We were thrilled with all of the questions we got from teenagers wanting to invest in the stock market after our last video. Instead of answering everyone individually, we decided to make a video about it!
In the video we discuss how we would invest in the stock market if we were under 18. Keep in mind, we're not qualified to give you this kind of advice. We just remember being young and confused. All we wanted was someone to spell out ONE WAY of investing, just to show how it works.
UPDATE: You need what's called a "custodial account" at vanguard if you're under 18. You have to call them to set it up.
More Info: https://personal.vanguard.com/us/insights/article/teen-roth-072014
Why Don't They Teach This in School - https://goo.gl/wrDl29
12% Returns - https://goo.gl/y1XZJf
Vanguard - www.vanguard.com
Further Reading - http://jlcollinsnh.com/stock-series/
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Mike and Lauren
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If you're going to do a video for teens who most likely know nothing about the stock market, I don't think it's helpful to just say "throw your money at this account, and okay you're done." As a young guy myself, I think a *_total index fund_* (such as Vanguard) is probably the best, simplest way for a young person to invest for the future, but regardless, you should never teach a kid or adolescent to invest their money into something without them knowing and understanding the financial exposure involved with their investment.
I’m 11 years old and have already saved $700+ and planning to invest in penny stocks, crypto currency, real estate, and much more as I get older. I plan on starting a YouTube channel and showing my journey. I’m doing very well in school with a 4.0 in gifted classes hoping to go far. If anyone has any tips for me it would be much appreciated!
Well im going to be old enough to get a job in a few months and im looking to learn about stocks because I know they are money makers and very important. So to clarify there is no limit on age for a minir account? Like I know under 18 has to have the special account but is there an age that cant have any account?
Another great video Mike and Lauren. I actually just made a similar video for investing for beginners/teenagers. Quick question: why would you not recommend stocks for teenagers, considering that stocks have outperformed index funds in the long-term? Because teenagers do not have a short (3-5 years) outlook, wouldn’t it make sense to invest in stocks (since a long term view wouldn’t not matter for short market corrections and drops)? And by stocks, I am referring to large-cap and blue chip stocks, not penny stocks and high risk securities. Thanks again 😀!
Couldn't you easily make that with a minimum wage, like here's the math.
10 dollars an hour so
Let's say you work 5 hours a day and 5 days a week that's 250. And then just slap that to about 3 weeks in all months and you have a total of 750 with 12 months which goes to 9000 dollars, so you could of been able to make more but oh well but them again taxes and other crap I hardly know about could heavily drop your gross income
adrian Carl read the books from Robert kiyosaki. He's a great invested and he has written many books which are easy to understand. The first two books you should buy is Rich dad Poor dad and the quadrant. Rich dad Poor dad is all about his experiences while growing up and what kind of mindsets you must have. The second book is how to work from being an employ to being a businessman/Investor. They are both great books and you should really buy them. Dude I am only 13 and I know a lot more than most young adults do because of him and other books I read. So go buy his books
Hi Mike and Lauren! I have a problem. I recently got some money from my grand parents and i have always want to use them stocks. I tried to talk to my parents about it and i got an answer quickly. I should be responseble with my money and not just spend it all on stocks. As i can lose my money. I said that spending it on stocks was more responsable than for exemple buy a video game. But they wont listen how did you guys get your parentes alowance?
For someone under 18, I slightly disagree. I wouldn't do a retirement account. I would do a non retirement account into the total stock market fund you mentioned. That way if you want to use the money for college you can, without a huge tax penalty. I wouldn't start retirement until I had my first real career job.
While I like Mike and Lauren, as an active private investor myself, I can never, nor do I ever recommend using mutual funds, IRAs or 401ks (unless it's the minimum to get an employer match, and no more. AND then the contributions should only go into cash equivalents instead of into funds which are subject to market conditions. Later that money should be transferred to actively self-managed accounts. And yes you pay the penalty to move the money). Mutual funds are terrible investment vehicles due to illiquidity, lack of control, huge amounts of undefined risk, and unnecessary tax advantages which hamper returns. Investors, if they are serious, and especially if they are young, should be educating themselves with everything they can watch, read, or listen to with regards to personal finance, accumulating wealth and building income streams. Then start small with real money and begin learning hands-on with the things you've learned that interest you. Never pay for advice, or for an advisor. Never use tax sheltered accounts. Passive investing is dangerously risky and antiquated. Be an active investor, track your progress, learn from your mistakes and always look for new opportunities. Good luck! 😉
I've got all minimum requirements for this to happen but I've got one question. Does this method apply to ALL teenagers or just the ones who live in America, as there was an option that said something about college? I'm from Australia and we don't have "colleges" like you guys. We have University's and TAFE as tertiary schooling. So i was just curious if i would be still be able to do this.
Only spend $1k. Try your hand at the stock market, it's OK to lose money as it's the same as paying for education. You'll learn from your mistakes and build proper investing skills to later invest the big bucks.
Al Rocky Just wondering, are you new to trading? Of course you have to be 18+ to sign up, that’s why his parents would, but when they do they can choose a custodial account, which means they don’t completely own it, and the child does.
Best way to invest in stocks that you hold no personal control over? And risk is 4/5?! While barley defeating US inflation?! (U.S inflation=1.6%) that's assuming that your return is 2.23% and you guys are investors?
its kinda true, well not for all of us, some teens are already investing which is the best thing someone can do, but so many of my classmates at my school just arent interested in that, neither was i because i never knew it existed but now i love it and im glad i found out about trading.
Congrats on saving $100+ that's a big deal for a 13 year old. Just keep saving. DON'T blast it on a new phone that'll be worthless in a few years or other items. By the time you're 18 you'll have at least $5k.
There are several ways of maybe getting upwards of the controversial 12% return but it's not guaranteed and you could just as well lose money. Year to date some International Mutual Funds are well over 12% and I've just sold one of mine that is over 20% YTD although I would not recommend that particular MF.
Apple Juice Simpson You have a great point. Wish I could help with whatever he is confused about. I think you and I both agree that the Vanguard 2060 is a good investment for a teenager who has time until retirement. And I agree there is a lot of information/disclosure/risk assessment that is not included in this video. The video would have been at least 20-30min if not much longer. Hope it inspires at least one teen to learn more about the fund and talk to a financial advisor about a strategy. And wish the original commenter would clarify what it doesn’t help with.
Randy M - Eh, I don't blame him for being confused. If you're going to do a video for teens who most likely know nothing about the stock market, I don't think it's helpful to just say "throw your money at this account, and okay you're done." As a young guy myself, I think a *_total index fund_* (such as Vanguard) is probably the best, simplest way for a young person to invest for the future, but regardless, you should never teach a kid or adolescent to invest their money into something without them knowing and understanding the financial exposure involved with their investment.
You can only put money into a Roth IRA if the money has been earned and taxed. When I was 12 all of my money was from saved gifts, so I couldnt put it in a roth, so I just used a regular brokerage account. If you have earned income, put it in a Roth IRA. If its not earned income but money you have saved, just put it in a custodial brokerage account.
How'd you do it? I'm fourteen and I'm trying to figure out how to do things. A lot of comments contradict the video and I can't tell how to invest in my best interests. When you were twelve and had a custodial account did you put your funds into retirement or general savings?
Sarah Kereen Im still in highschool and have a job right now looking for a second job. Don't make excuses, even putting away half of that would be better than nothing. Life wont be so easy when youre 18 and your parents dont give you money anymore and expect you to have your own money. Start now and thank yourself later
(btw 5 months ago btc was worth £1000 noe its like £7200) OK so I managed to let my parents give me £200 to invest in 0.04 bitcoins now that 0.04 btc has nearly doubled in price. I highly recommend doing this as soon as possible bitcoin prices will very likely keep on going up.
Yes. Due to foreign taxes and difference in currency you'll be paying at least 30% extra, making the venture useless and almost certain to be unprofitable. My advice is get on your own country's stock exchange. I live in the UK and the London Stock Exchange is fantastic.
I honestly wouldn't take advice from them,. I believe that you should be creative and outgoing. You shouldn't follow a set plan that everyone else follows. You would just be an ordinary person who wants to achieve the American Dream, but can't because you follow the same plan that everyone else follows. You should create your own plan for your success. Everyone's plan is different, but it is your choice to follow by your own plan or the "illusionary" plan.
Basically when you invest say $1000 a year into a vanguard account, the bank uses your money for loans and other purposes. In return, they put 8-12% into your account per year. This is how your money makes more money without you actually doing any work.
VTSAX is Vanguard Total Stock Market Index Fund Admiral Shares which requires $10,000 as an initial investment. VTSMX is the "Investor" share class which requires only $3,000. VTI is the EFT version which you can buy as little as ONE share at a time currently about $120. Yes, you can invest in VTTSX ($1,000) and once you reach $3,000 simply exchange it for VTSMX. Once your account reaches $10,000 it automatcally becomes VTSAX. You could also simply invest in the EFT VTI. VTTSX may be the better choice. You can do any of these options in ONE Roth IRA.
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Internet Expl hey, I tried to open a robinbood and i'm 16 as well, but it didn't work. I thought u had to be 18. And even if you used a different age, they ask for your social security and stuff. So they are still able to keep us young kids out.
Tell your parents to want to invest money and ask them to open a custodial account (since you are underage) at a discount brokerage or Fidelity or Vanguard. You most likely want to open a Roth IRA. Select a total US stock market index fund or a S&P 500 index fund as the foundation of your investment portfolio.
That's a dumb thought process. You'll never be rich if you don't actually invest. Sure you'll get a boost in revenue but how much are these houses worth? Unless they're mansions you won't be rich. $3 million is the new millionaire, $1m doesn't take you very far nowadays.
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