3 Investing Strategies Teen Investors Should Avoid

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  • Jack Rosenthal, 19, received $5,000 from his grandfather when he was 8 to start investing.
  • He started a teen investment club in high school and amassed a $250,000 portfolio.
  • Rosenthal tells other teenage investors to avoid hyped stocks.

When Jack Rosenthal was 8 years old, his grandfather gave him $5,000 to start an investment portfolio.

Rosenthal told Insider, “He gave me a few stocks to watch, but I was just a young kid. I wanted to buy companies that I thought were cool, but that wouldn’t necessarily be good to buy based on the So since then I kind of listened to what he told me to do and started developing my own strategies.”

As a teenager, while other kids played sports or worked part-time, Rosenthal started an investing club at a local high school where other teens in the area contributed $1,000 to start investing.

Rosenthal says, “By the time my junior year came around, we had about 40 members. After the junior year was over, I really wanted to expand and make it as big as possible. And we grew from 40 members to 90 members. , making us the biggest teen investment club that I know of.”

After leaving the teen investment club to go to college, Rosenthal wanted to pass on everything he knew, especially since he felt it was important that the club still have teen leadership. He self-published his book, ‘Teen Investing’, on Amazon so the club could learn from his experience.

Here are three investing strategies that Rosenthal says teenage investors should avoid.

1. Invest in crypto-altcoins

Rosenthal says crypto-altcoins are “highly volatile,” making them a less than ideal investment choice. He says teenagers are more likely to be drawn to the hype of smaller altcoins that are unlikely to see a comeback.

“Outside of bitcoin, in theory, small coins haven’t been proven to be there for the long haul, so they’re not necessarily great long-term investments,” Rosenthal says. “That being said, I think bitcoin and ethereum have several advantages, and I think they’re here to stay.”

2. Waiting to diversify your portfolio

Rosenthal says too many teens think they have to wait until they have more money to diversify their portfolio. “It depends on how much money the teenager has,” he says. “If they have around $1,000 or less, I could see that it makes sense to put it all back into a business you want to start. But I would just say to teenage investors, beware of investing all your money in a thing.”

3. Invest in hyped stocks

“Obviously, it’s always impossible to follow the market,” says Rosenthal, “but I would say whenever something is really hot, you have to be very careful.”

Rosenthal says a stock that explodes on Robinhood, or is the subject of ubiquitous news stories, likely means the price has already moved up significantly, which means now is not the right time to trade. to buy.

He adds: “When everyone is telling you to buy, you’re not really getting it at the best price. So I would be very careful to invest at the top like that.”

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