You can start investing at any age. Only the mechanisms differ (until the age of 18 it is done with the mediation of parents), but the basic principles remain the same. To get to grips with the science of independent active investing through a broker, it is wise to start with virtual money on a demo account.
At what age can I start investing and trading on the exchange?
You can find a lot of inspiring stories online about how young people become obscenely rich by investing in securities. In 2014, a teenager from New York City, Mohammed Islam, who made $72 million by the age of 17 by trading stocks for school lunch money, became famous. He began his career as an investor at age 9.
A high school senior from North Carolina, USA, Sudarshan Sridharan made $17,000 in 2016 by successfully investing in Tesla stock, with another $20,000 coming from his investments in Google and Netflix. He got into a stock trading at age 12, somehow convincing his parents to entrust him with their retirement savings.
How does it work there? In the U.S., you can’t open your own brokerage account or have an account in an investment app before you’re a solid 18 years old. However, it is legal to open a so-called fiduciary account. When a child becomes an adult, it is transferred to his or her name.
One of the parents can open such an account. The amount that can be “gifted” into it is limited to $15,000 per year (as of 2018). Yes, control remains in the hands of the custodian, the teenager cannot contact the broker for transactions on his own. But he becomes a full participant in the investment process legally, can do his own analysis, form a portfolio, and select assets for it.
What do I need to become an investor in Russia? If we are talking about active investments, that is, independent trading on the stock exchange, then in Russia you can become a full-fledged investor also from the age of 18. Formally, the law allows transactions from the age of 14 with the consent of parents or guardians. In fact, it is quite a demanding document. You can’t just write in it “I allow my beloved child to do whatever he wants”. Consent is required for the very fact of opening a brokerage account and for each transaction separately.
Teenagers are unlikely to make millions on investments. We’re talking about “healthy person investments,” bitcoin manipulation and pyramid schemes do not interest us. The Russian regulator limits the set of instruments available to novice investors. More risky, hence potentially more profitable variants are closed for him yet. For example, you will not be able to immediately buy shares of foreign companies via broker companies with a license from the Central Bank.
How do I become a beginning investor? There are several options open to you for generating additional income:
1. Active investments, when a person chooses trading platforms, assets, buys stocks (note that the choice of instruments, in the beginning, is limited), bonds, or tries to catch a profit on currency pairs on the “Forex”.
2. Passive investments, which involve the purchase of a mutual fund, sectoral fund, ETF, investing money in deposits. Direct management and constant analysis are not required here. You can put your money for a certain period of time and forget about it.
3. You can invest through crowdfunding platforms. In this case, the investment goes not in assets, but in the idea. If the project turns out to be successful, it is possible to get the development started in it, a new gadget.
In any variant, the earlier you start investing, the better. The amount of initial investments, as a rule, does not matter: what is important is the periodicity, and the compound interest will do the rest of the work for you.
To become a successful “active” investor, you need to constantly learn and improve your skills. Age does not play a role here. Even as a seasoned 40-year-old citizen you can easily zero out your investment account by following unqualified “advisors” or mass information hysteria. In investing, it is good to have a mentor, a mentor, like a coach in sports, who will share knowledge, experience and check transactions for common sense and logic at the first stages.
The size of the investment: how much money do you need? We tell you in the article
In passive investing, no extra effort is required. You can open an account for a child even from birth, putting aside a small percentage of income for it. The easiest option – mutual funds, where managers try to achieve the maximum result in terms of profitability by virtue of their knowledge and skills.
Where to start in active investing
At the age of 15-25, you’re not really interested in what’s going to happen over the long horizon of life. One wants to get a decent profit from investments here and now. More attractive variant with active investments, independent trade in securities through the broker.
It’s optimal to learn not with real money, but with virtual money. Almost all brokerage companies today offer the opportunity to have a demo account. There one can observe the full movement of all markets, all transactions look like a real one, it is possible to follow transactions and one’s own efficiency. The “tumbler” in the trading application shows the share price right now, you can bid, buy and sell. Of course, liquidity is not taken into account there. But more often than not, novice investors, even on a real account, will not have any liquidity problems.
You can have as much fun as you want on such an account. Usually investment demo accounts show good results. While almost 90% of accounts with real money “collapse” before they last six months. With real investments, a person’s behavior, especially at a young age, becomes less rational. The pressure on the investor increases many times, decisions are more difficult to make, and there are more nerves. He begins to trust not his calculations, but the information bacchanalia. From every news headline he is told that all is lost, a recession is coming, Mr. Trump is introducing new duties, the economy will collapse.
His own rational analysis tells him that all will be well, but he suddenly begins to believe the TV “experts” and closes his positions on a market slump. In a week or a month the market will return positions, but in the moment, especially when losses are in sight, we tend to make rash decisions.
The same works in the opposite direction when, succumbing to the herd sense of unwarranted optimism, a person enters the securities market at the highs, when many assets are clearly overvalued.