Investing as a teenager? It might sound a bit too early. But, in reality, the sooner you start, the more financial freedom you’ll have later. Investing early gives you a head start with compound interest—meaning your money grows not only from your contributions but from the interest your investments earn over time.
Starting young allows you to take advantage of the time in the market. Unlike older investors, you can ride out market ups and downs without pressure, allowing your investments to grow. Just think about it: a few dollars invested today could turn into hundreds, even thousands, by the time you reach your 30s or 40s.
Learn more about compound interest and investing basics from Investopedia
1. Age 13: Opening a Custodial Investment Account
When you’re 13, you can begin investing with the help of an adult by opening a custodial investment account. A custodial account is managed by a parent or guardian, but it’s yours. When you turn 18 or 21 (depending on where you live), the account becomes fully yours.
Some options to explore:
- UGMA or UTMA Accounts (U.S.): These accounts allow you to invest in stocks, bonds, and mutual funds. Your parent manages it until you’re of age.
- Junior ISA (U.K.): This is for U.K. teens, where parents can contribute up to £9,000 per year. Like U.S. custodial accounts, it grows tax-free.
Start with something simple like an S&P 500 Index Fund, which invests in America’s 500 largest companies. Historically, this index has returned around 10% annually—perfect for young investors aiming for steady growth.
Read more about custodial accounts on NerdWallet
2. Age 14: Discover Your Talents and Passions
At 14, you don’t need to focus heavily on earning money yet. Instead, explore your interests. Trying different hobbies and activities now can help you find out what you’re good at or enjoy. Whether it’s sports, music, coding, or art—these experiences may lead to potential income sources later.
This stage is about self-discovery:
- Experiment with new hobbies: Try something you’ve never done before. It could be video editing, graphic design, or even baking.
- Build discipline: Activities that involve regular practice, like sports or learning an instrument, help build discipline—a skill that will serve you well in investing.
By understanding what you enjoy, you’ll have an easier time identifying side gigs or businesses that match your interests.
3. Age 15: Start Stashing Your Money
By age 15, you may receive cash gifts or even earn from a part-time job. Instead of spending it right away, think about saving. This money can be the seed for your future investments.
Here’s how to start:
- Request cash gifts: If family members ask what you want, suggest cash. It’s more flexible and can go straight to your savings or investment fund.
- Consider a part-time job: Jobs like tutoring, babysitting, or working at a local store provide some income and useful work experience.
- Create a savings goal: Instead of spending all your money, aim to save at least half. Think of it as building a financial cushion that you’ll eventually use for investing.
Avoid unnecessary spending—this is your foundation for future investments.
Learn more about saving and budgeting for teens on Practical Money Skills
4. Age 16: Sharpen Your Skills
At 16, it’s time to invest in yourself by developing skills that can be profitable in the future. If you have a specific interest or talent, invest a little money to improve it. Whether it’s photography, coding, or music production, focusing on your skills now can pay off in the long term.
Consider these ways to build your talents:
- Invest in quality tools: If you’re into photography, a good camera is a smart investment. For artists, quality supplies can make a difference.
- Take online courses: Platforms like Udemy or Coursera offer affordable courses in various fields, from digital marketing to graphic design.
- Join local groups: Many communities have free or low-cost workshops. Learning from others in your field is not only motivating but can help you get insider tips.
Building your skillset can open up side hustle opportunities, like freelancing, which gives you a way to earn money from your interests.
5. Age 17: Get Your Driver’s License and Expand Your Options
At 17, consider getting a driver’s license if possible. Although it’s an extra responsibility, being able to drive can create more income opportunities.
How a license can help you earn more:
- Increased job options: Jobs like delivery services, tutoring, or even pet sitting become easier when you can drive. You’re not limited by bus routes or walking distance.
- Convenience for side hustles: If you freelance or have a business, being able to meet clients or attend events is much easier with a car.
- Adds to your skillset: Driving responsibly and managing transportation costs (like fuel) adds to your financial skills.
While it might feel like an extra step, a driver’s license can make a difference in your income-earning potential, making it easier to fund future investments.
6. Age 18: Open Financial Accounts and Start Career Planning
At 18, you’re entering adulthood with a world of financial opportunities. Here are the essential steps to kick off your financial journey:
- Open Your Own Bank Accounts: Start with a checking account for daily use and a high-interest savings account to grow your emergency fund.
- Start Building Credit: A beginner-friendly credit card, used responsibly, can help establish your credit score. Aim to keep balances low and always pay in full to avoid interest charges.
- Open an Investment Account: Consider a tax-efficient option like a Roth IRA (U.S.) or a Stocks and Shares ISA (U.K.) for long-term growth. These accounts offer tax advantages that help your investments grow faster.
Additionally, this is a great time to think about your career path:
- Consider College or Alternative Paths: College is a significant investment, so explore scholarships and weigh its value for your career goals. For certain fields, certifications or apprenticeships may be more beneficial and cost-effective.
- Avoid Bad Debt: Only borrow what’s essential for education or career needs. Good debt, like student loans for necessary education, is manageable if it aligns with future income.
Opening these accounts, handling your credit carefully, and planning your career path will set you up for future financial success.
7. Start a Side Hustle
Now that you’re 18, it’s a perfect time to consider a side hustle. Side gigs can be anything from freelancing to selling items online. Starting a side hustle lets you earn additional income while learning valuable business skills.
Here are some ideas:
- Freelancing: If you’re good at writing, graphic design, coding, or social media management, freelancing sites like Fiverr or Upwork are great places to start.
- Sell on eCommerce Sites: Platforms like Etsy or eBay allow you to sell handmade crafts, vintage items, or even thrift store finds.
- Teach or Tutor: If you’re strong in a particular subject, tutoring can be a lucrative side hustle. You can offer services locally or join an online tutoring site.
A side hustle gives you experience with managing money, building relationships with clients, and learning to provide value. Plus, every dollar earned brings you one step closer to funding future investments.
8. Invest with a Long-Term Mindset
Investing is a long game, and at 18, you have the advantage of time on your side. It’s best to think about your investments in terms of years, not months. A long-term mindset can help you stay calm during market dips and benefit from compounding.
Some ways to start investing for the long haul:
- Start Small: Begin with a small amount, even $50 per month, to get comfortable with investing. Apps like Robinhood or Acorns are beginner-friendly.
- Diversify Your Portfolio: Don’t put all your money into one stock. A mix of stocks, bonds, and index funds can lower your risk.
- Look into Growth Stocks and Index Funds: Growth stocks have high potential returns, though they can be volatile. Index funds are more stable and grow with the overall market.
Remember, the goal is to let your money grow steadily over time. The more you invest early, the more you’ll benefit from compounding.
Learn more about long-term investing strategies from The Motley Fool
Conclusion: Make Your Financial Future a Priority
Starting to invest as a teenager isn’t about getting rich quick. It’s about setting the foundation for a secure and prosperous future. The small financial choices you make today—whether it’s opening a custodial account, learning a skill, or building a side hustle—can have a major impact down the road.
“The best time to plant a tree was 20 years ago. The second-best time is now.”
As a young investor, you have time, a powerful asset that allows your investments to grow. With discipline, patience, and a bit of learning, you’re already on your way to financial success.
Take control of your financial future. Start small, stay consistent, and remember—your future self will thank you.
Thank you for reading! If you’re ready to take your first step, talk to a parent about opening an investment account or try learning more about a skill that could turn into a future income stream.