Rags to riches: why and how to invest as a high school student
Photo: Davis High student Andrew Yin has had success investing in companies with innovative technologies.
By Rayyan Islam,
BlueDevilHUB.com Staff–
Throughout January, GameStop (GME) investors triggered a short squeeze that compounded into a global frenzy after a virtual brawl between retail investors and institutional investors. A short squeeze occurs when the price of a stock rises while some investors bets against its success, and those investors are forced to purchase it in order to avoid even greater losses. This scramble to acquire as many shares to mitigate losses applies pressure on the stock’s price, causing it to soar in a small window of time.
This short squeeze was egged on by billionaire investors like Elon Musk and Chamath Palihapitiya, resulted in a hedge fund losing billions and brought light to the manipulability of stock prices to the public eye. With it tripling the monthly search volume of “How to Invest?”, according to Google Trends, many people have wanted to get into investing for the first time.
Regardless of age, one of the best ways to learn and start investing in the stock market or cryptocurrencies is to use a simulator. Simulators like Investopedia and MarketWatch offer users instant virtual cash to begin investing with real-time prices and can help one experiment with various strategies and levels of calculated risk before dipping their wallets into the market.
Once one deems that they are ready to truly begin investing, they should start shopping for an online broker. Brokers differ when it comes to their commissions, fees, perks and user interfaces. For example, both TD Ameritrade and Webull offer zero fees on most trading, zero dollar account minimums and easy to use platforms. However, in this comparison, only TD Ameritrade pays interest on uninvested cash, whereas only Webull gives new investors four free random stocks up and allows the purchase of fractional shares.
Most brokers also offer the option to open custodial accounts where assets are held in the name of a minor while also being co-signed to their parent or guardian. Choosing the right broker that aligns best with an investor’s budget, investment style and comfort is a key to begin trading in the green.
Senior Connor Tang has been using TD Ameritrade to employ a strategy of long term investing.
“Understanding Buffett and the other successful investors, it’s statistically not favorable to change hands even during dips, so I look for reliable stocks with solid business models and leadership with long term projections that can have some sort of market niche,” Tang said.
Most hedge funds will primarily hold diversified long-term positions due to the low risk and lack of need for precisely timing the market. Tesla has recently been a poster child stock for long-term investing since its constant innovation and revolutionary technologies have pushed it over a decade ahead of its competitors and carved out a bright profitable future. Senior Andrew Yin invested in Tesla back in the summer of 2019 when the share price was 1/18 of what it is today.
“I realized the future was in electric cars after receiving a neck-breaking ride in my neighbor’s Tesla. I invested and held it for about a year but sold it all when the price dramatically rose to 10x and feared it was a bubble. Although I wish that I had held Tesla longer, I moved to other long term investments like gold and Bitcoin last fall,” Yin said.
The price of gold has been steadily rising over the past few decades, and Yin believes that Bitcoin will continue to rise exponentially as it becomes more widespread and heavily transacted.
Investing in the stock market or cryptocurrencies may often seem daunting and confusing, but ample practice with simulators and a comprehensive understanding of the market can easily help one build the fundamentals to begin trading as an informed and successful investor.
