Teen who is interested in investing app but no real money yet, wants to learn-recommendations?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Investing isn't for fun. Buy low fee index funds and hold them for 40-50 years.

+1
Encouraging kids to trade stocks is the worst thing you can do. This is one of the ways Wall Street makes lots of money. They ultimately win and you end up losing. It takes a person with a big ego to think they can beat the big boys.

I disagree. That's a very middle class/boomer mindset. Investing is a habit, and can become a skill, that should be encouraged.

Folks, we have the next Benjamin Graham posting here on DCUM.

[Anonymous]

Anonymous wrote:I'd get him a book, maybe Bogleheads guide to investing. Definitely stay away from apps or any kind of active trading.

Bingo. Teach him about why real investors invest over the long term and why "trading" stocks is really gambling. Teach him about low fee index funds and why "buy low, sell high" is so important.

That's it.

[Anonymous]

Active trading is gambling. It may be a slightly upscale version, but if you wouldn't want your kid sports betting, do not support them doing active trading.

Investing, especially when young, is an incredible thing to want to start though. If they have an earned income, I'd start working on a Roth for them (which i would match so they could still keep some spending money), I'd try to get them to read up on FIRE, and John Bogle.

[Anonymous]

Wasn't there an app that let you trade imaginary money as if you were really trading on the stock market?

[Anonymous]

https://www.stockmarketgame.org/ or https://virtualstockmarket.tdbank.com/ are good places to start. Echoing past posters I would look to encourage learning fundamentals and how the markets work. There's been a rapid gamification of investing post-covid and every time there's a market shock some idiot looses a fortune they lucked into because they have no idea what they actually are doing.

[Anonymous]

Show kiddo this chart if you want to get him/her interested in investing.

https://sweeneymichel.com/blog/compounding

[Anonymous]

First step is get a job and earn the money to invest.

[Anonymous]

As a profesional investor I will echo the sentiment to encourage learning fundamentals and discourage app-based investing, meme stocks, etc.

IMO it would be very beneficial for them to learn how a business operates and makes its money. Many people are totally clueless to this but it is pretty foundational in investing.

To do that I would get them to pick a business they want to learn about, task them with writing a report on the industry/business, and come up with a recommendation on whether or not the family should invest $X in the stock (the least important part).

Let's say they pick Nike. Nike is a publicly traded company that files annual reports called 10Ks with the SEC. In the first half of these filings Nike (or any other co) will give an overview of their business - what they do, how they make money, etc. You will also have graphics showing this like sales breakdowns between countries. In addition there are plenty of business breakdown podcasts (https://podcasts.apple.com/us/podcast/s16e2-nike-business-breakdown-can-the-iconic-brand/id1509069589?i=1000680892095), books, and news articles on Nike to reference.

How does Nike make money? Who buys Nike shoes? How much does a shoe cost to make and what is the breakdown? What do sponsorship deals look like? Why does Nike pursue sponsorship deals? What does Nike market share look like today and what direction is it trending? All examples of quesitons to answer to give a better idea of what this business actually is.

[Anonymous]

Have him fake it! Ask him to think about a product or company that he thinks is great for whatever reason. Come up with six companies. Then have him develop a simple spreadsheet where he can pretend he bought 100 shares of each and then track them over time. On going he should read about their results and why they are doing well or not. This will get him into the basics.