How to Invest Your Bar Mitzvah Money

The Bar Mitzvah is a noteworthy milestone in a young person’s life. It marks a pertinent coming of age when you should begin to think more responsibly about all things, including finances, financial goals, and future plans. The giving of gelt (money) seems to be the ideal gift for a young person who is getting started in their life as a young adult, and it is not at all uncommon for there to be several thousand dollars gifted by the time the event is over. This money can be put to good use for sure. Investing Bar Mitzvah money is also a logical way to use the funds and help you begin the process of building their own wealth.

Why Invest Your Bar Mitzvah Money

There are a lot of good reasons to invest your Bar Mitzvah money. One, you can begin the process of building accumulative wealth, and this has worked really well for some people. Timothy Sykes, just one noteworthy investor, managed to turn $12,415 of his Bar Mitzvah money into $1.65 million. Even if a young investor does not manage to yield quite this kind of return, it is a good way to save for the future and potentially garner a return for things like college tuition, a first home purchase, or other major investments. Secondly, investing your Bar Mitzvah money is a good way to garner some fiscal knowledge, which is always helpful as you grow into an adult.

Best Way to Invest Your Bar Mitzvah Money

There are multiple ways to invest Bar Mitzvah money to set yourself up for a healthy possibility of accumulated returns in the future. From saving the money in an interest-bearing account and investing in stocks, bonds, or ETFs, there are several really good options to consider. Getting to know a little about all of your options will help you get a better idea of what will work out best for your personal financial goals.

1. Saving Your Bar Mitzvah Money

You could choose to stuff all that cash into a box and hang onto it, but there’s never a need for cash to be sitting around when it could be working for you. Placing your Bar Mitzvah money in a savings account is possibly the simplest way to keep the money safe and yield a return. Regular savings accounts are fine, but it is even better if you can go with a CD account that can tend to garner a little more interest over time. Market Watch also recommends state 529 plans, which are interest-gaining accounts that are designed to help young people save for college.

2. Opening a Stock Trading Account as a Teen

Minors technically can’t open a stock trading account on their own, but what they can do is have parents open a guardian or custodial account. The adult will have to be the one to make the actual stock trading decisions as the of-age party over the account. Depending on the state where a teen lives, stock trading personally may have to wait until the age of 18 or 21. However, most parents have no problem setting up a guardian or custodial account and allowing their child to play an active role in the process to help them learn. Once the teen reaches legal age, the account can be transferred to them.

3. Best Ways for Young Adults to Invest

Young adults have a plethora of opportunities when it comes to investing. You can choose to go with primarily stocks, primarily bonds, or mainly ETFs, but it is best to build a diversified portfolio. Some young adults start with small investments until they gain a better understanding of how investing and stock trading works, and then start to take a few more risks or make a few larger investments. No matter what you have your sights set on, it is best to work with a knowledgeable brokerage firm or guide to help you make sound financial moves with your money.

4. Buying Your First Stock or ETF

Buying exchange-traded funds (ETFs) and stocks for the first time is something that should take some careful consideration and guidance from a stockbroker or individual who knows the process well. ETFs make it easy to build a diverse portfolio without investing a lot of money in just one place. Risks can be a little lower than what they would be with stocks, which do tend to require a larger investment amount. However, there are also some “safe-bet” stocks out there that show steady gain year after year or stay fairly stable in a volatile market.

5. Bonds are Safe Investments for Teens

Safe investments are a preference for teens, especially when the money used to invest came from the generosity of loved ones. Therefore, bonds can be the preferred way to get started with investing when it comes to making the most of Bar Mitzvah money. Bonds are available from companies who are looking for financing for their company, and they have to be paid back with interest down the road. Essentially, when you buy a bond, you are participating as a lender to a company in exchange for a promised payback with a gain later on. It won’t matter whether the company does amazingly well or makes very little profit, you will still get the return on the purchased bond. The upside is bonds are a low-risk investment. The downside is the return will be the same no matter how well the company does over time.

Bottom Line

Wise moves with money collected at a young age is a good way to build a stable financial future down the road. Learning how to properly invest your Bar Mitzvah money is only going to lead to good things for your financial future.