Ways to Save and Make Money What to Expect From Investing Your Friend, the Index Fund Start Investing Taxes, IRAs, Drips, and Savings Accounts Aim to Do Better Than Average Stocks for Teens to Consider True Teen Stories Keep Learning Have Your Parents Read This? Talk With Other Teens Learn How Much Money You Can Grow.

The world is full of empty promises. Advertisements tell us to buy an amazing cream because it will make us beautiful, or to buy that weird-looking contraption because it will tone our muscles and make us popular.

And here comes the Fool, with another promise. Invest money now and we'll help make you a millionaire, or at least comfortably well-off in your adulthood. Gee, that sounds even less believable than the beauty cream, doesn't it? You can print this out and take it to your math teacher, and she can verify it.

If you're not the type who enjoys math class, who delights in solving for X and figuring out how long it will take a plane to get from Los Angeles to New York if it's going miles per hour, you might expect this section to be boring. It's all about numbers, after all. Give it a chance, though -- these numbers will show you how money grows and how millionaires are made.

Compounding is when something grows over time, and the amount by which it grows is also growing. It's much easier to understand when you consider some examples. Keep reading, though -- it's just multiplication, and it's very important stuff. Let's start with a simple example. Here's a table that will make it clearer:.

Do you see what's happening?

Stock Market for teens - Free stock market game - rehojuvuyequ.web.fc2.com

That's compounding in action. In just eight years, you doubled your money. But since your money was compounding, it grew faster. If this doesn't seem magical enough for you, here's a continuation of the earlier table, showing certain years that are farther out:. If you're not yet finding this fascinating, then perhaps the next few tables will do it for you.

The growth rate -- how fast your money grows, on average, from year to year -- is very important. Five percent is what you might earn in interest in a bank account in some years, or on a CD certificate of deposit or on some bonds. Eleven percent is the historical average growth rate per year of the stock market for most of the last century. Fifteen percent is how fast your money might grow if it were invested in a bunch of top-notch companies that you selected on your own.

The pennies have been rounded off to the nearest dollar. Keep in mind that not all growth rates are the same. The stock market, however, is not a sure thing, and neither are some bonds issued by companies. Stock market returns fluctuate. There are good years, great years, so-so years, and years we'd much rather forget. Over long periods of time, though, the stock market tends to go up. Similarly, with companies, many remain strong for decades or a century.

In general, the more certain the growth rate, the lower it will be. The more iffy it is, the higher it will be. We'll cover these topics in more detail later. For now, just understand that most growth rates are not sure things. You can still make a lot of money by investing.

You should now have a sense of how money can grow over time, and how much growth rates matter. Now let's turbocharge our results by upping how much money we start with. In another article we offer you a bunch of good ideas.

Trade - Stock Market for teens - rehojuvuyequ.web.fc2.com

The point of this table is just to show you: Is all this math stressing you out? This is extremely important stuff -- stuff that could change your life. Don't think of it as just math -- think about what the tables represent. They show you how small sums of your money can grow into large sums. You can start with enough money to buy a CD player, and end up with enough to buy a car or a house or a trip around the world. Many adults find that these tables make their heads hurt, too, but for a different reason.

It's because when they realize what these tables are saying, they start banging their heads against a wall, wishing they'd known about this stuff when they were younger. Let's tweak these tables one last way, to make them more realistic.

Here's what happens when you invest money regularly. Notice in the table above how much you put in, versus how much you have. See the power of investing regularly? Even with these very small amounts, it makes a huge difference. It's likely that none of the examples above reflect how you will actually do.

You might start investing sooner or later. You can't control every variable, but to a great degree, you can control how much you invest, how you invest, and how long you let your money grow. One of the most important factors here is time. It's one thing that you, as a teenager, have much more of than any adult.

How to Teach Teenagers About Investing in the Stock Market - WSJ

It can be a huge advantage. You don't have to start investing today, or even this year.

And in fact, you shouldn't begin investing until you've got more knowledge under your belt. But if you learn a few things now and get started soon, you can set yourself up to enjoy comfort and security for most of your life. Remember also that you can still enjoy your life while you're saving and investing. You can amass great wealth by regularly investing a portion of your income -- not all of it.

Try experimenting with compounding. You can do it the old-fashioned way, with paper and pencil, or the less old-fashioned way, with a calculator. You just plug in some numbers and it'll show you how much money you'll end up with. Try changing the numbers you enter and see what happens. This article was adapted from The Motley Fool Investment Guide for Teens: For more information on how compounding works and some additional amazing charts, check out the book.

If you have some questions about anything you've read here, you can ask them on our Teens and Their Money discussion board. Make it inline block later. Premium Advice MY SERVICES None OTHER SERVICES.

MENU Services MY SERVICES None OTHER SERVICES. Special Broker Deals Today's Headlines Investing Bonds Broker Comparison ETFs Index Funds Mutual Funds Stock Ideas More TEENS AND THEIR MONEY Want to Be a Millionaire? Want to Be a Millionaire?