Considering how sizable these returns are, what if people began investing earlier?
At age 11, my parents asked me what I wanted for my upcoming 12 birthday. Unlike other 12-year-olds, who want video games or gift cards, I asked to start a stock account after having learned about the benefits of saving and investing money.
Intrigued by my interest in saving and earning money, my parents started a TD Ameritrade account for me and added $150 to my account, with which I purchased four shares of Coca-Cola. From then on, every birthday and Christmas, I requested cash from my parents and grandparents so that I could continue contributing to my stock portfolio. I have even invested all of my paychecks.
Now, at age 18, my stock portfolio has had cumulative growth of 30%, simply from purchasing and holding “blue-chip” stocks and ETFs. Since this exceeds the total inflation rate of 17.22% since 2016, when I began purchasing stocks, I have made a substantial amount of money.
Obviously, as a teenager, it is nearly impossible to contribute $5000 to a stock portfolio annually. However, small investments are feasible for teenagers and are incredibly beneficial. For those who are fortunate enough to be given gifts for birthdays and holidays, simply asking the gift-giver for money as an alternative to a tangible gift is a good starting point.
Moreso, if one has a job and no financial obligation to spend the income, investing is far wiser than purchasing unnecessary items. Rather than purchasing or receiving something that one will value for a limited time, it is better to contribute to something that will ensure a financially secure future, as long as investments are made in a low-risk manner.