Meet the teen investors of the future

Can you become a millionaire at 30? Could learning about investing help build your financial resilience, and how might consumers be affected by a cashless society?

These questions were among the questions raised by over 300 hopeful students entering the FT’s competition to find the best young personal finance writers in the UK.

Organized with the London Institute of Banking and Finance (LIBF), the pandemic has proven to be a catalyst for young investors with time and money. Lockdown produced a record number of entries, and many expressed a clear desire to learn more about personal finance topics at school.

“The standard was incredibly high, so the rating was tough, but very rewarding,” says Catherine Winter, LIBF’s chief financial officer, who rated the entries Bobby Seagull, the FT columnist and TV math expert. “It’s wonderful to know that so many young people are enthusiastic about finance.”

Our three winners, whose edited entries appear below, will now have to decide how to invest their £ 150 prize pool.

Age group 18-19

Winner: Pamela Kruze, Pendleton Sixth Form College, Salford

Do you want to be a millionaire by the age of 30? What role do investing and trading stocks and shares play in helping people build wealth for their future?

Pamela Kruze

Can you really become a millionaire at 30? US trader Tim Gritani was able to do this by trading penny stocks at the age of 24. These are stocks that are under £ 1 in the UK or under $ 5 in the US. In five years, YouTuber Tim claims to have made over $ 4 million in profit. So can we do that too?

As always, it depends. Investing can make people wealthy, but there is no guarantee that they will become a millionaire. You have to be careful as everything can be lost.

Do you recognize trends at the beginning? For short-term traders like Gritani, the timing of buying and selling is everything. If you had taken the mass action to short GameStop and then get off the ship before the price fell, you could have made a good return – but not millions. However, many think GameStop is overrated and the bubble may burst soon.

Stocks like Netflix did well during the pandemic as people got stuck at home subscribing to shows and playing. That has happened in the past – but investors are always trying to capitalize on predicting the future.

To diversify risk, consider a longer-term investment that aims for steady but steady growth. It’s less risky, but your wealth will take more time to grow in value, so your chances of becoming a millionaire by the age of 30 are slim. There is an advantage; Choose well and you can reinvest the dividend payments to add value to your investments while you wait.

Before investing, you need to weigh your options and weigh the risks and benefits of any particular investment strategy before deciding whether to go for it or not. The higher the risk, the higher the return could be – but also the risk of losing your money.

You also need to factor in brokerage costs and commissions, however, there are cheaper alternatives like Freetrade, Robinhood, and Webull so access to stocks and shares is now much easier for young investors.

Overall, investing allows you to build your wealth over a longer period of time and there are many options available to you depending on your financial situation and the risk you are willing to take. Knowing all of these factors can help you build wealth for your future. Perhaps in time you too will become a millionaire.

16-17 age group

Winner: Eliza Stevenson-Hamilton, Benenden School, Cranbrook

In uncertain times, many people worry about their finances. What do we mean by financial resilience? Why is it so important and how can young people improve their resilience for the future?

Eliza Stevenson-Hamilton

As a young person preparing to go into the real world, the concept of managing my own finances seems daunting. We lived through the coronavirus and learned the effects of a recession not only in our textbooks, but also through our parents and siblings worrying about losing their jobs or paying rent.

I’ve come across the term financial resilience before, where teachers or parents have pointed out the importance of having money to fall back on and overcome unforeseen circumstances. Still, I haven’t met an adult who has told me how to become financially resilient.

Why is it so difficult for young people to develop these skills?

High unemployment rates coupled with low average savings have forced many to return to their parents. This seemingly short-term regulation can have long-term consequences. According to a 2019 research report by the Urban Institute, those who lived with their parents between the ages of 25 and 35 were significantly less likely to be homeowners 10 years later.

I would argue that one factor helps young people maintain their “financial virginity” by staying with their parents. You miss out on firsthand learning important life skills like managing household bills, grocery budgets, and paying rent.

This could be a chance to save for the future. However, when I read stories of skyrocketing house prices and huge student debts, I can see why the under-30s propensity to consume is so high.

What is the best way to encourage students in such uncertain times to go out into the world without having to rely on their parents? In my opinion, the secret lies in investing.

By building long-term investments, young people can take control of their finances. So I think we need more education about investments targeting young people.

It may be easy to dismiss this and say that young people do not want to learn how to invest their money or that they would not be able to compete with the more experienced investors.

This is just not true. I conducted a survey of students aged 11-17 at my school and found that 91 percent of those surveyed said they wanted to invest their money in the future and 88 percent said they would like to learn how to do it . This willingness to invest is also evident in the real world.

Take the GameStop story. We see that young people are looking for investment opportunities and will seize any opportunity that presents itself. We’re not lazy or unmotivated, we just haven’t been taught how to invest.

Young people also need investments. Our risk-taking nature enables us to make decisions that more risk-averse investors may not make. In addition, we have time on our side. By investing early, one has the opportunity to make mistakes early, allowing for the development of the resilience necessary to be successful in investing and the time to build up compound interest.

So how can young people improve their financial resilience? Predictably, my answer is education. It seems crazy that we are expected to go out into the world and show financial resilience without being told how. By introducing investment in young people, teachers could pave the way for their students to become both financially independent and equipped with the resources to overcome the unexpected problems that we are sure to face in our future.

14-15 age group

Winner: Mukund Mahendra Soni, Queen Elizabeth’s School, Barnet

Money makes the world go round? Not so much nowadays. What are the potential advantages of a cashless society and what could be the disadvantages?

Muk and Mahendra Soni

The invention of the currency around 640 BC Is generally seen as an economic breakthrough. However, in the last few decades we have moved away from cash and prefer contactless cards, online transactions or mobile payments. This could spark another economic revolution, but there is resistance – and for good reason.

The pandemic has accelerated the decline in cash. Consumers in the digital age prefer the simplicity and speed of cashless payments. Some estimates suggest that cash will make up less than 10 percent of all transactions in the UK by 2027.

Cash is inefficient for banks because of the high cost of the infrastructure required, such as ATMs, vans with banknotes and branches, and counters that accept bills and coins.

The state is also benefiting from the digitization of payment transactions. In rich countries, the cost of minting, storing, sorting and distributing cash is estimated at 0.5 percent of GDP. Going cashless would hamper the black economy and allow the government to better monitor tax evasion and fraud.

However, concerns remain. Over 1 million people in the UK do not have a bank account, making it impossible for them to make cashless payments. The hassle-free nature of cashless transactions can make it difficult for consumers to see how much they are spending.

A cashless society could also have a negative impact on small businesses. All companies must pay interbank fees to credit card issuers who operate electronic payment systems. These costs are often disproportionate to smaller businesses that are more likely to process low-value transactions.

For consumers, the loss of anonymity in cash transactions could enable governments or banks with commercial interests to exploit personal information and spy on shopping habits.

Another major disadvantage is that electronic payment systems are vulnerable to technical failures and cyberattacks, and many rural areas still have poor digital connectivity.

However, the main limitation of cashless trading can be demonstrated in the following scenario.

Imagine you are in a foreign country – nobody knows you and you want to take a taxi back to your hotel. You are dependent on payment on your phone, but the battery is dead. How do you get home now

Click here to learn more about FT’s Financial Literacy and Inclusion Campaign or email financial.literacy@ft.com

FT schools

Students ages 16-19, their teachers, and schools around the world can get free access to the FT to help with their studies, exams, preparation for further education or employment, as well as financial and career insights. Check that your school is registered here: FT.com/schoolsarefree

source https://thedailytradingnews.com/meet-the-teen-investors-of-the-future/