Early Investing: How Gen Z Can Grow Their Wealth

Investing in the stock market can be a smart way to build wealth, even if you’re under 18. To get started, you’ll need a Custodial Account, which is opened with a parent or guardian until you reach adulthood. E*Trade is a popular platform for beginners because it’s user-friendly and offers a variety of investment options. Historically, the price of living has always increased over an exponential period. With current inflation, learning how to grow your money now is more important than ever.

One effective investment strategy for beginners is to dollar cost average into indexes and blue-chip companies. Dollar cost averaging involves investing a fixed amount of money at regular intervals, regardless of the stock price. This reduces the impact of market volatility and lowers the average cost per share over time. Indexes, like the S&P 500, represent a broad market segment and provide diversification, while blue-chip companies are large, well-established firms with a history of stability and reliability. These are great because they offer lower risk compared to individual stocks.

For those who want to dive deeper, swing trading indexes and narrative-driven companies can be an advanced strategy. This involves holding stocks for a short period to profit from price swings. This approach requires much more market analysis and timing. While there is potential for higher returns in a shorter period, this method also comes with increased risk and the need for more active management and market knowledge.

A key concept in investing is the power of compound interest. When you earn interest on both your initial investment and the interest that accumulates, you’ll have the potential to significantly increase your rolling return. The earlier you start investing, the more you can benefit from the compounding effect. However, it’s important to understand the balance of risk and reward. Higher potential rewards usually come with higher risk, so it’s crucial to assess your risk tolerance and invest accordingly.

When funding your account, you’ll need to connect your bank account to your brokerage account. This allows you to transfer money, which typically takes a few business days to settle before you can invest it. Consistency is key in investing. Regular contributions and sticking to your strategy, even during market downturns, will no doubt lead to long-term success. This disciplined approach helps build a robust portfolio over time. Starting early, understanding the basics and staying consistent can set you on the path to financial success.

Kamaal Morris is St. Paul, Minnesota-based entrepreneur. Follow his Instagram: @kamaalmorris. 

Edited by Nykeya Woods