by Evan Murphy
As a high school student, it’s very easy to not understand what investment options are best for you. With the wide variety of investment options all having their pros and cons, it can become extremely overwhelming. Saving and investing money at a young age is extremely important, so that’s why I’ll be going over some of the options that you have right now!
The first thing you likely want to do as a high school student is open a checking account. Probably the easiest form of investing, it’s a good way to get yourself started and comfortable with investing and saving money. It will help teach you financial responsibility with using a credit/debit card to manage your balance. A checking account is meant for you to easily deposit and withdraw money for daily transactions, although it’s not best to put lots of money into a checking account at once, as the interest rates are relatively low. Axos Bank now offers the Axos Bank First Checking Account, which is designed for teenagers aging from 13 to 17, earning a 0.25% APY (Annual Percentage Yield) on your balance. There are also no overdraft fees, monthly maintenance fees, or non-sufficient funds fees, as well as daily transaction limits of $100 in cash or $500 on the debit card.
Another good investment option is to open a savings account. This is another great way to get comfortable with saving and investing money with no risk before getting involved in more complicated forms of investing such as stocks. Instead of simply holding onto your money like most teenagers do, you might as well put this money into a savings account so you can earn interest with absolutely on risk involved. It may be best to set up an online savings account as a teenager, as you can’t easily make a withdrawal, preventing you from making any bad impulsive purchases directly from your savings account. The American Express High Yield Savings Account currently offers a 0.50% APY (Annual Percentage Yield), and requires no minimum deposit to get started. There’s no monthly maintenance fees either, meaning that they won’t lose any of their money invested either.
Finally, the last two options are a bit more advanced, and you should start utilizing them after creating a checking and savings account. One option of investing that is a little bit safer is an Index Fund, which is a portfolio of stocks or bonds, which have lower expenses and fees than actively managed funds. The diversification of stocks makes this option a lower risk investment option, but usually at a low price as well. Otherwise, a riskier option is investing stocks, but it also provides a much greater opportunity to make money as well. Investing in individual stocks makes it so that you can choose what companies to buy shares in and how many shares you want to purchase. This means the opportunity not to only make money, but lose money is greater. Therefore, it’s important that you research the stock market often and understand how it works so you don’t lose lots of money that you have invested. Stocks are great to get into once you understand how they work and have had experience investing and saving money.
Overall, there are lots of different investment and savings opportunities for you even as a teenager, ranging from no risk at all to extremely risky. That’s why it’s important to start out slow with a checking and savings account, and from there move into more risky but rewarding investment options such as Index Funds and Stocks.
Works Cited
ABOUT Erin Erin Gobler is a personal finance writer and millennial money coach. She is passionate about teaching women to pay off debt and save for their financial goals without having to give up spending on the things they love., et al. “The Best Investments For Teens And How To Start.” Clever Girl Finance, 9 Jan. 2021, www.clevergirlfinance.com/blog/investments-for-teens/.
Consumerismcommentary.com, www.consumerismcommentary.com/the-best-investments-for-a-teenager/.
DeMatteo, Megan. “Here's When You Should Put Money in a Checking Account vs. Savings Account.” CNBC, CNBC, 21 Sept. 2020, www.cnbc.com/select/checking-vs-savings/#:~:text=While checking accounts are for,t immediately plan to spend.&text=In addition, savings accounts don,send or receive money electronically.
Doughroller.net, www.doughroller.net/investing/best-investments-for-teens/#:~:text=One of the best ways for teenagers to start learning,a low tax rate, too.
Fernando, Jason. “Index Fund.” Investopedia, Investopedia, 4 Feb. 2021, www.investopedia.com/terms/i/index
I agree that for most people an index or mutual fund will provide them with the best results. Unless you actively trade, which can be extremely risky and cause for a lot of loss. In fact, most people who trade, despite research, will lose money because it is extremely difficult to time the market. Therefore, most people should try to invest because over the long term, they could have significant gains.
ReplyDeleteI also feel like municipal bonds are a good option, I think in most scenarios people should be investing their money into bonds or index funds like you said instead of just having their money sit in a bank I also think it's important to open a retirement fund like a roth IRA as soon as you possible can just because of how exponential the growth of those accounts become later on.
ReplyDeleteI do agree that as a teenager, you should invest in having a checking and savings account. It is always good to have both for future purposes. Then I thought the Index fund was very interesting and informed me on something I didn't know before. It sounds like a really good option for a teenage as there is low prices. Every single teenage should try at least one of these investing options as it will help prepare and set them up for their future financially.
ReplyDeleteI thought that you chose a relevant topic because it really pertained to me as a senior in high school moving on into college soon. Prior to reading, I had a good understanding of the checking and savings account because I already have that set for myself. I definitely believe that this is highly effective starting out. However, I never have thoroughly researched other investment opportunities. I personally do not think investing in stocks as of now is the smartest idea because it has been extremely inconsistent which puts one’s money at risk.
ReplyDeleteWow Evan! I really admire the way you approached writing this blog. It was really written and very educational. I think you made a good point in mentioning how index and mutual funds will be the best choice. I like how at the beginning of your paragraph of saving accounts you talk about how it is a great idea for teens because it has no risk involved and can introduce them to having there money work for them. However I also would add that it is important to find a high interest savings account so you can really get the experience of watching your money grow alongside you. Personally, Summit Credit Union's GOSave account works well for me, with a no deposit fee, a minimum of a $100 month, and one free withdraw per month it is the perfect savings account for me.
ReplyDeleteThis blog is great as a lot of information that was given I think is extremely crucial to begin thinking about when your reaching your final moments in high school. Beginning with a checking and savings account is the right way to go and liked how you progressively listed each investment in like ranks. Felt like putting stocks has the most complicated investment is so true, only consider investing in stocks when you actually understand the stock market and if you can actually make money efficiently without losing more money. I felt like you touched every topic except for opening a retirement fund like a Roth IRA as it would help your growth of those accounts in the future and make it even more beneficial.
ReplyDeleteI've always been told that investing is a good idea for younger people, But I have the same question every time, what and where should I invest? After reading this article I think i'm going to open up a savings account. Like you said most teenagers have a lot of money that they hold in their checking accounts, which I may or may not do. So that's next on my agenda is to open a savings account. But I have another question, how much money should I put in and how much should I keep in checking?
ReplyDeleteI have a savings account and a checking about though I don't feel comfortable with the stock market yet. One thing I am more interested at this time is US Government bonds. They are quite safe investments, but they are more long term. I feel like that is an option to try out before going into the risky stock market.
ReplyDeleteEver since I was a little kid I’ve always thought why don’t I just put all of my money in a savings account and watch my money grow like crazy! I watched a video explaining that investing in a savings accounts is really not worth it. As you make more money the price of the market does up with it. An example being candy bars, they used to be only a few cents for a bar and now they’re a few dollars. Because of this, do you think it is still a good investment to put money in a savings account?
ReplyDeleteI like how you include ways to start out saving money and then more advanced strategies. I want to explore more about the stock market because the risk seems to be calculated as there are a lot of people who are able to make their living off of the stock market by dedicating enough time and looking at the right resources. I hope that as personal finance continues we learn more about where to start when investing in stocks and what resources to look at when evaluating the price of a stock.
ReplyDeleteI never really thought of a savings account as really an investment, but now that you say it It does make sense, as you put your money there in order for it to grow and take it out at a later date. The checking account though I wouldn't necessarily categorize that as investing as really money is easy to take out and the account I have has no interest and its more to just have money to spend. Another investment option That I thought of was perhaps a retirement fund as you can start investing money in there for retirement and the money will grow so You can take that money of when you retire.
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