How To Start Investing (It's Not Nearly As Hard As You Think)

Let me paint you a picture. You've saved up some money, maybe from the job you’ve been working or maybe from the past few Christmases and birthdays. It’s sitting in your savings account, barely growing (we're talking a few cents in interest each year in interest). You know you should have this money invested, but you're stuck on one big question:

"Where do I start?"

Sound familiar? If so, I have some great news: you don’t have to be an adult, a Wall Street guru, or anything else to begin investing. In fact, you can get started right now with something called a custodial account.

In this article, we'll walk you through every step one by one to take you from square one to a full-fledged investment account

Step 1: Talk to a Parent or Guardian

• Since you're under 18, you'll need an adult to open the account with you.

• Explain why you want to invest your money. Even show them this article if it helps!

Step 2: Choose a Brokerage Platform

• There are a ton to choose from, but a few great platforms that offer custodial accounts include: Fidelity, Charles Schwab, and Vanguard.

• Additionally, other apps such as Greenlight, CashApp, and Acorns also offer investing features!

• For a more detailed analysis of some of these options, check out our post "Top 5 Investment Apps for Teens" attached below!

Step 3: Gather Necessary Information

Before opening the account, your parent/guardian will need:

• Their Social Security number

• Your Social Security number

• Both of your addresses

• Employment info (for the adult)

• Bank account info of the account being used to fund investment account

Step 4: Fill Out the Application Online

• Go to the platform’s website or app.

• Fill out the application alongside your parent/guardian and have them list you as the account owner.

• This usually takes between 10 and 15 mins.

Step 5: Fund the Account

• Link your bank account with savings to investment account

• Transfer the desired amount

• Many platforms have no minimum deposit, so you can start with as little as $1!

Step 6: Pick Your First Investments

While we don't offer investment advice here at Kidconomy, some good beginner investments include:

• ETFs (Exchange Traded Funds), or in other words a fund made up of multiple companies that you can buy and sell like one stock through your account.

• Index Funds, which are ETFs that track a specific index (such as the S&P500 or NASDAQ 100).

• Blue chip stocks, which are large, well-known, and financially stable companies like Apple, Coca-Cola, Disney, or Microsoft.

These investments may seem boring to you at first, but they seriously work. For example, every year from 2011 to 2020, the S&P 500 yielded a greater return than the average hedge fund, even though the index just sits there quietly growing with the market while hedge funds are investment firms run by professionals who try to “beat the market” using complex strategies. That’s why investors like Warren Buffett, one of the most successful investors ever, recommend passively managed index funds for most people: they’re easy to understand, don't require high management fees, and have a long track record of growth.

Final Step: Sit Back and Relax

The best part of investing? The hardest part is opening the account. After that, you just sit in the passenger seat and watch as your money grows by itself. In the meantime, remember a few things:

• Check your investments every once in a while, not every day.

• Don't panic over short-term losses. Remember: "when in doubt, zoom out."

• Keep learning more about investing and different types of assets.

• Continue to contribute money towards your account. The more money you have invested, the more powerful compound interest is.

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That's just about it! If you have any questions, feel free to leave them in the comments down below. We're happy to help.