to the initial investment, don’t think that you made a mistake in starting all that. Good financial habits are even more important in the long run than making money. Because you probably won’t make millions, but good financial habits can bring you millions in a lifetime. You will learn how to save and how to invest the money saved in the right way. Then you know that you do not need to spend more than you have, so you will avoid being constantly in debt and paying loan installments. A debt-free life is the best thing you can do for yourself.
It is better to live more modestly, but without debts, than to temporarily live beyond your means and then pay it off for the rest of your life. When you become an investor at a young age, all this will be clear to you and you will never make such mistakes. Also, you will learn how to cut expenses when needed, because you will already be doing it to have enough money for the stock market. It is easy to save when you have surplus funds, real challenge is to cut expenses and save.
Repetitio est mater studiorum is a Latin proverb meaning repetition is the mother of study/learning. That is exactly the case here. The stock market is not something you can learn all about in a few days. It takes years to be familiar with the basics and to be able to better decide which stocks to buy and the like. When you start doing this as a teenager, you will be at a huge advantage over your peers. At the age of 25, you will be very experienced in all this, and most of them will not even start yet. You will know the market and different strategies, which will most likely bring you significant financial resources throughout your life.
5. Possibility of early retirement
Why would you have to work until you turn 70 when with very little effort during your teenage years you can afford early retirement. Early retirement means that before your 60th birthday, and maybe even earlier, you will have enough funds to stop working. And you will have another significant portion of your life to enjoy instead of working every day. Now you have plenty of time and it is the right time to start investing. One day you will be very grateful to yourself.
It is certain that this will be one of your best decisions in life. This way you can allow yourself to have financial security for the rest of your life. And when you have financial security, it is very likely that you will earn even more, because you have room to take risks.