In the world of investing, the earlier you start, the better your chances of really making it big as an investor. The best time to start investing is when you are a teenager. But how does one go about it?

One of the main advantages of starting your investment journey as a teen is that you do not have that teens do not have a lot of financial obligations and so they can afford to be more patient with their investment. This will in turn allow, them to take advantage of the small gains and be patient enough to see them grow bigger over time especially if you take a long-term investment.

The ideal investment vehicle

One of the best options that teens should consider for their investments is the stock market. This is mainly because one does not necessarily have to do much once they invest in a particular stock. There is not much work that goes into it and one can therefore go about their business and wait for their investment to grow.

Challenges

Investing as a teen is not exactly easy, which explains why very few teenagers go down this road. The biggest obstacle is the age limitation. Brokers do not allow individuals below a certain age to open accounts. The minimum age limit in most states is 18-years-old and 21-years-old in some. However, there is a way to go around this problem and that is through the use of a custodial account.

A custodial account is where a parent or guardian opens an account on behalf of their child and deposits the funds into that account. Once you get a custodial account, you can commence trading without any issues.

Custodial IRAs

If you are a teenager and are looking for a long term investment that will have you covered in old age, custodial Investment Retirement Accounts otherwise known as Custodial IRAs are the best way to go. The annual interest rate might appear low but when compounded over time it may grow your invested amount into a huge sum.

For example, if one invests about $5,000 annually for three years when they are teenagers and then stops, they can potentially have more than $700,000 in their account by the time they reach 70-years-old.

In summary, investing as a teenager is always a great idea and it does not have to be complex investments if thoroughly researched.