As the title said, I’m 15 years old and have AU$1400 saved up. I no longer have a job and am working on a small business of mine, which has just $300 in revenue in the last few months.
The reason I’m here is because I’m not sure if I should invest in some compounding assets or something else, and if I should educate myself on stocks/dividends before making a decision?
I have read finance books such as Rich Dad Poor Dad, the Warren Buffett Way, and others, so I do know a lot about finance/business considering my age.
I previously had a job as a dishwasher for AU$16 per hour, and so I got $1700 from that after working for 5 months.
If I should ask this on a different r/, please direct me there so I can figure out what I should do :)
Listen up youngster! :)
First off, the fact that you are here means you are light years ahead of your peers. This is the single most important fact that you have going for you because passive income is really a long term strategy. Compounding returns from an investment over time is the surest way to grow your passive income. If I were to give myself “investment” advice at 15 this is what I’d say…
The single biggest return on investment you will get on your money today is anything that upgrades your skills so that you earn more money from your work or that gives you knowledge that helps you grow your business. $16/hour as a dishwasher (my first job was dishwasher at a seafood restaurant at 15) is great. It demonstrates a strong work ethic, humility, and probably good communications skills because you had to convince the manager to take a chance on a kid for a physically demanding job. Assuming you have limited living expenses, you ought to be able to save a decent amount of money over the next few years.
I could do a whole sermon on the decision to attend college or not. The short version is that sometimes it’s the best decision in the world, other times it’s the worst (at least in the US). Make sure if you go you come out with a degree that pays well with as little debt as possible. If you decide college isn’t for you, get into a skilled trade that pays well. Don’t become a radiologist.
For traditional investing…you can just save up your money until you are legally an adult without missing out on too much income. Let’s say you could have invested $1k per month in an index fund for the next 2.5 years. That $30k of invested income would have grown to something like $34k. The key is getting used to investing a fixed amount of money consistently every month that you never see (and thus never get used to spending) that is diligently working for you behind the scenes. $1k invested every month for 40 years at a 10% expected average return (before taxes) is: $6.3 million. In theory, as you get older and earn more income you would increase your monthly investment amount by some portion of you raise (I like 20% of the raise amount.)
It’s good to have a long term mind set, which you are clearly cultivating through your research and reading, but don’t forget to enjoy your childhood and youth. In fact, if you can find a friend locally who shares this interest, so much the better. But either way…have fun. It would be a sad day for you in 70 years if you looked back on life and just saw work/savings for their own sake. Know what you are working for/towards, and be sure to enjoy yourself along the way.
Never stop learning. Some people do that through trying a lot of new things…some people read voraciously…some people are creative minds and come up with their own ideas. Whatever your style, make time for learning and keeping your mind engaged and fresh in the present.
Lastly…I just want to wish you well on your path. If your first business doesn’t work out, remember that means you are just one step closer to the next one that is a success.
Cheers!