How to Invest as a Teenager, and Get a Head Start

It turns out that teenagers have two incredible advantages: time and hustle. If you can combine a side hustle that generates cash with smart investing habits, you’re setting yourself up for something pretty amazing. Let me show you how this works.

Why Starting as a Teen Is Your Secret Weapon

Here’s something that blew my mind when I first learned about it: time beats money every time when it comes to investing. A teenager who invests $1,000 once and never adds another penny could end up with more money at retirement than someone who starts investing $5,000 annually at age 35.

The Magic of Starting Early

Let’s say you make $2,000 from reselling sneakers at age 16 and invest it all in a stock market index fund that averages 10 percent annual returns:

• By age 65: That $2,000 becomes about $256,000
• If you wait until age 25 to invest that same $2,000, it becomes about $108,000
• Wait until 35: Only about $42,000

Those extra nine years, from 16 to 25, added $148,000 to your final result. That’s why every dollar you can invest as a teenager is worth multiple dollars invested later.

Starting Your Investment Fund by Reselling

Here’s where it gets exciting. You don’t need to wait for a traditional job to start building wealth. Reselling can generate significant investment income, and it teaches you valuable business skills along the way.

Why Reselling Is Perfect for Teen Investors

• Start with whatever money you have (even $50–100)
• Learn about supply, demand, and markets
• Generate cash specifically for investing
• Develop entrepreneurial skills
• Work on your own schedule around school

What Actually Makes Money

• Sneakers: Limited releases, retro drops, rare colorways. Buy retail, sell for 2–3x when they sell out
• Electronics: Phones, gaming consoles, AirPods. Buy broken/used, fix, resell for profit
• Thrift store gold: Designer clothes, vintage band tees, unique pieces marked way under value
• Trading cards: Pokémon, sports cards, Magic cards. Buy packs or collections, sell singles
• Seasonal items: Halloween costumes in October, Christmas decorations in November
• Textbooks: Buy at semester end when students want them gone, sell at semester start

Reselling Strategies That Actually Work

• The thrift store method: Visit thrift stores to find name brands priced incorrectly. A $5 vintage Nike sweatshirt might sell for $40 online.
• The retail arbitrage play: Buy clearance items from stores and resell them online where they’re not on sale.
• The fix-and-flip approach: Buy broken electronics, learn to repair them, sell for 3–4x what you paid.
• The seasonal strategy: Buy Halloween costumes in November when they’re 75 percent off, sell them next October.
• The local market gap: Find items that are popular online but hard to find locally, then source and sell them.

The Investment Strategy: 50/30/20 Rule

Here’s a system that turns your reselling hustle into long-term wealth:

• 50 percent goes to investing: This builds your future
• 30 percent goes back into inventory: This grows your business
• 20 percent is yours to spend: This keeps you motivated

So if you make $200 profit in a month, $100 goes to investments, $60 buys more inventory, and $40 is yours for whatever you want.

Where to Actually Invest Your Profits

Start with a Roth IRA: This is the holy grail for teen investors. If you’re reporting your reselling income (which you should), you can contribute to a Roth IRA. Here’s why this is incredible:

• You pay taxes now (when your rate is probably low or zero)
• Everything grows tax-free forever
• You can withdraw contributions anytime without penalty
• No taxes ever in retirement

Custodial Accounts for Other Money: For money that doesn’t qualify for retirement accounts, your parent can open a custodial account (Uniform Gifts to Minor Account or Uniform Transfers to Minor Account) with you as the beneficiary.

Keep It Simple: Don’t overthink this part. Use index funds. Put your money in broad market index funds.

• Total Stock Market Index Funds: Own pieces of basically every U.S. company
• Target-Date Funds: Automatically adjust as you age (pick a date around when you might retire, like 2070)
• S&P 500 Index Funds: The 500 largest U.S. companies

These typically return 8–10 percent annually over long periods and require minimal effort to manage.

Real Examples: From Hustle to Wealth

Example 1: The Sneaker Flipper Alex, 17, gets into sneaker reselling. Invests $500 initially and earns a $300 monthly profit on average. Invests $150 monthly (50 percent rule) starting at age 17 and by age 65, assuming 9 percent returns, that investing habit could be worth over $1.2 million.

Example 2: The Thrift Store Hunter Sarah, 16, spends weekends hitting thrift stores. Invests $200 to start and makes a $150 monthly profit. Invests $75 monthly. By retirement, this could grow to over $600,000.

Example 3: The Electronics Repairer Mike, 18, learns to fix phones and gaming consoles. Makes $400 monthly profit, invests $200. This habit could become nearly $1.6 million by retirement.

The Legal and Tax Stuff

You’ll Need to Pay Taxes

If you’re making money reselling, you’re running a business. Keep track of:

• What you buy (costs)
• What you sell for (revenue)
• Any expenses (shipping, supplies)
• Your profit (revenue minus costs)

Consider It Self-Employment

Once you’re making decent money, you might need to file taxes and pay self-employment tax. This actually helps because it creates “earned income” that qualifies for IRA contributions.

Keep Good Records

Utilize apps like PayPal or Venmo, or a simple spreadsheet, to track all transactions. You’ll thank yourself later.

Scaling Your Operation

Month 1–3: Learn the Basics. Start small, figure out what sells, learn the platforms (eBay, Depop, Facebook Marketplace, Mercari).

Month 4–6: Find Your Niche. Focus on what’s working. If sneakers are profitable for you, consider delving deeper into the sneaker market.

Month 7–12: Systematic Approach. Develop systems for sourcing, pricing, and selling. Start investing your profits consistently.

Year 2+: Business Growth. Consider getting serious: business license, dedicated workspace, maybe even hiring friends to help.

Common Mistakes That Kill Profits

Buying Without Research: Don’t just buy things because they look cool. Check sold listings to see what actually sells and for how much.

Spending All Your Profits: The primary goal is to build investment capital. Stick to your 50/30/20 rule.

Getting Greedy on Pricing: Better to sell quickly at reasonable profits than hold inventory forever trying to maximize every dollar.

Ignoring Taxes: Just don’t do this. Keep track of everything from day one. Don’t let tax season surprise you.

Not Investing Consistently: Making money from reselling is just the first step. The wealth building happens when you invest those profits consistently.

Platforms and Tools You’ll Need

For Selling

• eBay (everything)
• Depop (clothes, vintage items)
• StockX/GOAT (sneakers)
• Facebook Marketplace (local sales)
• Mercari (general items)

For Research

• Sold listings on eBay
• StockX for sneaker prices
• WorthPoint for collectibles
• Amazon for retail prices

For Investing

• Fidelity, Vanguard, or Charles Schwab for accounts
• Their mobile apps for easy investing

Balancing Everything: School, Hustle, and Investing

Time Management: Reselling can be easily worked into school schedules. Source and work on the weekends, list items in the evenings, and ship during free periods.

Don’t Neglect School: Your hustle is great, but your education comes first. Think of reselling as funding your future, not replacing your education.

Automate the Investing: Once you establish your profit patterns, set up automatic transfers to your investment accounts. Make wealth-building automatic.

When Things Don’t Go as Planned

Inventory That Won’t Sell: It happens to everyone. Don’t panic and sell at a loss. Sometimes holding out for the right buyer is worth it. Don’t store up too much stuff (a sore spot with the parents…), take down your display and try again in a few weeks.

Seasonal Fluctuations: Certain items sell better at specific times of the year—plan for these cycles.

Market Downturns: Your investments may decline at times. That’s normal and temporary. DON’T jerk your money out —leave it alone and keep investing through the dips.

The Long-Term Vision

Here’s what’s really exciting about this approach: you’re not just making money as a teenager. You’re developing multiple skill sets that will serve you forever:

• Entrepreneurial mindset
• Understanding of supply and demand
• Negotiation skills
• Financial discipline
• Investment knowledge

By the time you’re 25, you could have:

• Years of business experience
• A substantial investment portfolio
• Financial habits that most adults never develop
• The confidence to take on bigger challenges

Your Action Plan

Week 1–2: Research and planning. Study what sells in your area. Check out local thrift stores, clearance sections, and online marketplaces.

Week 3–4: First purchases start small. Buy a few items you’re confident about. List them online.

Month 2: Open investment accounts, talk to parents about custodial accounts. Research Roth IRA requirements.

Month 3: Establish your system—50/30/20 rule, consistent investing schedule, good record keeping.

Month 6: Evaluate and scale what’s working? What isn’t? How can you do more of what works?

The Real Talk Section

Not every teen is going to become a reselling millionaire. Some of you will try this and realize it’s not for you. That’s totally fine. The important thing is developing the mindset that you can create your own opportunities to build wealth.

You don’t need to be perfect at this. You don’t need to make thousands of dollars. Even small amounts invested consistently starting in your teens can become life-changing money by the time you’re ready to retire.

The Bottom Line

Starting to invest as a teenager isn’t just about the investing part—it’s about creating the money to invest in the first place. Reselling provides a way to generate income while learning valuable business skills.

By Deanna Ritchie

The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.