1. Savings accounts
Savings accounts offer a low-risk way for teens to start building their savings and earning interest on their money. Many banks and credit unions offer savings accounts specifically for teens, with lower minimum deposit requirements and lower fees.
2. Stocks and mutual funds
Investing in stocks or mutual funds can offer higher returns than savings accounts, but also comes with higher risk. Teens can start by investing in a mutual fund that tracks a broad index, such as the S&P 500, to gain exposure to a variety of companies.
3. Education savings plans
Education savings plans, such as 529 plans, allow parents and guardians to save for their child's future education expenses. These plans offer tax advantages and can help teens build a nest egg for college or other educational expenses.
4. Individual retirement accounts (IRAs)
IRAs are a great way for teens to start saving for their future retirement. Contributions to IRAs may be tax-deductible, and the money grows tax-free until it is withdrawn in retirement.
To start investing, teens can open a brokerage account with a reputable firm, research investment options, and consult with a financial advisor for guidance on choosing the best investments for their goals and risk tolerance. It's also important for teens to educate themselves on the risks and rewards of investing and to start with small amounts of money to gain experience and build their knowledge before investing larger amounts.
Savings accounts offer a low-risk way for teens to start building their savings and earning interest on their money. Many banks and credit unions offer savings accounts specifically for teens, with lower minimum deposit requirements and lower fees.
2. Stocks and mutual funds
Investing in stocks or mutual funds can offer higher returns than savings accounts, but also comes with higher risk. Teens can start by investing in a mutual fund that tracks a broad index, such as the S&P 500, to gain exposure to a variety of companies.
3. Education savings plans
Education savings plans, such as 529 plans, allow parents and guardians to save for their child's future education expenses. These plans offer tax advantages and can help teens build a nest egg for college or other educational expenses.
4. Individual retirement accounts (IRAs)
IRAs are a great way for teens to start saving for their future retirement. Contributions to IRAs may be tax-deductible, and the money grows tax-free until it is withdrawn in retirement.
To start investing, teens can open a brokerage account with a reputable firm, research investment options, and consult with a financial advisor for guidance on choosing the best investments for their goals and risk tolerance. It's also important for teens to educate themselves on the risks and rewards of investing and to start with small amounts of money to gain experience and build their knowledge before investing larger amounts.