When I was 13, I had a critical financial decision to make: should I spend my birthday money on the latest Xbox that all my friends were raving about, or invest it in a stock that might grow enough to buy ten consoles in a few years? The console was calling my name, and trust me, the temptation of never-ending Fortnite matches, Victory Royales and late-night weekend gaming sessions with friends was really hard to resist.

But then, my dad gave me one of those momentous ‘think about your future’ talks. You know, the kind that feels way too serious when all you want to do is enjoy the moment. After some back-and-forth, I reluctantly chose the stock.

Instead of immediate fun, I got… a line chart that barely moved. Thrilling, right?

Fast forward a few years, and guess what? That investment has far outpaced the value of the console I passed up, and then some more. Oh, and the Xbox? I bought it later with profits from another investment, played Fortnite for a year, and then sold it for a quick flip. Turns out, sometimes you can have your cake and eat it too.

So obviously, investing has its benefits. But why should it matter to teenagers?

In fact, according to a 2023 Teens & Money Study conducted by major US financial services company Fidelity concluded that only 23% of teens aged 13–17 have actually started investing, though 75% say investing is important to them. The gap between interest and tangible action is something worth addressing, especially considering the potential long-term benefits. 

A major misconception among teens is the belief that all investing must be risky, especially given the volatility of stocks and the unpredictability of the market. 

However, understanding the concept of the investment horizon – the duration for which you intend to keep your capital invested before accessing it – can significantly reduce this perceived risk. 

The longer you invest for, the greater your capacity to weather market volatility and profit from your growing investments. Being teens, we have decades in front of us and can afford to take calculated risks, knowing that we have time on our side. 

Why not harness this advantage to build a financial foundation that can set you up for life? 

After all, every great journey starts with one step – and, in the world of investing, it’s probably the most important one you’ll ever make. 

A step-by-step guide to investing

Start small

Investing in your teens can be intimidating, but it doesn’t have to be. When I decided to invest, I had no idea where to start. I had a small sum of money and no clear growth plan, but I knew getting started was the clear first step. 

The key to investing is consistency. You don’t need thousands of dollars; small, frequent contributions –$20, $50 or $100 per month or even as little as $10 – will grow significantly over time with compounding. 

My first investment in the stock market was in VOO, an exchange traded fund (ETF) that tracks the performance of the S&P 500 Index – a basket of 500 of the largest publicly traded companies in the US. I didn’t know much about individual stocks apart from the big names out there such as Apple, Amazon, Netflix and Meta, so I opted for something that would give me wide exposure to the market. 

It seemed a safer bet – something that allowed me to grow my wealth without having to pick and choose among individual stocks. It was a low-risk, intelligent entry into the world of investing and taught me one thing: that the art of investment isn’t about overnight big moves but actually is to stay steady and let the market work in your favour.

Where can I start?

Starting with an investment in ETFs or index funds (as I did with VOO) can be helpful. They are less volatile since they track a collection of stocks, rather than just one, which provides for diversification, or spreading out, of assets.

In the US, platforms like Robinhood and Fidelity offer commission-free trading, and some even allow you to open custodial accounts, where your parents can manage your investments until you are 18 years old. 

In Europe, apps such as Revolut and Trading 212 make it easy for teens to invest as well. 

Get advice

It’s essential that you consult trusted individuals such as parents/guardians, bankers or financial advisers to ensure you make sound financial decisions – don’t worry, bankers don’t bite! In fact, they’ll likely be thrilled to see a young person taking an interest in investing. 

Additionally, websites such as Investopedia, Morningstar and The Motley Fool are excellent resources through which you can learn various strategies concerning investments, as well as the latest financial news.

What if it all goes wrong?

The key is to stay calm and avoid making emotional decisions. Selling your holdings due to fear during a downturn often caps losses, while remaining invested gives your portfolio time to recover. Diversification will be your best friend! It reduces risk, ensuring no single underperforming stock drags down your entire portfolio.

Whether it’s picking a stock that underperforms or investing at the wrong time, mistakes will be made – every mistake, though, makes you a smarter investor. Just start now!