If you are under the age of 18 and already have some interest in the stock market, you have come to the right place. You’re probably wondering how it all works and if you are even allowed to invest.
Well, first, let's talk about the stock market.
The stock market is a place where buyers and sellers meet (often via third parties) to exchange shares in companies based on a market determined price. For example, you can buy and sell shares of Netflix, Apple, Microsoft, and Ford with other parties wishing to do the same, often with just the click of a button. There are thousands of stocks to invest in and their prices are determined by supply and demand for each individual stock or company.
Let’s say you have $500 you want to invest with the help of your Loved account. You think stock X has the potential to grow in value over the next few years. Currently a share of X is trading at $5 dollars per share. You purchase 100 shares at this price. Months pass and the stock is at $10. You have now doubled your investment. Of course it isn’t always as simple as this - sometimes you lose money. The key is to win more when you win and lose less when you lose.
In essence the stock market is a place where you can invest in the companies that you see each and every day. The more money you invest, the more you own of that company.
Ok, so how old do you have to be to start investing in stocks?
To open a typical brokerage account, you have to be at least 18 years old with some brokerages requiring you to be 21. But with a Loved custodial account you can begin investing under the age of 18 with the help of an adult.
A custodial account is a brokerage account where an adult (usually a parent or guardian) controls the account on your behalf and when you reach the age of majority (18 or 21 depending on your state), you can take control of the account. Until then you can ask your parents to make investments on your behalf.
If you are feeling eager to start investing in the stock market there is one thing in particular that you must bear in mind: The stock market can be risky.
Unlike traditional savings accounts, investing brings risk. You must be smart about your investing decisions and do your research. Some people spend their lives trying to make a living from investing and trading on Wall Street! At Loved we do have the added benefit of caring deeply about you and yours learning, so we offer educational content in an effort to make enhance your learning experience.
If you are smart about your investing and have a plan each time you place an order, you drastically increase your probability of success. Through diversification and Loved’s advantage of dollar cost averaging, you give yourself an even better chance of success.
And do you want to know the best thing is about all of this?
You learn a great deal about the market and yourself in the process so that in the future, you will be more informed to make better financial decisions to enhance your life.
If you want to try it right now: Here you can create a Loved account