Updated: Feb 20, 2020
I’m a big advocate of teaching kids early how to think about and handle money. And what I’ve found is that the more kids learn about finances in their adolescent and teenage years, the earlier they become curious about the stock market and the fundamentals of investing. The great thing about getting involved early in the stock market is that young adults have a much longer time frame to work with and can take more risks than their older counterparts. They also have the time to really learn about the market, identify their own risk tolerance, and get comfortable with different ways to invest. However, taking that first step into the investment arena can feel nearly impossible for a lot of young people. I liken it to going to the gym for the first time. You walk in and feel intimidated because you don’t know how to use the equipment, everyone looks to be in better shape than you, and you have no idea where to start. Just like with investing, there are a few tips I can share that can help you take the plunge.
There’s no use trying to figure out every single piece of weight and cardio equipment before you go to the gym, right? After all, you won’t be using everything and trying to learn too much right away will be overwhelming. The same is true with investing. If you try to learn everything about the market right away, you’ll likely get frustrated and disheartened and walk away. The best way to start investing is the same as the best way to start working out—just start. In the gym, you’d go in and start running on the treadmill, take a group class, or do a few curls. With investing, you need to open an account and buy a few stocks so you can follow them and learn through experience. You don’t need to (nor should you) start big. By investing just twenty or thirty bucks, you’ll have some ‘skin in the game’ and can start figuring out how everything works.
Grow and Learn
As you watch how your stocks perform, do your research, and talk to available mentors, you’ll be able to get more specific with what you want to buy and your goals with investing. Think about how you work out in the gym three months into your membership vs the first day. You’ve like chosen your favorite machines, developed a bit of a routine, and understand what you want to accomplish each day you walk in. It’s the same with the market. Allow yourself to do some experimenting with different types of stocks from different parts of the world and see what makes sense for you and your goals.
Get Comfortable and Diversify
After a while, you’ll start to get comfortable with what the market is and what it can do. Think about your workouts two or three years down the line. You’ve probably realized that working out can’t take the place of a good diet but that it can allow you more flexibility. You’ve also probably settled into a routine but you still try out a few different things here and there to see if they fit. It’s the same with the market. You’ve hopefully realized that the market is risky and identified how much risk you’re willing to take. You’ve learned when to buy, when to sell, and when to be patient and seen what cycles and trends look like. At this point, you’ve reached a point where you can really start making some long-term goals for investing for your future.
Are you ready to get started in the world of investing? I always encourage young adults to jump in and start experimenting as there’s no better teacher than hands-on experience. Of course, if you want a mentor in the journey, there are plenty you can reach out to for a bit more guidance.
Have questions about starting out in investing? Please leave them below.