How to Start Investing and Building Wealth: The Ultimate Investment Guide for Girls in Their Teens/20s

I know that you know you should be investing. But nobody actually talks about how daunting it is to get started. Believe me, my mum was telling me to invest for years before I actually did. And I did want to, I was listening to podcasts and watching YouTube videos for months. Yet I never really felt like I knew enough about investing to actually start. But this was a big learning curve for me. 

You’re never actually going to get started if you keep waiting for the “perfect” time. Starting your investment journey is a pivotal step toward achieving financial independence and building wealth. 

This is my ultimate investment guide for girls in their teens or 20s, because I know sometimes we need some realistic advice. Investing doesn’t have to feel scary. 

What is Investing?

Investing is just putting money away, into a financial scheme like stocks or property, with the intention of making profit over time. 

What is the Stock Market?

The stock market is just where a lot of people invest their money. You can access it through apps like Sharesies or Pearler. 

It’s basically just a place where you can buy or sell fractions of a company. And the values can go up or down based on the demand, which usually has to do with how popular a company is.

Why is Having a Diversified Portfolio Important?

Having a diversified portfolio just means that you’re investing in lots of different assets, which is can be important for stability and risk reduction. 

For example, if you’ve invested all of your money into a particular stock and it crashes, you might face a lot of financial difficulties. However if you have a diverse portfolio and one stock crashes, it might not have as much of a financial impact on you. 

So basically, the more diverse your investment portfolio, the less risky your investment style tends to be. 

What is Compound Interest?

Compound interest is how your money grows over time. 

Basically, the profits you’ve made start to make their own profits. If you think about buying a fruit plant, that’s your original investment. But after a while, you can plant the seeds (profit) it’s given you, and keep growing more of your original plant. And you can continue this cycle for as long as you want. 

So say you put $100 into a stock or an ETF, you might get a $10, or a 10% return on that. But when you get a 10% return on your new total ($110), you’ve actually made an addition $11, even though you didn’t do anything. The idea is that this number keeps accumulating over time, so you keep getting a 10% return on an ever-growing number. 

Of course, you can’t really guarantee a certain return. The number can fluctuate higher or lower. But you have the choice to invest in whatever you would like, and how risky or stable those investments are. 

Why is it Important to Start Investing Young or Early in Life?

Starting to invest at a young age allows you to really get the most of out compound interest, where your investment earnings generate their own earnings over time. This growth means that even modest investments can accumulate substantially with time. 

Am I too Old to Start Investing?

No, you can start investing at any time. Of course it is better to start sooner rather than later because of compound interest, but that doesn’t mean investing isn’t worth it if you have left it a bit later. Investing is still a great financial tool to help you grow your wealth passively.

What Financial Steps Should you Take Before Investing?

While I do think that investing shouldn’t feel daunting, there are some steps you can take to ensure you’re setting yourself up for financial security and success. 

• Establishing a budget: Track your income and expenses to understand your financial habits and identify areas to save.
• Set up an emergency fund: Aim to save three to six months’ worth of living expenses in a savings account. This emergency fund is easier to access in a savings account than investments. This provides financial security if you ever need to access your money in an emergency. 
• Managing Debt: If you have high-interest debt, I would prioritise paying this off before beginning your investment journey. You can compare the interest rates on your debt and investments, but also consider how things like your credit score or borrowing power are impacted by the debt. 

Can I Invest Even if I’m Broke?

As long as you’re taking care of yourself first, you can definitely start investing even if you’re young or broke. Just know that you’re basically “putting away” money, and you might not be able to access it if you need it in a pinch. This is why it’s important to set up an emergency fund. 

I found it comforting to know that you don’t need to invest a certain amount each week or month. It’s totally okay to just invest what you’re comfortable with whenever you feel ready. 

I know when I was a casual worker, the idea of committing to investing regularly was very scary. But if you invested $50 here and there, or even $10, that money will go a lot further now than it would in 10 years time. This is because your money would have had lots of time to grow.

Do I have to Invest for a Long Time?

A lot of investments are left to grow until retirement, or when you’re ready to make major purchases, like buying a house. And while you don’t have to wait a long time, it’s generally recommended. Besides, there usually fees involved when withdrawing money, so its not something you want to do too regularly. 

If you take your money out of your investments early, you could miss out on a lot of compound interest overtime. I wouldn’t be putting money into investments if you can see yourself needing to withdraw it in the short term. Personally, I don’t think I would touch any of my investments until I’m looking to put down a house deposit. 

What is the Difference Between a Stock and an ETF?

A stock is usually just a fraction of an individual company, like Google. But an ETF is a big group of stocks, like the S&P500, which is the top 500 companies in the US. 

A lot of people prefer to invest in ETFs because it diversifies your portfolio for you. This is typically seen as less risky for your investment portfolio. However, it’s all about doing your research and figuring out you’re most comfortable with based on your individual financial goals. 

How to Start Investing?

Once you’re ready to actually start investing, you can open an account with your chosen platforms. 

Best Ways to Learn About Investing 

I know it can be super daunting to first start researching. Honestly, there are a lot of finance bros that make it seem a lot harder than it is. 

I love listening to podcasts about investing, and my favourite is “Girls That Invest”. I’ve found this to be a great way learn about investing and become more familiar with the terminology. 

Honestly it’s about whatever suits you best. Just don’t get too overwhelmed by the jargon or negativity, because there is a lot of that out there since investing is pretty male dominated. But I love to look for female creators or content with a primarily female audience, because I find this actually explains the investing concepts better. 

Starting your investment journey in your teens and 20s lays the foundation for financial empowerment. By educating yourself, setting clear goals, and making informed decisions, you can build wealth and achieve financial independence. Remember, the earlier you start, the more time your money has to grow.

Disclaimer: The information in this blog is for educational purposes only. I am not a financial advisor.