Investing for Teenagers

Summary

In this vibrant and engaging video by Mike and Lauren, teenagers interested in taking their first steps into the world of investing are given a clear path forward. Despite not being financial experts, the hosts offer practical advice based on their own experiences and the approaches they'd teach their kids. They highlight the importance of setting up a joint account with the help of parents, choosing a Roth IRA for its benefits in the teen years, and starting with Vanguard for its low fees. By focusing on the target retirement date fund, they illustrate a straightforward, efficient way to begin building a financially secure future.

Highlights

• The video targets teenagers eager to start investing early. ✨
• Mike and Lauren emphasize they aren't financial experts, just sharing personal tips. 📸
• They recommend using Vanguard for setting up investment accounts. 📈
• Highlighting the importance of parental involvement in setting up teenage investment accounts. 👪
• Opting for a Roth IRA due to its tax benefits for young investors. 💼
• Choosing target retirement date funds for their simplicity and effectiveness. 🎯

Key Takeaways

• Starting early with investing can make life easier financially. 🌟
• Teen investors should set up accounts with parental assistance. 👩‍👦
• Vanguard is recommended for its low fees and reliability. 🏦
• Opt for a Roth IRA because it's beneficial for teenagers with lower taxes. 💸
• Target retirement date funds offer a simple entry into investing. 🚀
• Always keep some savings for emergencies, don't invest every penny. 🚨

Overview

In a world where financial education often falls short, Mike and Lauren step in to guide teenagers curious about investing. With a friendly, approachable tone, they share insights that are as practical as they are encouraging. The hosts immediately set the stage by appreciating the young audience's proactivity in managing money—a skill that promises to ease future financial burdens.

While explicitly stating their lack of formal financial qualifications, Mike and Lauren provide a roadmap grounded in their personal experiences. From choosing the right type of account to selecting the best investment funds, each step is laid out with clarity. They advocate for the Roth IRA, emphasizing its long-term tax advantages, particularly beneficial for teenagers.

Throughout the narrative, there is a strong emphasis on keeping things simple and ensuring financial stability. By recommending a mix of saving and investing, they stress the importance of being prepared for life's surprises. The video wraps up with a lighthearted note on the importance of leaving investments to grow untouched, making financial acumen feel like an adventure rather than a chore.

Chapters

• 00:00 - 00:30: Introduction and Disclaimers In the introduction, the content creators acknowledge their previous video discussing the 12% rule and the dialogue it generated. They express excitement about the response from young viewers who want to learn about investing. They commend these teenagers for taking early steps towards financial literacy, highlighting the potential positive impact it can have on their future lives.
• 00:30 - 01:00: Setting Up an Investment Account as a Teen The chapter emphasizes that the presenters are not qualified financial advisors but are providing personal insights on investment strategies. They plan to share specific actions they would take as teenagers setting up an investment account, aiming to provide clear guidance amidst often vague financial jargon.
• 01:00 - 01:30: Choosing Vanguard and Account Type This chapter addresses the challenges young investors under 18 face when trying to start investing with a smaller amount of money between $500 and $1,000. It emphasizes the need for parental involvement in setting up a joint investment account when the investor is underage.
• 01:30 - 02:00: Picking Funds and Investment Strategy The chapter focuses on selecting investment funds and crafting a robust investment strategy, emphasizing the importance of choosing the right brokerage firm. Vanguard is recommended due to its low fees and unique ownership structure. The guide suggests starting with a savings account if you don't meet Vanguard's minimum account requirement of $1,000. Once on Vanguard, it advises selecting a retirement account, specifically a Roth IRA, as part of a long-term investment strategy.
• 02:00 - 03:00: Final Tips and Closing The chapter "Final Tips and Closing" focuses on providing financial advice to teenagers on setting up a Roth IRA for their retirement savings. It begins by recommending a Roth IRA over a traditional one for teenagers, due to their likely low current tax rates. It underscores that teens are at an advantage since they can contribute to retirement accounts without needing immediate tax deductions, unlike older individuals with full-time jobs who might prioritize tax deductions. Once an account is established, the chapter advises young investors to select a fund, specifically recommending a target retirement fund as the most suitable option for teenagers beginning their investment journey.

Investing for Teenagers Transcription

• 00:00 - 00:30 welcome to part two of our follow-up to the video why don't they teach us in school we already discussed all the controversy about the 12% rule in the comments and you can go look at that video here but in this one we wanted to talk about something a little bit more positive we were pleasantly surprised after posting the video to hear back from a lot of teenagers wondering how to invest their money so we quickly want to talk to you guys first congratulations life is going to be so much better and easier for you if you just manage your money responsibly so kudos to you for getting a head start but first we want
• 00:30 - 01:00 to explain to you that we are not qualified to teach you how to invest we're not licensed We're Not educated we're not accountants we're not financial planners we're not anything except a couple of people with a camera and a kitchen but this is what we would do if we were in your shoes and it's the same thing we'll teach our kids and pretty much the same thing we did when we were teenagers what we are going to do in this video is be very specific and that can be controversial but we want to be specific because when we were young all the vague and confusing terminology just to kind of to protect yourself
• 01:00 - 01:30 didn't help us at all we've previously made a video called Investing For Beginners that tells you how we invest in the stock market but it requires $3,000 to get started based on your emails and private messages most of you have between $500 and $1,000 and you're under the age of 18 so let's address those two things separately first being under 18 you have to get your parents on board to help you sign up for an account online you can't do it alone it has to be a joint account it's not that big a deal but you have to do it when you do go sign up for an account we suggest
• 01:30 - 02:00 vanguard.com and the reason is they have lowest fees and they're not shareholder owned there's a bunch of reasons for it and we actually have a video coming up in the fall about why we choose Vanguard but this is what we would do so you're going to need at least $1,000 to set up an account at Vanguard so if you don't have that much yet just put it in a savings account and keep adding to it and keep adding to it once you're at vanguard.com it's going to ask you if you want a general savings or a retirement account we would pick retirement and next it's going to ask you if you want to set up a Roth it Ira
• 02:00 - 02:30 or a traditional IRA and we would pick a Roth IRA because you're in your teens you are probably paying very little in taxes so if you're a little bit older and you have a full-time job this would not be the case because you would want to use the tax deduction but this is advice for teens okay you've got your account set up you've picked Ro ra all your details are verified everything's ready to go you need to pick a fund and the fund is just the collection of stocks that you're actually investing in and for us I think the best one for a teenager is is the target retirement
• 02:30 - 03:00 date 2016 of course this is very highly debated and a very personal choice but this is what we would do if we were in our teens and it's going to be what we teach our kids that's it that is the easiest and cheapest way that we know how to invest and in our opinions it's the best way vanguard.com Roth IRA Target retirement date fund 20160 1 2 3 once you get a little older and you have a little bit more money you can choose different Vanguard funds we happen to be in the total stock market index fund but
• 03:00 - 03:30 if you don't ever want to worry about that you don't have to it's also a good idea not to invest every single penny that you have you're going to want to keep some money set aside in a bank account just for the unexpected emergencies if your car needs to get fixed or if you need to replace your phone you don't want to take money out of your Vanguard account pretend you gave your future self that money to hold on to and you can't get it back unless you have a time machine but how lame would it be to go to the Future just to ask yourself for money that you already gave yourself I don't know doesn't even
• 03:30 - 04:00 make any sense leave the money in Vanguard see you next week guys bye bye