Book Review – The Motley Fool Investment Guide for Teens

One of the biggest regrets I have when it comes to money and investing is that I didn’t get an earlier start on things. It’s only been a bit over three years that I’ve really considered my money in any detail, being sure to invest for my future and manage my money properly. Often times I wonder how much better off I’d be if I had started to pay more attention to my finances in my early twenties, or even my teens.

The Motley Fool Investment Guide for Teens attempts provide the information that the typical teen needs to start investing. Does it give a thorough background to the would-be junior investor, or leave the typical teen reader hanging? As always, we need to read onward in order to find out.

Summary

The book opens with an introduction, stressing the advantages of getting started with investing as a teen, and introducing the steps to be laid out throughout the book. The first step covered is to set goals for your financial future and trying to meet them. There’s an emphasis on the power of compounding to grow your wealth and make it easier to get to your final goals.

The second step covered is how to make and save money as a teen. The making money portion discusses everything from getting an allowance to finding an appropriate job for a teenager. Saving money includes some suggestions on preventing yourself from spending too much. Step three continues the discussion of good money management, featuring tips on budgeting, saving money, and planning for car ownership and college savings. Step four looks at some of the bad ways that people use money, from gambling to improper use of credit cards.

The fifth step starts to get into the main purpose of the book, investing, by looking at what to expect when investing, particularly when investing in stocks, which is what the remainder of the book focuses on. Step six, in turn, emphasizes the possibility of using mutual funds to invest. It stresses the advantages of using index funds, rather than actively managed funds, to cut down on your expenses and prevent fund manager mistakes from costing you.

Step seven gets into actually investing, covering issues of finding a broker and choosing the right type of account (do you opt for a traditional IRA or a Roth IRA, for example). The eighth step polishes off the first part of the book, by encouraging the reader to continue to learn. The ninth step offers a $1000 per year giveaway (sadly, one that ended five years ago) and offers advice from numerous Motley Fool members to teenagers getting started with money management.

The latter part of the book covers the details of investing in individual stocks. Step 10 looks how to start finding possible companies in which to look further, relying on your own experiences to get investing ideas. The eleventh step shows how to track stocks that you are interested in, reading through stock market listings and monitoring their progress, while the twelfth step looks at how to launch an investment club as a teenager, particularly looking at some of the differences between teenage investment clubs and adult investment clubs.

Step thirteen looks at how to read the documents put out by businesses, in order to find good investment options. The fourteenth step continues the discussion of evaluating businesses, looking at how to run calculations on the aforementioned documents. The fifteenth and final chapter looks at how to manage a portfolio of stocks, including finding the best time to sell them and avoiding common investment mistakes.

Pros

The Investment Guide for Teens strikes a good balance for a young would-be investor, neither patronizing nor exceptionally complex. The concepts are covered with humor and plenty of accounts from Motley Fool members. The book proves a pretty solid introduction to many investment concepts.

Cons

The book (over-)emphasizes individual stock investing for people who are just getting started in their investment lives. Many of the suggestions in the latter part of the book, in particular, are more appropriate for more experienced investors.

Overall

The Motley Fool Investment Guide for Teens is a pretty solid introduction to money management and investing for teenagers. You probably should let any teens in your life know that they don’t need to get right into individual stock investing until (or if) they feel ready. That said, if they are interested in stock investments, it’s not a bad way to introduce the concept.

2 Responses to Book Review – The Motley Fool Investment Guide for Teens

  1. Daisy, I think it would be fine to read this as a starter guide to investing, although obviously, some of the comments are directed at teens specifically (needing your parents’ permission to invest, for example, only applies to the under 18 crowd). There are plenty of good introductory investing guides out there, including this one.

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