Choosing the Right Investment for a Young Investor: A Guide for 14-Year-Olds

As a 14-year-old, it's thrilling to think about investing and building wealth. However, the financial world can be overwhelming and full of myths. Larry Terrell has wisely advised that the best investment you can make is in yourself. This is particularly true given the potential for educational and skill development.

Invest in Yourself First

Education and self-empowerment are the most lucrative investments you can make, offering returns that no stock or business can match. With teenage years marking a period of rapid brain development and learning, investing in yourself is crucial. With the right resources and knowledge, you can lay a solid foundation for a successful financial future.

Start by exploring financial resources and educational tools that can help you understand the market. These include books, online courses, and educational videos on financial planning, investment strategies, and personal money management. By gaining knowledge, you not only avoid scams but also build a robust understanding of financial systems.

Staying Focused on Education and Skill Development

One of the best ways to use your savings is to invest in your education and skills. Whether it's through after-school programs, online courses, or vocational training, additional knowledge and skills can open doors to new opportunities. A well-rounded skill set can help you stand out in any future endeavors, and the return on this investment is invaluable.

Avoid overreaching and focusing on 'quick wins.' The allure of buying stocks or even engaging in other high-risk ventures can be tempting, especially with the constant influence of media and peers. However, it's wise to take a step back and build a strong foundation before venturing into more complex investment strategies.

Alternative Investment Options for Teens

If you're keen on making your money work for you, you have a couple of low-risk options to consider:

1. Exchange-Traded Funds (ETFs)

ETFs are a mix of stocks, and they're typically less risky compared to individual stocks. They allow you to invest in a diverse range of assets with a smaller amount of money. ETFs are bought and sold on stock exchanges, making them accessible and flexible. Owning an ETF can help you diversify your portfolio and potentially earn consistent returns.

2. Generate Income Through a Service Business

Another practical option is to start a service business. For example, you could use your skills to offer services such as car detailing, lawn mowing, or even pet sitting. My nephew started detailing cars at the age of 16 and turned it into a lucrative business, making over $30,000 annually. Such ventures are more grounded and can provide hands-on experience and a sense of accomplishment.

These types of businesses require initial investment (like buying supplies and tools), but they have the advantage of being manageable at a young age with a flexible schedule. They also offer the potential for regular income, which can be reinvested for future growth.

Developing Financial Wisdom

When venturing into investments, it's crucial to take your time and develop a strong understanding. This involves:

Learning about financial principles and markets. Understanding the risks involved in different types of investments. Learning how to manage consumer debt responsibly. Developing the patience to ride out market fluctuations.

By taking these steps, you can make informed decisions and avoid the pitfalls that come with impulsive investing. Financial wisdom is a lifelong learning process, and the earlier you start, the better equipped you'll be to handle the complexities of the financial world.

In conclusion, while it's tempting to dive into high-risk investments, the most prudent strategy for a young investor is to prioritize self-improvement and education. Building a solid foundation of knowledge and skills will not only enhance your financial future but also provide a broader perspective on how to navigate life's challenges effectively. Keep the long-term view in mind, and remember that investing in yourself is the greatest return on investment you can ever make.