The Millionaire Investing Advice For Teenagers

What's up you guys? It's Graham here.

So I have to say this is probably one of the most requested topics I have ever consistently got on my channel, and it only took me two and a half years to finally make this video. So for anyone who's ever commented asking me to make a video on what to do when you turn 18 or how to invest as a teenager, here you go! Your wish is my command.

We're gonna be going over exactly what you should be doing as a teenager to set yourself up financially, exactly what you need to do when you turn 18 years old, step by step, and exactly what you should be doing with your time to make the most out of those early years. This is the type of video I wish I saw when I was 17 or 18 years old because I made a few of these mistakes that I could have entirely avoided just by watching like a 15-minute video like this. If this existed when I was 17 or 18, maybe it did; I didn't see it.

So anyway, now you're here, now you see it, and just trust me when I say this: no matter what you want to do with your life, or how much money you have right now, or how much time you have right now, if you just watch this video and implement even just a few of the things that I talk about here, I guarantee you will be ahead financially.

So with that said, sit back, relax, and this is what I recommend.

So here's my first piece of advice: as soon as you turn 18, go and get a credit card. I want you to skip the presents and the birthday cake because that's not gonna make you money, and instead, you got to get a credit card. That's gonna be your birthday present to yourself. If you're over the age of 18 and you haven't done this yet, then I want you just to watch this step. Then after this, you got to pause the video and literally just go and get a credit card as soon as you can, like, like now.

But in all seriousness though, if I had any regrets in my teenage years, it was by not getting a credit card because I grew up with two parents who were in credit card debt. I saw the effects credit cards had on them, and I basically grew up with the mentality that credit cards were pointless, they were evil, and you should always pay with a debit card or cash. You should never use credit.

So I was pretty much like the teenage version of a Dave Ramsey. That was, by the way, until I wanted to invest in real estate when I was about 21 years old and no bank wanted to give me a loan because I had absolutely zero credit history whatsoever. Sure, I was thinking I am so cool for never needing a credit card and staying out of debt until I found out I couldn't get a mortgage because of that, and that was a very rude awakening.

I just didn't understand that building your credit wasn't about being irresponsible with money. It wasn't about being in debt; it's simply about playing the system to your benefit by showing lenders that you could pay your bills on time and in full. If you could go and do that successfully, then lenders will see that you could properly handle money, and because of that, they're more likely to lend you money to then go and invest with.

And doing all of this, by the way, is very easy, and if you're just starting out, I highly recommend a credit card called the Discover It Secured Card. All you need to do is go to their website, type in your information, you're gonna put down a small deposit, and it will give you back a credit line equivalent to that deposit.

So if you put down $200 as a deposit, that is going to become your new credit line. This credit card is totally free. There's no annual fees, and you'll get cash back on every purchase. So pretty much every purchase you make now is 1 to 2 percent less expensive if you just charge it on the card. All you need to do to build your credit is just spend a minimal amount on the card every month, like put $20 on the card every month, and then just go and pay it off in full before it's due. Just do that consistently; it's really just as simple as doing that.

The entire process is going to take you maybe 15 minutes. So if you haven't done this already and you're over the age of 18, seriously, just trust me on this one: pause the video, go and do this, and come back to it. I swear to you guys, it is going to help you tremendously in the future if you just start building your credit now.

Now secondly, assuming you don't already have one and you're over the age of 18 years old, go and open up your own bank account. I think it's incredibly important that you have your own bank account that is solely in your name, that only you have access to. I think it's just the next logical part of being a financially responsible independent adult.

Most importantly, go and open up a bank account without any ridiculous fees. There shouldn't be any account minimums or any ridiculous monthly maintenance fees or anything like this, like spending forty dollars to order checks. I did that; I had to spend $40 to order checks, and let's just say I was not happy about that.

So when it comes to this, here are a few of my own suggestions. The first one is an online bank - it's Ally Bank. It's one of my favorite online banks; they're completely free, there's no fees, there's no minimums. I've been incredibly happy with them. You could very easily open up an account with them online. Their savings account pays 1.9 percent in interest, you can have as many checking accounts as you want, they give you free checks, a free debit card, free savings, everything's free. I highly recommend them.

Now, the only downside I could see with Ally Bank is that they're online; there's no physical branches that you can go and walk into. So I recommend if you want a physical bank you can actually walk into with branches everywhere, I use Bank of America. If you're under the age of 25 years old and a student, then everything you have with Bank of America is pretty much free; they waive all the fees.

So there's really no downside, and you may as well just set up an account with them. Otherwise, if you're over the age of 25 years old and not a student, as long as you keep $1,500 in your account, they're gonna waive all of the fees. So that's the way around it.

Also, as a third option, you can look into a local credit union. Usually, these have really great services, there's no fees, and an overall really good customer service. So if you have a good local bank, just go down there as soon as you turn 18 years old and open up an account with them.

And like I said, just do me one favor: no monthly maintenance fees; just make sure your bank account has no fees, and I'm good. That makes me happy.

Again, this step is really just about learning to manage money on your own by having your own bank account that you are fully responsible for, and that is one step closer to being a financially responsible adult.

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Third, as soon as you can, once you're over the age of eighteen, go and sign up for a Roth IRA. Again, this is another one of those things that I should have done when I was 18 years old, but back then I had no idea what a Roth IRA was. I had no idea how it worked, and how was I supposed to know I should have done this? It wasn't until a few years later that I was on Reddit and someone suggested I get one. I was like, "Wait a second, why have I done this sooner? This is awesome! I'm gonna go and set one up."

If you're not familiar with what a Roth IRA is, all it is is a retirement account that lets you contribute what's called post-tax money. That just means that you've already paid taxes on the money you contribute to that account, and then at the age of 59 and a half, all of the profit that you've made within the Roth IRA is yours to keep completely tax-free.

Now, this account is really good to start as a teenager, or really as young as you possibly can, for two main reasons. The first reason is that chances are you're not making a lot of money right now, and chances are, because of that, you're not paying a lot in taxes. That's really the perfect time to invest within a Roth IRA because right now you're not losing a lot of money to taxes like you would later in life when you're potentially in a higher tax bracket.

A second, when you're young, you also have the power of compound interest. This is where your money makes you more money that then makes you more money that makes you more money. It's kind of like a snowball rolling down a hill, and as it continues rolling, it starts getting bigger and bigger and bigger and bigger. That's compound interest.

Like, let's just take this example. Let's just say that you invest $5,000 at the age of 30 at an 8% return; that means at the age of 60 that $5,000 will have turned into just over $50,000. But on the other hand, if you invested that same $5,000 at the age of 18 instead of at the age of 30, by the time you're 60, that $5,000 will have turned into more than $126,000.

That means that just by investing your money a little bit earlier, you will have more than doubled your profit by the age of 60 thanks to compound interest. So that's why you need to start a Roth IRA as soon as you possibly can, preferably as soon as you turn 18 years old. I have my Roth IRA set up through Vanguard; I also highly recommend Fidelity.

Again, it's extremely easy to do; it'll take you like 15 minutes. And if you haven't done this already, all I want you to do is go and pause the video, go to one of those websites, or just go anywhere, just set one of those up, and then come back to the video to watch the rest of it. Trust me; you're not going to regret doing this.

And fourth, this one is so important to start as early as you possibly can, but honestly, it applies to any age out there. That is stay out and stay away from consumer debt. When I say this, I'm not referring to like a low-interest rate mortgage on a rental property or leveraging your money to make you even more money. I'm talking about like high-interest rate credit card debt, a high-interest rate personal loan, high-interest auto loans, or any other consumer type of debt that has really no purpose but to make you more money other than just to make your life awful.

I really believe for anything other than a business, real estate, or investment, if you cannot afford to buy something outright, then don't buy it and don't finance it. It's so important to stay out of debt like this and get in the habit of never buying things you can't afford outright, unless, like I said, a business investment or real estate.

Instead, the responsible way to handle purchases like this is to only buy things that you could afford to pay off in full, but instead you put it on a credit card so you get the points and then you pay off the credit card in full by the time it's due. That way you stay out of debt, and at the same time, you can continue building up your credit history. So it's a win-win.

Debt is really one of those things where if used incorrectly, can absolutely destroy your life, especially at a young age where you should really be prioritizing saving and investing. Having any sort of debt weighing you down like this could absolutely ruin everything. So just get in the habit when you're young to only buy things that you could afford, and if you put them on a credit card, just make sure the credit card is always paid off in full by the time it's due.

Now, fifth, if you're a teenager watching this right now, go get a job! Yes, seriously though, go and get a job! I know I sound like an old man saying this; I sound like the type of person who's like, "Did my god!" But seriously, go and get a job! If there's anything that set me on a successful path and got me on the right track to things, it was this.

I got my first job right before high school at a marine aquarium warehouse where I would go in and take pictures of the livestock that would come in. My parents would go and drive me after school from like 4:00 to 6:00 p.m. so I could go and work for a bit. The owner, Chris, in the very beginning, would go and pay me in like three fish and coral, and I had an absolute blast!

If there's any, like, I would rather go and work after school for a few hours than hang out with my friends. I mean, that is how much fun I had doing this. When I was going and doing this, the manager really did his best to take me under his wing and teach me the ropes, even if it was something as small as just preparing shipping boxes. I didn't care; I just wanted to be busy, and I wanted to do anything I could to learn anything.

Actually, in high school, I started working a little bit more and actually getting paid for some of the work I was doing, not just like getting free stuff. Being able to work like this taught me everything. I was around actual working adults all day long. I got to see how the business was run, I got to see the importance of customer service, and I got to see what it was like to actually make and save my own money. Having that type of experience was absolutely invaluable, and I really believe it was that that just helped shape my entire future going forward.

So if you're a teenager right now and you're watching this and you don't have a job, go get a job! Take any job you can, even if it's just working a few hours a week. I don't care; work! The experience that you get from doing this now will be worth it a thousand times over by the time you're older. Plus, if you could go and make some extra money, it's always worth it just to make some extra money! Who doesn't want extra money?

Honestly, there's no way I would be here today if it wasn't for those experiences that I got by working part-time when I was younger.

Now sixth, for all of you young whippersnappers out there, just get used to living below your means. From all the mistakes I could have made when I was younger, this is one of the ones that I have practiced religiously, and it has paid off one thousand times over. No matter how much money I ever made, I always lived like I made significantly less.

Even when I was working part-time throughout high school, I pretty much saved all the money that I made. Even though I had no idea what I was doing with investing, I still managed to accumulate about six thousand dollars by the time I graduated high school, and it was with that amount of money that I used to fund my real estate license and get everything set up for that business.

Then even as a real estate agent, I pretty much saved all of my money, and that allowed me to go and invest in real estate at the very bottom of the market. Even now, despite how much money I'm making from real estate and also from YouTube, I save like 99.9997 percent of my income.

I'm sure that is going to pay off in the future for whatever opportunities arise coming up, and all of that happened because of this one thing: just living below your means. Just don't go buying stupid things to impress people who don't matter. Don't go and buy things that are not going to make a positive long-term difference in your life.

I am such a firm believer that it's totally acceptable to live extremely cheaply in your 20s just for the sake of setting yourself up financially for the rest of your life. I really believe that this time right now is the time that you could get wildly ahead by saving your money as early as possible. In the future, while all of your friends are working jobs they hate because they went out, blew their money, and partied every weekend, you're gonna be sitting there with more money than you know what to do with, traveling the world, making YouTube videos in your garage, and telling other teenagers how to save money.

Now seventh, I really believe it's so important not to go to college just for the sake of going to college. Maybe I'm out of line here, but I really believe that this is an epidemic that needs to be stopped, and one day people are gonna wake up and realize that they don't need a college degree to do what they want to do.

So here's the thing: for those that don't realize, I never went to college, so I am a little bit biased when I speak of this. But I have seen so many of my friends go to college because their parents pressured them into going. So they go to school and they waste 4 years of their life studying something that they didn't really care about, and then they get bogged down with student loans. They graduate, and then they can't find a job, and they have to find a way to repay $30,000 in debt.

Given that, here's my solution to all of this: if you don't know what you want to do with your life, either get some work experience until you can figure it out, or instead just go to a two-year community college just to get your general education requirements out of the way until you figure it out. That way you could save a ton of time, you can save a ton of money, you can get some work experience at the same time, and make some money until eventually you figure out what you want to do.

Then from there, you can make a decision. But to be fair, on the other hand, if you have a clear-cut path to what you want to do and college is a requirement to doing it, then by all means go to college. Also, if your parents are paying for you to go to college and you can graduate without any student loan debt whatsoever, then by all means go for it.

But if you're going to be paying for school out of pocket and you don't know exactly what you want to do, and this is going to cost you 4 years of your time and your life that you could just be spending working, then definitely think very long and hard if college is the right choice for you at that moment.

Like, I'm not any economist here; I'm just someone who loves personal finance, but I think we could avoid a lot of wasteful student loan debt if more people just took a year or two off after high school just to gain some work experience and really try to figure out what they want to do with their life.

It's so much better just to wait and really decide what you want to do than jumping into college right after high school because that's what everyone else is doing. It makes no sense to me.

Finally, eighth, in terms of how to invest as a teenager, this is pretty much all you need to know for most people out there. All you need to do is invest in a low-cost broad index fund, invest in that consistently, and then invest with the expectation of holding it for the next 30 to 40 years.

That is literally all you need to do. This could be Fidelity's fund; I will throw it up on the screen here. It could be a Vanguard fund like VTI, VTSAX, or VFIAX, or even a target date Vanguard retirement fund, which I will put right here too. If you just do that one investment, chances are that is going to be your full retirement by the time you're older, and it's just that.

On the other hand, if you're not gonna be doing this and you want to take more risk with your money, now when you're young is the time to do it. Like, if you want to go and start a business, now is the time to do it! If you want to go and gamble on cryptocurrency, then now when you're young is the time to do it.

If you lose money in something like this, then at the very least, you got it out of the way early on. If you're successful with it, then hey, you know what? You set yourself up financially, and maybe you're a little bit further ahead. Either way, I think you win.

It's a lot better to lose a small amount of money at 18 years old than a large amount of money when you're 40 years old. So any learning experiences like this, just get them out of the way early on. Same with starting a business. Like, if you go and start a business and it fails at 18 years old, then it's no big deal versus if you start a business at 40 years old and fail. Then there tend to be a lot more repercussions from that.

So you have my full permission just to have any ideas or any risky investments you want to start a business; just go and run with it. Now is your time just to take those risks and to get those learning experiences out of the way and just kind of figure it out on your own.

And that's, ladies and gentlemen, is all of my advice for anyone who wants to know what to do when they turn 18 or anything that they could do as a teenager to set themselves up financially.

I just trust me when I say this, but I have learned all of these through trial and error, and you could avoid all my mistakes just by implementing these things that I have just messed up on or not figured out sooner.

So please promise me that my mistakes are not made in vain. Please learn from them so that that way my mistakes are at least made with a good purpose behind them, and you can learn from them.

Like all of this advice is totally free; I'm not trying to sell you anything with this. There's no ulterior motive other than to tell you to smash the like button if you haven't done that already for the YouTube algorithm. But really though, besides that, it's free advice, so go ahead and listen to it, and I promise you will come out ahead financially.

So with that said, you guys, thank you so much for watching. If you haven't already subscribed, make sure to subscribe! I post three videos a week: Monday, Wednesday, Friday. So if you want to be a part of it, hit the subscribe button and hit the notification bell so YouTube notifies you anytime I post a video.

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Thank you again for watching, and until next time!