Getting a head start on saving and investing can set teens up for long-term financial success. The best investments for teens are simple, accessible, and provide opportunities to learn about managing money. With the right approach, teens can build good financial habits while growing their savings. Here are some easy ways to start investing early and prepare for the future.
Open a High-Yield Savings Account
A high-yield savings account is a smart place for teens to park their money and earn more interest than a regular savings account. These accounts are easy to open, often requiring only a small deposit, and help teens get familiar with basic banking practices. They’re one of the best investments for teens because they provide both financial growth and security. The extra interest earned encourages long-term saving habits.
Start Investing with a Custodial Brokerage Account
Custodial brokerage accounts allow teens to invest in stocks, ETFs, and mutual funds with the help of a parent or guardian. These accounts make it easy to explore the stock market and learn about different types of investments. Teens can use custodial accounts to build wealth over time, benefiting from the power of compound growth. It’s an excellent way to experience the ups and downs of investing with adult guidance.
Consider a Roth IRA for Teens with Income
Teens with part-time jobs can benefit from opening a Roth IRA, which offers tax-free growth and withdrawals in retirement. Contributions are made with after-tax income, meaning the money grows tax-free for decades. This is one of the best investments for teens because even small contributions can lead to significant savings over time. Roth IRAs also teach young investors the value of starting early.
Use Micro-Investing Apps for a Simple Start
Micro-investing apps are a great way for teens to begin investing with small amounts of money. These apps allow users to invest spare change or make fractional investments in stocks and ETFs. With user-friendly interfaces, they make investing accessible and fun for young investors. Micro-investing apps are one of the best investments for teens who want a low-risk way to get started.
Invest in a College Savings Plan
Contributing to a 529 college savings plan is a practical way for teens to save for future education expenses. These plans offer tax advantages and allow the money to grow over time, easing the financial burden of college. Teens can also get involved by making small contributions from part-time jobs. Investing in education ensures that the money goes toward a meaningful goal.
Explore Certificate of Deposits (CDs)
Certificates of Deposit (CDs) are low-risk investments that offer guaranteed returns over a set period. They’re ideal for teens who want to lock away money for a few months or years without the temptation to spend it. CDs provide a steady, predictable way to grow savings. This makes them one of the safest investment options for young savers.
Develop Smart Money Habits Early
Starting to invest early helps teens develop financial discipline and build wealth over time. The best investments for teens offer a balance of safety and growth, providing both learning opportunities and financial rewards. Whether it’s a savings account or a custodial brokerage account, every investment helps lay the foundation for future success. Encourage teens to explore these options and watch their money grow.
Latrice is a dedicated professional with a rich background in social work, complemented by an Associate Degree in the field. Her journey has been uniquely shaped by the rewarding experience of being a stay-at-home mom to her two children, aged 13 and 5. This role has not only been a testament to her commitment to family but has also provided her with invaluable life lessons and insights.
As a mother, Latrice has embraced the opportunity to educate her children on essential life skills, with a special focus on financial literacy, the nuances of life, and the importance of inner peace.
