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In 2020, 77% of Americans regretted not investing earlier. The same study found that the majority of Gen Z investors in college also regretted not starting in their teenage years. But how can a minor invest in the stock market?
On Bumper, teenagers can open an investing account with an adult sponsor. The adult holds the actual brokerage account, allowing the minor to learn about the stock market and build a portfolio at an early age. Here are three reasons why teenagers might want to invest early:
- Time in the Market
One of the most powerful forces in investing is time in the market. For example, if a minor invested $50 per month into the overall stock market starting when they were 15, those investments could be worth over $700,000 by the time they retire. If they waited just 10 years to invest $50 per month, those same investments could be worth less than $270,000. As you can see, starting as a teen and giving investments time to grow can have enormous benefits.
- The Experience
A survey published in 2016 found that only 31% of high school graduates believed their education taught them healthy financial habits. When schools do offer financial education courses, they are often boring, lack real-world applications, and extremely outdated (most high-school students still spend more time learning how to balance a checkbook than how to invest in the stock market).
However, investing now can help a student learn about important financial concepts with one of the best teachers: experience. "Learning-by-doing" is an incredibly effective and engaging way for teens to gain financial knowledge.
- Learning from Mistakes
Investing early allows teenagers to make mistakes with few consequences. Currently, 58% of Americans between the ages of 40 and 54 find investing to be intimidating - they are afraid to make mistakes and are not equipped with the proper financial education. However, investing early can demystify these fears early on and familiarize teenagers with investing. Even when money is lost, each mistake teaches important financial lesson. Additionally, by starting now, any young investor has time to recoup potential losses.
If you have an opinion about teenage investing, we want to hear it! Contact us at hello@joinbumper.com with your thoughts.
Disclaimers:
Equip Solutions, LLC (Bumper) offers investment products and services through Alpaca Securities LLC, a registered broker-dealer, member FINRA and SIPC. Bumper does not offer investment advice.