By Josh Farahzad - Ward Melville High School
“How do I invest?” is a common question that I get from friends and members of the Nextgenvest Club at my high school. Many high schoolers want to start but don’t know how. I started investing at 11 with real money and today manage a substantial portfolio in addition to my parent’s money. Below is everything that has helped me invest and the top tips that I wish I was told before I started investing.
"I just sit in my office and read all day." -Warren Buffett
Step One: Practice Makes Perfect
First, I would begin by signing up for a trading simulation account on www.wallstreetsurvivor.com. You should start practicing in your account by investing in companies that you know of or have heard of. Start thinking of every product as a potential company that you could invest in. What company makes your phone? What company makes your Hamburger? What company do you spend all your time procrastinating on? If you answered: Apple, Shake Shack, and Facebook, then you are in luck for companies that you can invest in.
Step Two: Develop an Investment Thesis
As time progresses you need to start to develop your strategy before you actually make trades with real money. Strategies can involve your view on whether to buy individual stocks or how to maintain a collection of stocks, or portfolio. You can can also experiment with diversification, by buying things like Exchange Traded Funds and Mutual Funds, which pull an aggregate of stocks or bonds together.
Step Three: Read, Read, Read
Read about different investing theories and how great investors have built their portfolios. Try places like Bloomberg, the Wall Street Journal, and MarketWatch. With that said, I don’t recommend reading sites such as www.seekingalpha.com. These sites have articles that are published by anyone and these people don’t know much more than you, they are just speculating. On that note, only read things about how to invest, not what to invest in.
Step Four: Try the Real Thing
So let's say that you have a solid grasp on different investing strategies and have some experience with your simulated trading account. Now I would pick the investing strategy that you think works the best. Then, it’s time to try out the real thing and open an online brokerage account. There are plenty of online brokerage houses out there and I would highly recommend the one with the lowest fees. For example, Acorns, Robinhood, or ETrade.
Investing is a complicated subject, most adults don’t even know how to invest. The earlier you can get started, practice, and get comfortable with the process of investing, the better you will be for the long term.