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Teens Can Own Stocks! (Think… Pizza!)

In this post, Want to Get Somewhere in Life?, I talked about setting goals. This time, I’d like you to think about setting some goals for saving.

Perhaps you would like to go to University some day, or buy a car when you turn 17! You may even be thinking about buying a house someday? You can start saving for that now! A great way to save is with something called a “mutual fund.”

Imagine that you want to buy a pizza, but you only want one slice. So you and several friends put your money together, and buy a pizza from a pizza maker. He looks after the pizza for you. A mutual fund is like this pizza. Many investors put their money together (like the pizza buyers), invest , and then the fund manager (like the pizza maker) looks after the fund (the pizza). The difference is that the fund manager is making sure that your fund value grows (sort of like having your medium pizza become a large, without paying extra).

Over many years, a well-cared-for mutual fund can make your money grow. Right now, the stock markets are still down, so more mutual funds can be bought for less money. Many teens are interested in the stock market, and you may even have learned about it in a business course.

Money invested in mutual funds is used to purchase stocks of companies on the stock exchanges that are doing business around the world. If the companies are profitable, the value of the mutual fund goes up as the underlying stocks go up. So by investing in mutual funds, you are actually ‘playing the stock market’, but in a much less risky way.

The Internet is a great place to look to learn more about fund companies and which companies they are investing in. Just do a search on “mutual funds,” and you will find mountains of information! Also, heck out some of the investing sites on our Links page. Good luck!

Now, if you’d like to start doing some serious saving, talk to your parents about starting a mutual fund account!