Even teenagers can open a demat account and indulge in trading nowadays. It is ironic that many teenagers have already started trading and making huge profits while there are many adults around the world who don’t even know what is demat account. It is observed that when teenagers or kids are exposed to trading at a young age, they grasp the financial concepts and terms quickly. There are some investment lessons that you can learn from a teenager who is a successful trader. Here are some key lessons with examples:
Invest only when you know
Peter Lynch is a popular investor who is known for his investment tricks and methods. He has always maintained that investors must only invest in the instruments that they know well about. Walking on his footsteps, Maya Peterson, a young trader bought shares only when she had complete knowledge about them. She invested in stocks from Hasbro and Mattel because she was aware of the toys that these companies manufactured. She invested in Gilead Sciences because of her love for science. While she invested in the stocks that she was interested in, she also took keen interest in things that she wasn’t aware of.
For example, she read a lot of books on insurance policies, discussed her doubts with other investors, and did a lot of research on insurance companies before investing in them. This provides a key lesson on investment to all budding investors and traders. It reveals that you should not invest in stocks that don’t relate to your personality. Also, if you want to invest in a particular stock, take enough effort to grasp the things related to it.
See the bigger picture
When it comes to investments, it is always better to look at the bigger picture. Teenagers are quite hesitant to invest in the wrong stocks because the money they invest is mostly given to them by their parents. Therefore, they want to make their parents proud by growing their money. Instead of taking risks, teenagers tend to invest in stocks that can benefit them in the long term. As kids, they don’t need money to manage their expenses. Therefore, it is easier for them to plan their future. As an investor, you should learn from these kids and chalk out an investment strategy that works the best for you.
For example, Maya does not focus on technical aspects like RoE, P/E ratio, etc. but also checks the non-financial aspects like employee benefits, employee retention rate, diversity of the organization, etc. while choosing a company. She feels that checking these metrics is essential as they help her decide when choosing the stocks for the long term.
Choosing a trading platform
Due to the plethora of online trading options available these days, it won’t be hard to open demat account or free trading account these days. It is observed that teenagers don’t feel awkward while moving on to new trading platforms. They often switch between platforms to make the best use of features and offers. You can learn this quality from the teenagers and try to adapt to newer trading platforms. Also, you can go one step ahead and research about the features and options offered by various trading platforms before choosing one.
Youngsters make mistakes while trading because of their lack of experience in trading and investing. However, they accept their mistakes unapologetically and also try to correct them in the future. As a seasoned investor, you must also accept your mistakes and move forward with an intention to avoid such mistakes in the future.
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