3 Investment Strategies Teenage Investors Should Stay Away From

  • 19-year-old Jack Rosenthal received $5,000 from his grandfather when he was 8 to start investing.
  • He started a teen investing club in high school and built a $250,000 portfolio for himself.
  • Rosenthal tells fellow teen investors to avoid overhyped stocks.

When Jack Rosenthal was 8 years old, his grandfather gifted him $5,000 to start an investment portfolio.

Rosenthal tells Insider, “He gave me a couple of stocks to look out for, but I was just a young kid. I wanted to buy companies that I thought were cool, but might not necessarily be good to buy based off the metrics. So ever since then, I’ve kind of listened to what he told me to do and started developing my own strategies.”

As a teenager, while other kids played sports or worked part-time jobs, Rosenthal started an investing club at a local high school where fellow teens from the area brought $1,000 to start investing. 

Rosenthal says, “By the time my junior year came around, we had about 40 members. After the end of junior year, I wanted to really expand and make it the largest I could. And we took it from 40 members to 90 members, making us the largest teen investing club that exists to my knowledge.”

After leaving the teen investing club to go to college, Rosenthal wanted to pass down everything he knew, especially since he felt it was important for the club to always have teen leadership. He self-published his book, “Teen Investing,” on Amazon so that the club could learn from his experience.

Here are three investment strategies Rosenthal says teen investors should avoid.

1. Investing in crypto altcoins

Rosenthal says crypto altcoins are “very volatile,” making them a less-than-ideal investment choice. He says teenagers are more likely to be lured into the hype of smaller altcoins that will likely won’t see returns. 

“Other than bitcoin, in theory, smaller coins haven’t really been proven to be here for the long run, so they might not necessarily make great long-term investments,” says Rosenthal. “That being said, I think there are several advantages to bitcoin and ethereum, and I think they’re here to stay.”

2. Waiting to diversify your portfolio

Rosenthal says too many teens think they need to wait until they have more money to diversify their portfolio. “It depends on how much money the teenager has,” he says. “If they have like, $1,000 or less, I could see it making sense to just invest it all back into a business that you’re interested in starting. But I would just say to teenage investors, be wary of investing all your money in one thing.”

3. Investing in overhyped stocks

“Obviously, it’s always impossible to ime the market,” says Rosenthal, “but I’d say anytime that something’s really hyped up, you should be very cautious of it.”

Rosenthal says that a stock that’s blowing up on Robinhood, or being written about ubiquitously in the news, probably means the price has dramatically risen already, which means it’s a bad time to buy it.

He adds, “When everyone’s telling you to buy, you’re not really getting it at the best price. So I’d be very wary of investing at the top like that.”