Should a 16 year old start investing?

Asked by: Destany Fahey  |  Last update: March 8, 2025
Score: 4.9/5 (49 votes)

"Just like other investors, teens will benefit from a diversified portfolio of low-cost, long-term investments," he says. "However, teens are also in a good place to experiment because the stakes are relatively low," he adds. "If you're 16 and lose all your money day trading, that's a shame, but life goes on."

Is it good to invest at 16?

You're likely going to get a higher return on investing in yourself at 16, as several others have already mentioned. That being said, gaining some experience in the market at such a young age is also powerful. Maybe consider taking a smaller portion of your savings and put it into an index fund.

Can a 16 year old legally invest in stocks?

How old does my child have to be to buy stocks? To start investing in stocks on their own, your kid will need a brokerage account, and they must be at least 18 years old to open one. They can start earlier than this, but they'll need a parent or guardian to open a custodial account for them.

How much money should a 16 year old have saved?

“A good rule to live by is to save 10 percent of what you earn, and have at least three months' worth of living expenses saved up in case of an emergency.” Once your teen has a steady job, help them set up a savings program so that at least 10 percent of earnings goes directly into their savings account.

What age should I start investing?

You're never too young or old to start investing. The truth is investing is important at every age. ACC's Student Money Management Office partners with the University Federal Credit Union (UFCU) to offer these three reasons you might learn to invest, regardless of your birth date.

How To Invest For Teenagers

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What is the lowest age to invest?

You usually need to be at least 18 years old to participate in the stock market. However, there are some ways around that. Adults can open a custodial account with a brokerage on behalf of a child and then, in the role of custodian, invest in the stock market for them, with or without the teenager's input.

How much money does a normal 16 year old have?

How much pocket money should I give my teen? According to a report published by GoHenry, the average weekly allowance for teenagers in the UK between the ages of 16 and 18 is around £14, which adds up to around £56 a month. But the right amount of pocket money will be different for every parent and every teen.

Is saving $1000 a month good?

The $1,000 per month rule is a guideline to estimate retirement savings based on your desired monthly income. For every $240,000 you set aside, you can receive $1,000 a month if you withdraw 5% each year. This simple rule is a good starting point, but you should consider factors like inflation for long-term planning.

What is the 50 30 20 rule?

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

How should a beginner start trading?

Here's a breakdown of some simple tips to kickstart your journey:
  1. Open a Demat account. ...
  2. Understand stock quotes. ...
  3. Bids and asks. ...
  4. Fundamental and technical knowledge of stocks. ...
  5. Learn to set stop losses. ...
  6. Seek expert advice. ...
  7. Start with safer stocks.

Can I invest in Robinhood at 16?

The short answer: NO. Custodial accounts are not offered by Robinhood or many other similar applications. Investment platforms like Public, robo-advisors like Wealthfront and Betterment, as well as free investing choices like Robinhood are only available to adults. Investing as a teen under a parent's name is illegal.

What is the smartest thing to invest in right now?

  1. 5 best investments right now. Here are five of the best investments right now, generally ordered from lowest risk to highest. ...
  2. High-yield savings accounts. Yes, the Federal Reserve has been cutting interest rates and is likely to continue to do so in 2025. ...
  3. Certificates of deposit. ...
  4. Bonds. ...
  5. Mutual funds and index funds. ...
  6. Stocks.

How safe is Robinhood?

Yes, Robinhood is safe for most investors, with strong regulatory oversight, insurance protections, and robust security measures. However, it's essential to remember that “safe” doesn't mean risk-free—market volatility, impulsive trades, and a limited range of available securities could pose challenges for users.

Is gold a good investment?

There are many reasons to consider adding gold to your investment portfolio. The precious metal has a history of maintaining its value, making gold a useful hedge against inflation. Gold prices tend to increase when the U.S. dollar is underperforming or during times of economic and political uncertainty.

What is a good PE ratio?

To give you some sense of what the average for the market is, though, many value investors would refer to 20 to 25 as the average P/E ratio range. And again, like golf, the lower the P/E ratio a company has, the better an investment the metric is saying it is.

What is the $240000 rule?

The savings guideline states that for every $1,000 of monthly income you want to generate in your golden years, you'll need to have $240,000 saved in your retirement account. The rule assumes a 5% annual withdrawal rate and a 5% return.

Is saving $500 a month a lot?

Investing $500 a month can lead to significant long-term growth, thanks to the power of compounding returns. Whether you are just starting out or adding to an existing portfolio, consistently investing $500 each month can help you build substantial savings for future goals, like retirement or a down payment on a house.

How much will I have if I save $300 a month?

If you invest $300 each month, that comes out to $3,600 over the course of a full year. And after 30 years of investing, that would total $108,000. But with the power of compounding, your portfolio's value could rise far higher than that.

What pays 16 year olds the most?

Here is a list of the highest paying part time jobs for 16 year olds.
  • Youth Sports Referee. Average Salary Per Hour: $14.10. ...
  • Cashier. Average Salary Per Hour: $14.40. ...
  • Sales Associate. Average Salary Per Hour: $14.75. ...
  • Video Game Tester. Average Salary Per Hour: $14.92. ...
  • Barista. ...
  • Life Guard. ...
  • Pet Sitter. ...
  • Dog Walker.

How much should I save as a 16 year old?

Generally speaking, teens should save the same proportion of their income as experts recommend for adults, which is about 20%. This allows for some long-term savings, as well as short term savings for unexpected expenses, like vehicle repairs. It also builds great habits that can last for life!

Can I pay my salary to my son?

Your child must be under age 18 for wages to be exempt from Social Security and Medicare taxes. Once your child reaches age 21, you have to pay federal unemployment taxes on their wages. The IRS may flag high pay rates for children as unreasonable if it exceeds the norm for their duties.

Should I invest at 16?

While managing and saving money is important, early investing is the next step for financially savvy teens. Starting young allows wealth to grow through compounding, where even small investments can become significant. For example, investing $100 at age 16 with a 7% annual return could grow to over $1,400 by age 50.

What is the 100 age rule?

The "100 minus your age" rule is a longstanding rule-of-thumb that helps you allocate your portfolio between stocks and bonds based on your age. It's been around for decades and is popular for three main reasons: It simplifies asset allocation. It provides a basic risk management technique.

Are target date funds good?

Target-date funds may benefit investors who want to take a hands-off approach to their retirement, at least when it comes to managing their investments. They may also be a smart move for people who are inclined to frequently change their fund allocation inside their 401(k).