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Investing in equity markets is not child’s play, but it does not have to be an old man’s game either. In fact, if done carefully and with rigorous research, there is a chance that a smart portfolio can help you grow your investment in the long run.
Volatility is a part of stock markets, so a certain level of risk factor comes along no matter at what age you sign up for it. Troubles like misleading information and market-altering events are also common. So, the safest way to go about it is to be well-informed and mindful, without age being a terribly important factor.
In fact, it is often advised that starting investments at a young age helps build a broad investment portfolio and develop a pattern of financial independence and discipline.
Does that mean a 12-year-old should be able to pour their pocket money into stocks? Not exactly. Although American financial company Fidelity Investments is willing to let teenagers explore market investments.
The investment company, in May 2021, announced that it will create Fidelity Youth Accounts for teenagers looking to start investing in the stock markets. Under this new initiative, 13 to 17-year-olds will be able to buy and sell stocks, ETFs and invest in mutual funds without paying any fee.
Why Investing At Young Age Could Be Beneficial
- Starting an investment portfolio at a young age gives you more time to recover in case of any loss. To put this in perspective, early investments are likely to give your money more time to grow in value.
- Early investments are likely to help you develop a habit of saving your money. Also, having an extra source of income that is not your savings can help you on a rainy day.
- The ability to take risk and weather a loss is an important characteristic required to sustain in the world of stock market investments. And if you start investing young, you are likely to have more risk-taking and loss-bearing capacity than your older counterparts.
- Market experts have often pointed out that aged investors are more conservative in their approach. Young investors, on the other hand, are more open to explore unchartered area, such as cryptocurrency a few years ago. This, in some cases, can pay off in the long run.
- Young people are also often prone to opt for loan options as they generally do not have a strong bank balance. However, if you start investing early, you may have some surplus money invested in the market that can grow and come handy.
- Generally, people associate their investments in an equity market with retired life. There are, however, many investment options where people can make an income throughout life. For example, if you invest in a dividend stock, it is likely that you will get timely gains over a long period of time.
Let the records show, though, that you can make many blunders when entering the stock market world young.
Copyright © 2021 Kalkine Media
Common Mistakes You Must Avoid As A Young Investor
Quite often, young people avoid setting aside investments thinking they do not have enough money for it or that they are still too young. If the COVID-19 pandemic has taught us anything, it is that a rainy day can hit anyone, any day, unannounced. Hence, it is advisable to invest whatever little surplus money you can spare, after you have earmarked your savings, in a good, researched investment option.
Some, on the other hand, avoid investment options as they are complex. In today’s world, there are ample verified apps and websites that can help you understand these complexities.
Staying away from investments is not the only mistake young people make. Running to eagerly toward it can also be an error.
When exploring stock markets, going in blind thinking you will make millions off of a penny stock is a daydream a young investor should not indulge in.
The most basic principle an investor should follow is to do abundant research before parking your funds at any investment option. It is always important to know important elements about the company you are looking to invest in – its history, fundamentals, stock performance, financials, etc.
That said, let’s look into some companies that you could explore through the eyes of an amateur investor.
Copyright © 2021 Kalkine Media
Stocks Under C$ 10 That Might Help You Explore Canadian Markets
- Reconnaissance Energy Africa Ltd (TSXV:RECO)
Stocks of this oil and gas company returned 1,447 per cent to its shareholders in the past year. RECO’s share price also catapulted by 325 per cent year-to-date (YTD).
From a 52-week low of C$ 0.56 on August 24, 2020, the shares closed at C$ 9.44 on June 3.
As per TMX data, Reconnaissance holds a market cap of C$ 1.5 billion.
- VIQ Solutions Inc. (TSX:VQS)
The company operates as a technology services provider for capturing digital evidence. On May 13, the company posted strong first-quarter results for fiscal 2021, in which it achieved a record revenue of US$ 8.3 million.
VQS shares have swelled by about 30 per cent in the past three months, beating the TSX 300 Composite Index's growth of 15.7 per cent.
It holds a debt-to-equity ratio of 1.79 and its market cap is worth C$ 217.8 million. On June 3, the scrips closed at C$ 8.75 apiece.
- Aimia Inc (TSX:AIM)
Priced at C$ 4.85 apiece at market close on June 3, investors could explore Aimia stock’s low value as an entry point to invest. The marketing and customer loyalty services provider holds a price-to-earnings ratio of 0.6 and its market cap is C$ 457 million.
The stock soared by 94 per cent in the past one year and surged 23 per cent in the last six months.
- Filo Mining Corp (TSXV:FIL)
The mining company explores materials like gold, silver and copper. As prices of these metals are expected to rise in future, the company might benefit from them.
This year, FIL stock surged by 402 per cent. Its quarter-to-date (QTD) growth is 209 per cent.
In Q1 2021, Filo’s diluted earnings per share (EPS) were C$ 0.09 and its cash balance stood at C$ 28.9 million.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
