Munif Ali

Munif Ali Logo

7 Rewarding Investments For Teens

Share this content :

Rewarding Investments For Teens

Investing isn’t the first thing a regular teenager would explore as they crawl towards adulthood. Being a teenager is all about fun and excitement. It’s about enjoying what’s out in the world and seeing what can be found, or what can be bought. That said, there are the few who are actually concerned about their financial futures. It’s not easy to enjoy life if cash and budget are an issue.

So, if you’re a teenager looking towards a better future, or a parent who wants to financially educate their teen, then keep reading to learn some key points you need to know about investments for teens.

What is an investment?

Before you can choose the best investments for teens, you must know what they are. Investopedia defines investment as an asset or object that generates money over time. Simply put, it’s a means of gaining income that you can buy or use to your advantage.

Oftentimes, people who talk about investments refer to specific things or items you can buy. For example, a house is a worthwhile investment for most people. Not only does it provide them a place to live, but it can eventually be sold for a higher price. That’s why many homeowners spend so much time and effort on renovating their houses; it makes their humble abode look fresh, feel new, and be valued for more.

The Best Investments For Teens to Explore

Now that you know what an actual investment is, let’s explore the different kinds of rewarding investments you can take on, even as a teenager.

1. High-Yield Savings Accounts

The first and most popular investment is your savings account. Everyone in the world has some money they’ve saved up for the future. Some of them like to keep their salaries stored for an upcoming movie or date night. Others slowly build up their cash to buy a new house or car. Whatever reason you have for saving money, it’s important that you make an account with your local bank immediately.

High Yield Savings Account Investments For Teens-min

There are account options for both minors and those of legal age. It’s recommended to ask financial experts about what account type is suitable for you. For example, you can have a savings account with automated deposits, meaning it automatically stores a percentage of your paycheck for safekeeping. You could also use a time deposit account, which not only saves your money but also does not allow withdrawals until months or years later.

Now, while savings accounts are generally useful, high-yield savings accounts make a big difference when it comes to how much money you save. All savings accounts have an annual percentage yield (APY), which is how much interest your savings can earn you in a year. Usually, a normal savings account has a small percentage attached, like 0.10% or 0.15%. You still get some cash back, but’s not promising.

High-yield savings accounts go further. Their APY is about twenty times higher than the average account. So, rather than gaining 0.15%, you’d gain about 2% or higher. To put it in numbers, an average savings account with an APY of 0.10% with $1000 would only gain about $1 per year. Conversely, a high-yield savings account would give you $20 a year. With those digits, you’ll definitely want this kind of investments for teens.

2. Roth IRAs

An old friend once said planning for your retirement should be done at least ten years beforehand. While the actual number of years may vary, it’s a good idea to start saving some cash as early as now. There are many banks and credit unions that offer retirement plans for people of all ages, including teenagers.

However, to find the best investments for teens, you’ll want a retirement plan that gives you the most of your salary now and in the future. One of the best retirement options you can find in the market today is a Roth IRA. 

Compared to regular retirement plans, which carry taxable fees once you try and get them, Roth IRAs give you your money tax-free.

Now, don’t be mistaken: this doesn’t mean you’re not paying your taxes. In a Roth IRA, you’ll be paying extra cash to cover the after-tax amount that usually comes when withdrawing retirement money. This means you won’t be able to have year-end tax benefits like a traditional retirement plan. However, the advantage here is that when you finally do get to take your retirement funds, you won’t have to pay a single cent anymore!

3. Bonds

If you’re looking for good investments for teens, then bonds are one of the safest investments today. Bonds are essentially loans that you “lend” to help fund the projects of other organizations, like local schools or hospitals. For example, you can loan to money for a private school’s construction or renovation project.

The reason why bonds are so secure is that the organization you lend to will pay you back with interest. Yes, you read that right. By lending money to a company or institution, you get your money back and with profit!

That said, keep in mind that your bonds are paid back to you over a certain time period. In other words, you’ll have to wait a few months or even years before you get all the money back. However, bonds are a good investments for teens because they allow monthly returns, which means more stable funds for their expenses.

4. Stock index

Compared to bonds, stocks are risky and require a lot of knowledge. The values of different company stocks rise and fall, so knowing when to trade and sell your stocks is important.

However, many of us make a big mistake by buying a lot of stocks from one company. The problem here is that if that value falls down, we lose a lot more value for what we bought. In other words, you’d be placing all your eggs in one basket. So, when the basket falls or gets damaged, so do all the eggs.

Rather than buying from one group, we recommend taking the stock index as an investment. A stock index is a collection of smaller stocks taken from several companies. So, if an organization’s stock falls in value, you won’t be losing as much money on your portfolio. While you won’t get the ridiculous highs of selling six-figure stocks in the market, you’ll have a more stable means of earning cash when you’re ready to trade. It’s a solid investments for teens, especially once they learn how quickly the stock market can change

5. Mutual funds

When looking for the best investments for teens, it’s always useful to find the most stable kinds. Bonds are one such example, as mentioned previously. Another popular and stable investment option is the mutual fund.

Mutual funds are the shares of a company that gathers money from multiple investors. What makes this company different from other organizations is that they use the money to invest on other securities, like stocks and loans.

So, to put it simply, mutual funds are the shares you can buy from another investing group or organization. Essentially, you’d be helping other investors stay afloat as they make their own decisions to bring more money. If they earn well and gain steady money, then the shares you have become a worthwhile stock in your portfolio.

If you’re looking for different kinds of mutual funds, you can pick from several different investment options in the market. There professionally managed mutual funds, where the managers of that group handle all the research and decision making for you. There are also diversified mutual funds, which basically means investing money to multiple companies instead of just one or two.

6. Health insurance

When it comes making a good investments for a teens, you shouldn’t just focus on something that brings a lot of money. You can also focus on assets that cover any heavy expenses or costs in the future. The best kinds are insurance plans.

For those who don’t know, insurance plans cover any costs that you might pay to repair or recover something important. For example, car insurance plans pre-emptively cover any costly mechanical fixes in case of an accident or a roadside collision. In exchange, you subscribe to a monthly or annual fee to slowly pay the coverage costs. So, if you are looking to insure your health for $100 000, then you’ll have to pay back a certain amount to the insurance company for the next few years.

One of the best type of insurance plans that many people consider is health insurance. Basically, you’d be pre-emptively covering the cost of medical treatments and procedures in case you are harmed from accidents or illnesses. What makes a good investments for teens is that health insurance plans make it easier to recover from heavy medical bills that would otherwise ruin your wallet. So, instead of paying a hefty sum for a potential emergency room visit, you can feel safe knowing that your costs have most likely been paid for in advance.

7. Cryptocurrency

At some point, everything in the world went digital. Songs on the radio and ads on the billboards went to the online world. Nowadays, you can buy anything even without having to withdraw cash from a bank or ATM. Who knew that even money would follow this trend?

Cryptocurrency or digital currency is a new form of cash that only exists online. Popular examples include Bitcoin, Ethereum, and Solana. What makes crypto a useful investment option is that anyone can start with any amount of capital available. That said, cryptocurrency is still a risky area of investment. It’s not as stable as stocks or bonds, and there are still many questions about how it works. While it can be a highly profitable and rewarding investments for teens, it could also be a big burden on your portfolio. In addition, cryptocurrency is still being heavily researched. So, unlike standard stocks or insurance plans, this kind of option is unstable and can be a dangerous buy.

Investments for teens crypto-min

If you do decide to explore cryptocurrency, consider using some spare cash that you’re willing to lose. This way, if the value of your crypto investment goes down, you won’t be hurting your wallet badly. Also, if you’re interested to learn more about cryptocurrency, check out these 10 different research tools to help you understand how crypto works.

Check our new video that might inspire you and become one step closer to becoming a millionaire.

In Summary

Investments are a good way to keep yourself safe in the future. There are many different options for investment, from savings accounts to stocks and bonds. Exploring these different options will help teens build a strong foundation for their future finances. It’ll also assist those looking to expand their portfolios and spend their money wisely. With these seven rewarding investments for teens, you’ll be able to keep your future safe and profitable.

Share this content :

Free Ebook Pop Up