In order to start buying stocks, you need to know what an investment is, how to choose a broker and how to choose a stock you want to buy.
If you are a teenager and want to start investing, that already means that you are much smarter than your peers. When you start investing as a teenager, you will be able to come to life that you dreamed of much earlier.
It is, of course, important to understand that investing is always risky, so you need to be cool-headed and resilient to stress. Also, before you start investing, you need to come to terms with the fact that you will have to suffer big losses from time to time if your bets do not work. However, the risk is worth it.
So, in order to start investing, you need to know what an investment is, how old you must be to invest in stocks and how to buy stocks. After learning the basic steps, you can quickly understand the world of investments and start making your first profit.
What is investment?
It is often difficult for many teenagers to understand what investment is. For example, by opening an Investopedia, you can read that investment is an act of committing capital and time to a project, business, real estate, and so on. In simple terms, investment is money that you put into a project. Of course, people invest in order to get income in the future, which is why the project you invest in should be chosen very carefully.
You must have time and money to invest. Money – in order to invest it in a particular project, time – in order to study various projects, select, analyze them and find the one that can bring the greatest profit.
How old do you have to be to buy stocks?
Teens also often wonder how old they must be to start investing. Unfortunately, you need to be at least 18 years old to be able to open an account with a broker. Thus, in order to buy stocks on your own you must also be at least 18 years old.
It is also important to note that some states, such as Delaware, have a minimum age of 19. Moreover, there are states where you must be 21 years old (Mississippi) to invest. So check the laws of your state before investing.
IMPORTANT! If you have not reached the age of majority, but really want to start investing, there is a way out. You can invest under 18 if your parent agrees to open a custodial account with you. Thus, you will have a chance to sort out investments faster than most people who are waiting for them to turn 18.
How to buy stocks?
- The first step is to gain investment experience. Working on investments with your parents, you can delve into this incomprehensible world for you and begin to understand how everything works. Also, parents can help you to buy stocks in your name. It is important to note that once you reach the legal investment age in your state, the custodian can be removed from your account and you become the sole owner.
- The next step is choosing an online broker. Of course, for a person who has never encountered such a thing, it can be quite difficult to choose the first broker because you do not know what to look for. Explore several online brokers and choose the one that does not charge high commissions, as it is better not to risk your capital and overpay a large amount. There are brokers who have no activity fees and this might be a great option for you. Also consider brokers who have both no minimum investment and account balance. Some brokers also offer training that can help you learn how to choose stocks. Next, you need to study potential companies on your broker’s website, where you would like to invest. It is best to choose the company that you like and trust. Pay attention to the company’s annual report, as it will help you understand what is happening in the company. You can also use the analytical tools to evaluate each potential company. If you are still confused and do not know what to do, you can pay attention to investing stocks on the Dividend Aristocrat List, where you can definitely find companies that you know. Coca-Cola belongs to them, for sure you trust this company, right? Thus, choose a company, study information about it and buy stocks!
- Step Three – Time to Buy Stocks! After researching potential companies and being trained by an experienced broker, you can start buying stocks. However, you should not rush into the pool with your head, as it is important to soberly assess your strength. While you are a beginner, limit yourself to buying one or more stocks. Also, pay attention to the fractional shares option, which allows you to buy a portion of stock. This is a good option if you are buying expensive stocks. However, remember not to rush, as you can always buy more.
Investments are difficult and interesting at the same time. If you began to be interested in them as a teenager, then you are already on the way to success. Do not think that only adults can understand stocks and investments because it’s not true. Study the information and do not be afraid to ask questions in investment forums, your curiosity will be rewarded over time. Remember that by researching stocks and choosing which ones to invest in, you can quickly understand the work of the stock market. Good luck, future investor!