“Congratulations! The big 18!”
…
So?
This exact scenario took place multiple times last weekend on my birthday. I wondered what’s sooo special about being 18? I feel the same, but now that I’m an adult, what is different? I can be charged as an adult in court, join the army, and buy lottery tickets; hmmm so fun! Not to sound materialistic but the best part of my birthday besides being able to spend time with my friends and family was the money I received. I gained about $650 and began to think about what I should do with this spare money to be financially smart. That is when it hit me, I can invest!? One issue that arose, I have no clue what I’m doing and I don’t want it to merely go to waste. But with my few takeaways from Consumer Economics and no other business class, I learned that taxes suck, how a credit card works, and to start investing young.
Beginning of This Week, Where I Began:
Firstly, I searched for a platform to begin my investing journey. I found the more popular options such as Robin Hood, Vanguard, and Fidelity but realized they took a decent amount of commissions although all were pretty reputable. That is when I stumbled across a promotion for the platform WeBull stating that upon acquiring their app and depositing $500 dollars or more into the brokerage account then I would receive 25 free fractional shares valued from $3-3000. The flaunting of free money and my need for any money I could get entering college obviously made me intrigued, so I looked further into it. Luckily the app was backed and trusted by a vast amount of investors and took ZERO commission. In comparison to the other platforms, I was sold. I downloaded the WeBull on the Monday following my birthday and went back and forth as to whether I should deposit the $650 or not and if that little amount of cash would even make me any profits in the market. I initiated the deposit before going to bed that night and received the instant buying power of $650 but the fractional shares would take about 6 business days to be given to me along with the actual arrival of the wire to my account. But what now?
Mid-Week Progress:
Come the third period of Tuesday, I have study hall with the finance gurus Sean Young and Fisher Muck as well as THE Adam Alshika in my Strength and Performance. So, I picked their brains and began asking what I should invest in and what I needed to know. They happily, and I emphasize happily, started to spew knowledge and numbers at me for the rest of the week. The most common stock that was mentioned and that came with the lowest risk and decent reward was the S&P 500. Arguably one of the most stable and consistent stocks; the ETF which buys into the top Fortune 500 companies in the United States has never failed to provide its stakeholders with an average of 10% APY since its IPO in the 1860’s. Yes, I can play it safe and I very much plan to invest in the S&P, but it just does not align with the investment plan I devised. I figured that as experts say, continuously reinvesting into stocks steadily will set you up in a very nice position 30-40 years down the line, but I can’t wait and the S&P was literally setting record highs (as it usually does) while I stared at it. My plan is this, once I have a substantial income come to the summertime and no school or lacrosse to create work conflicts, I will hopefully devote roughly a quarter of each paycheck to the S&P but for now, with the $650, I need to take on a slightly higher risk and reward play. This is because I see myself needing the money more near the end of college and want to see a quicker return. Fisher and the gurus definitely did not like this plan as much given the volatility, but they were still happy I was investing at this age. So my research began to find my “breadwinner” of a stock that would hopefully “go to the moon”.
End of The Week, Thursday-Friday:
The research began and my watchlist was growing. I believe these sectors will grow, the lithium-ion battery providers as electric vehicles take over, technology, but in specific my focus is AI as it is sprouting everywhere. I also see this market booming for the next 3-4 years which aligns perfectly with my financial timeline before I sell and reinvest or continue to hold if it is doing really well in the foreseeable future. I found a few companies that offered flashy dividends and enticing expensive stocks before settling on one. I bought twenty shares of it at $25 dollars a share ($500) and it is bound to join the Fortune 500 and exceed its market cap in the coming years. I also bought a fractional share of Nvidia as they are doing very well with my remaining $150. After buying the stocks early Friday morning I have unfortunately only watched them lose a few dollars but that means nothing as I am playing the long-term game and all stocks do this. I also created a savings account now that I am 18 and am getting 4.65% APY on all cash within it, so that is cool too. Let’s hope all goes well and I did not just lose all of that birthday money lol.
Alex, I’m so happy that you’re finally getting into investing. It is a huge endeavor but I’m proud that you’re taking the time to research and consider your options. I have to agree with the “finance gurus” Sean, Fisher, and Adam. The S&P 500 is the way to go if you want to have almost guaranteed profit in the long run. Key word: long run. This ETF is not one that you should be worried about if it goes down one day, because its track record is strong and it will earn you decent returns over a couple years. I personally have most of my investing money in the S&P, and plan to keep it in there for 20+ years, if not all the way until retirement. The two other ETFs that I own shares in are the tech ETF and the clean energy ETF. These are both essential to our future and will (hopefully) be on the rise over the next few decades. I’m super impressed with your commitment to learning about investing even though you check your stocks every 30 seconds. Amazing job with this endeavor and the blog post!
Happy Birthday Alex, thank you for sharing your thoughts.
Alex
I think it’s great that you’re investing at our age. I took consumer ec over the summer and was intrigued, and I want to enter a career in Finance, so I was drawn to your blog. I also turned 18 recently, and found an increase in funds, so I looked for my own way start investing, but when I saw RobinHood was going to take some hefty commissions, I deduced that the small amount I was planning on investing mixed with the low-risk, low-reward stocks I wanted to own would end up with me either breaking even or losing money on a week-to-week basis. That shut me down, and I stayed away from investing but I’m glad that you found a system that works for you. Investing is such an invaluable skill to have, and the fact that you are developing it so early is admirable and a little enviable. I hope you make the big bucks!
Great Blog!
Hey Alex! I too have similar thoughts about being 18 soon. My parents still support me, any other big responsibilities stay the same, so why is it such a big deal? I looked into investing early in senior year and was fascinated. My accounting teacher helped me gain some insights into how I can invest and how to look at a market. The big focus should always be the long run. While there are many ways to make quick money with stock options, they are often huge gambles, and should be treated as such. Gradually putting money into indexes through your roth ira would be a big step. Since we are young and can take risks, I’d suggest indexes like VOO that have a tech focus (apple, microsoft, nvidia, amazon and many more). Amazing breakthrough, keep at it! Happy 18th Birthday Alex!
Hey Alex,
I found your post really interesting because I’ve been seriously considering getting into investing for a variety of reasons. First I’ve been working every summer for the last four years and I’ve saved up quite a bit but right now all that money’s sitting in my checking account doing absolutely nothing so I feel like I’ve got to invest it or something but I haven’t done any research yet. Also even though I’ve been working, I’ve also been spending way too much money on random things and I need to find a way to be less liquid. My first thought was a savings account but now that I’m 18 I feel like an investment account might be better. There’s also the matter of where to actually invest my money. My family recommends the money market for it’s reliability but a lot of my friends recommend just dumping cash into the S&P 500. I’ve got a lot to figure out still and seeing you go through that whole process is reassuring that I’m not alone in that stress.
For the last couple years I’ve been on a similar journey. It definitely helps to have someone like my dad who is very on top of their portfolio and financial situation. It can be scary to start from scratch in a position like yours, but it’s a good idea to learn lessons about smart investing now before you can really mess up your financial well being. I wasn’t too exposed to it, but everyone has to learn the lesson at some point that they can’t time the market. Even the people who get paid to do it at hedge funds can’t always do it, and they earn a majority of their profits simply from all the fees they charge their clients. Even then, quantitative firms are starting to rise in popularity and the hedge fund model is starting to fizzle out because of all the legal compliance they have to deal with. Overall, investing is a really important step for securing your financial future, and I hope you never have to work a day in your life because of your expert stock picks.