At a time when most kids their age are focused on schoolwork and getting a part-time job, 15-year-old Srijan Sharma and 16-year-old Rohit Roy have been learning the ins and outs of the stock market – and making thousands of dollars in the process.
These two teenage investors (and their parents) shared with MagnifyMoney how they got ahead of their peers by learning about investing. They also share a few tips on how other parents can get their kids curious about investing at an early age.
The summertime day trader. Srijan, a sophomore at Robbinsville High School in Princeton, New Jersey, has always had an entrepreneurial spirit. At age 13, he learned he could earn a profit by purchasing limited edition sneakers online, leveraging social media to find good deals and flipping them for a profit. In 2016 alone, he made about $70,000 in revenue.
More from U.S. News & World Report:
Visa denials common before travel ban
On Obamacare replacement bill, Ryan open to changes
10 spring break spots for grown-ups
It was a natural transition to investing in the market from investing in sneakers.
"I realized that what I was doing [with my business] was closely tied to the stock market and how the market behaves," Sirjan says.
Over his summer break in 2016, Srijan decided to invest some of his sneaker earnings in the market. He began trading individual stocks on the Robinhood app, a fee-free brokerage service that lets investors trade stocks and exchange-traded funds. He started by investing $1,500 in various companies, including MGT Capital, Facebook (ticker: FB) and Valeant Pharmaceuticals International (VRX). He carefully researched companies before making trades.
"If he has any questions about business or economics at the macro level he can ask my wife or me but outside of that he's on his own," says Sanjay Sharma, Srijan's father, who works in management consulting. Sanjay and his wife, Ritu, who is a certified public accountant, both have degrees in accounting and provide Srijan with insight when they can.
By the time he went back to school in fall 2016, Srijan had grown his initial investment to about $4,500. With school work to focus on, he knew he wouldn't have time to dedicate to active trading so he decided to close his positions and sell his remaining shares, although he kept the funds on his Robinhood account.
The father-son team. New Jersey teen investor, Rohit Roy, 16, says he saved up $2,500 from doing chores at home and babysitting his younger sister. With his father's help, in November he invested his savings in the family's account at a major brokerage firm. The bulk of his investments are in low-cost ETFs but he says he uses about $500 of his savings to invest in individual stocks. So far, he's earned about $300 on his initial investments overall.
Rohit's father, Jay Roy, says he's advised his son to invest for the long term and short term so Rohit can learn to manage risk through diversification.
"At the beginning it was a little bit weird having the extra pressure of 'these are real dollars that you don't want to lose,'" says Rohit. But the teen didn't let the pressure dissuade him from investing. Instead, he became motivated to analyze stocks and learn industry-level concepts such as using multiples to decide if a stock is under- or overvalued.
"It really fundamentally changed the way I looked at the stock market rather than just looking at it generally. I learned to really research the companies that I want to invest in," Rohit says.