6 Investing Tips For The Recent High School Grad

Congratulations! Your child is officially on their way into adulthood. But how much do they know about all that adulthood entails?

Investing can seem daunting to someone who knows little to none about it, but it’s not as difficult as it may seem. Make it easy on yourself and start with a free investing account to get your foot in the door. Here are six investing tips the new high school grad should know.

1. Interest Can Be Good And Bad

The thing about interest is that it can help you, but it can hurt you too. Good interest helps your money grow. Some examples where good interest is harnessed are savings accounts, term deposits and offset accounts.

Bad interest adds more to the money you owe. Bad interest can be tricky to stay away from. Credit cards such as American Express AXP and loans are two of the best examples when it comes to where bad loans are most prominent.

2. Invest In Yourself

Remember when you had to save your allowance to buy that toy you couldn't live without? Well, you should be saving a portion of your paycheck as well.

Learning to properly save and budget isn't an easy skill to master, but it is important. Try writing a budget and keep tabs on your spending for the next three months. Then, compare your plan to your actual spending and see where you can make some changes.

For most college students, working an entry-level job isn't going to bring home much pay. However, even saving pennies at a time adds up in the long run.

3. Use An App

Investing can seem confusing to someone who hasn't grasped the concept. Also, commission and entry fees can make it too expensive for young investors to make their start.

Both of these barriers can be overseen through the use of investing apps such as MoneyLion, which allows you to start investing fee-free.

4. Start Planning For Retirement, Now

Retirement may seem like light-years away for your high school grad, but that doesn't mean it should be ignored.

The best way to start contributing is through your employer's 401(k) retirement plan. As of today, all workers below the age of 50 can add up to $18,000 per year to their plan. The best part is that the additions are taken straight out of your paycheck, leaving you with less hassle.

Chances are when the time does come around, you'll be thanking your younger self. However, stay away from digging into your 401(k) account. Not only will you have less money in the end, but you'll probably be stuck facing hefty taxes and fees.

5. Contribute Regularly

Start thinking of investing as a habit. If you keep up with saving and investing regularly, you'll be more well off in the end.

By putting yourself on a regular regime you will save more and accumulate more. By investing consistently, you're less likely to pull away if things get bad.

Dollar-cost averaging is the strategy of spreading out your investments in regular intervals and average amounts. By doing so, you can help smooth out your purchases over time, making sure your money is going to one place at a high price. You can also score stock at low points where many investors are too nervous to buy (but that's when you score the best deal).

6. Stay Diverse

As the saying goes, don't put all your eggs in one basket.

By staying diverse with your investments, as in not putting all your money in one place, you can avoid the risk of major losses by offsetting with gains from another area.

Focus on making smaller, regular investments on a variety of choices. From this, you can reduce your risk and assist your portfolio returns.

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