16 years old and got my first job… how should I start investing?

I’m 16 and just started working my first job (fast food). I’ve been hearing that index funds are a good way to start investing since they’re safe and grow over time, but I’m not sure where to begin. I want to make smart choices early on, so any advice on how to start and what to invest in would be awesome. Thanks!

Are you looking to save for retirement, or is this more of a short-term plan, like saving for college?

If it’s for retirement, I’d say open a Roth IRA and invest in something diversified like VTI or VOO. If it’s short-term, you could just put the money in a high-yield savings account (HYSA) or even look into a 529 if it’s for school expenses.

@Grady
I’d say more short-term, but I also want something that could grow over my lifetime. ETFs seem interesting to me. Do you know what brokerage works best for someone under 18?

Since you’re young, you can afford to take on more risk because you have so much time for your investments to grow. Even if the market dips, you have decades for it to recover.

I’d recommend looking into ETFs like QQQ or VGT. They’re not super risky but have great growth potential. Congrats on starting so early, by the way!

@Corey
Thanks! I was leaning toward QQQ or VOO but wasn’t sure what brokerage to use since I’m under 18. Any suggestions?

Here’s a breakdown based on your goals:

  • Retirement savings: Open a Roth IRA and invest in VT. It’s a global index fund and will grow long-term.

  • Non-retirement savings: Use a taxable brokerage account and go with 60-70% VTI and 30-40% VXUS. That’s a solid combo of U.S. and international stocks.

  • Emergency fund: Keep this in a high-yield savings account or a money market fund. This becomes more important once you’re out on your own.

If you ever feel like selling because of market volatility, try to resist. But if you really can’t, sell a small portion (like 10%) and move it into something safer like bonds (BND). Over time, patience pays off.

Some great books to read:

  • The Psychology of Money by Morgan Housel
  • The Millionaire Next Door by Thomas Stanley & William Danko
  • Common Sense on Mutual Funds by Jack Bogle
  • A Random Walk Down Wall Street by Burton Malkiel
  • All About Asset Allocation by Rick Ferri

@Frost
Thanks for the tips! Do you have a recommendation for a good brokerage since I’m under 18?

Sullivan said:
@Frost
Thanks for the tips! Do you have a recommendation for a good brokerage since I’m under 18?

I’d go with one of the big three: Vanguard, Fidelity, or Schwab. All of them are solid and let you invest in the ETFs I mentioned. Since you’re under 18, you might need a parent or guardian to open a custodial account for you. Call their customer service—they’ll guide you through the process.

An index fund like QQQ would be a great choice. Check back in five years and you’ll be glad you invested.

Just go with VOO. It’s a solid starter ETF and super safe.

VOO is a great place to start. It’s safe and steady for beginners.