What would a good investment for teenagers be?

Question

How could a teenager become financially successful by starting early so he has a welthy life?

Answer 1

That is a good question all teenagers should be asking themselves. Even though most people (and Congress) disagree with President Bush over people saving money on their own for Social Security, the fact remains that if people would put as much money into savings as they pay in Social Security taxes, they would have more than $1,000,000 by the time they reach 65. At 5% interest, that would result in $50,000 annually and not even touch the principle.
What is a good investment?
Start out with a regular savings account. After you have a predetermined amount saved in the savings account, save more and put into CD's. Next, put a set amount (each month if possible); into U.S. Savings bonds.
After you have a decent nest egg saved up, then start with stock or similar and some municipal, etc., bonds, etc., even invest in silver, gold, platinum.
Depending upon your life style, near-future plans (college, car, etc.), you should put the bulk of your savings into long-term (including stock). If, however, you want to buy a car, go to college, etc., put the money into U.S. Savings Bonds and C.D.'s.

Answer 2

Buy a handsome copy of The Richest Man in Babylon, and a sturdy Bible. Use them (particularly the latter) and you'll never get so much value from so few dollars.

Also consider buying some of the writings of Andrew Carnegie so you understand what money is and is not. I suggest the collection put out by Penguin. Don't bother with Rich Dad Poor Dad- it won't harm you to read it but doesn't tell you anything of substance. It's just another chump pandering to multilevel marketing scammers.

My strongest reccommendation (sp?) for an investment in larger dollar amounts is a college education. You don't necessarily need a ritzy one- go to any university that isn't dirt-cheap and you should be fine. If you've got more money than this or dont' have an interest, travel is also an excellent investment.

Money won't do you any good if your life is dim and stunted, or you lack the capacity to do something useful or usefully.

Finally, if all you're looking for is direct cash return, talk to an investment professional. S/he will tell you about diversifying your assets, show you around a few different investments, and divide your resources into different things for you to try out, explore, and capitalize. I'd also put back at least a few thousand in a savings account, if it were mine. But hey, I'm paranoid :P

Other excellent investments:

The Millionaire Next Door (Stanley & Danko)
The New Portable MBA (Collins)
The E-Myth Revisited (Gerber)
The Law of Success (Hill)
One Up on Wall Street (Lynch)

Answer 3

Hey buddy - I am 22. I started investing when I was eligible to open my Roth IRA - you become eligible once you take home a paycheck.

Some advice. Do not listen to any of the advice before this post. It made my head hurt. The 401K advice was good, and the research links provided by derobake were good, but other than that it was all crap.

You are young - you can afford risk - you must be patient. There is no get rich quick formula, you must have perseverance.

1) Make sure you are 100% in equities (no bonds!, no CDs!)
2) Start contributing to a ROTH IRA. The gains grow tax free. I use scottrade.
3) Do not, EVER, I repeat, EVER buy a mutual fund.
The data show, the history shows that THE MAJORITY OF MUTUAL FUNDS CANNOT BEAT THE MARKET. They are tax inefficient and charge high fees.

Therefore, if the idea of instant diversification appeals to you, buy an INDEX FUND which represents stocks in a particular index. A good one is VV. If you would like higher returns but higher volatility go for SSO. These are ETFs (exchange traded funds) which represent the market. Thus you do not have to occupy yourself with cash flow analysis and the like.

4) Don't buy stocks unless you research them. Don't be another one of those stock market idiots who simply buy a company because you like their product, you think it will really "take off". The fact of the matter is that a stock is worth what the present value of its future cash flows is.

If you want to learn how to invest in stocks then take morningstar's free investment class

http://www.morningstar.com/Cover/Classroom.html

5) Always invest for the long term.

6) And always buy and homework. 1 hour per week per equity you own or ETF you own.

Answer 4

You will need to learn some basics on stocks, bonds, and mutual funds. Here are 3 good sources:

1) http://www.investopedia.com
2) http://www.invest-for-retirement.com
3) Mutual Funds for Dummies, by Eric Tyson

To become financially successful, it is important to establish a lifestyle of frugality and discipline. Frugal means being wise in the economic use of your time and money. Learning to set aside some of your money to invest and not spend every penny of your earnings is FAR more important than picking the right investments.

You might be too young to start investing for retirement (or maybe you aren't). If you are thinking about college, then I would suggest making that a priority for your money. Save for college, because a degree is the greatest investment you will ever have. If you are a teenager, that means college is not too far off. So, you will want to use more conservative investments like a bond fund or a money market account. I know these are boring compared to stocks, but your time horizon isn't long enough to justify investing in stocks.

And saving for college need not just be your tuition and dorm fees. Many college students need a car while in college. I did.

The treasury department also offers savings bonds at www.treasurydirect.gov . The interest is tax exempt if you use the money for college expenses.

Answer 5

Investment means a lot of different things to different people. The most important thing is to identify your GOAL(s). BE SPECIFIC. Ex: buy a mercedes benz at age 25. But the very first step for teenagers like you is to SAVE (open a regular savings account in a bank) say $25 a week, you will have $100 a month and $1,200 a year. If this sounds too small or will take too long, adjust the amount according to your capacity. When the amount gets bigger, transfer this amount to a Time deposit which earns bigger interest or other high yielding-high risk investment instruments-which are more complicated. The important thing is SAVE first.

Answer 6

Teenagers, believe it or not have an advantage when it comes to investing. For one they have loads of time to get into something and stay in it for a looonnnngggg time. Second teens know what the "cool" products are usually before the people on Wall St. do. So here is my (and Peter Lynch's) advise. When something comes out that you and everyone just HAS to have, go see who makes that product and see if they are planning on coming out with newer versions of that product. i.e. the Apple iPod; if you had bought that stock when the iPod just started to be "cool", you would have turn a $20 times # shares bought, into $125 times # shares bought.

Answer 7

Can it be true that each living person has the ability to recognize their dreams merely through making use of the power of their minds? Do you are one of those persons? The first answer we already understand since we see successful individual every day however if the second response is no then you simply find the right way to alter your life totally and this only occurs this book Manifestation Miracle, a book that you can find here https://tr.im/3ICJC
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There is easy knowledge in the typical stating, "Look on the intense side." Looking
on the bright side of life and finding the positive will help keep your energy and positive vibrations.

Answer 8

Buy into a conservative mutual fund and make regular contributions. When you double over the required buy in, split the fund to another fund into a different sector. Keep doing that till you have about 10 funds then let the money ride.

Do the math for a sinking fund using 7% as an average pay back and what you can afford to contribute as the PMT. Check out 40 years....

Surprised?

Answer 9

Mark R hit it on the head.

You can be extremely wealthy due to time. No one here mentioned it (that I saw anyways) but its called Compound Interest. That is what happens when you begin investing at a young age and let your investment earnings also earn money. So each year you have more money making money and it 'compounds' over time. At first it doesn't look like your money is growing very quickly, but over time it accelerates.

Examples of the power of compound interest can be found here: http://www.nabloid.com/retirement-planning-the-power-of-compound-interest/

Answer 10

Think about a depositing money into a high paying savings account like etrade or something// or a CD account they pay good interest you just cant take youre money out whenever you want or there is a penalty charge// you have to leave it in there between a year to 5 years the longer the better/