As recent events have demonstrated, the stock market is an interesting place, to say the least. By selling and exchanging stocks, people have the ability to involve themselves in the world’s economy and get a chance at earning the big bucks. But with one wrong decision, all of your money could be going to waste.

Many have heard about the recent events with Gamestop and the stock market, and for those of you who don’t know much about it, here’s a quick rundown about what happened.

A group of Reddit users created a plan to buy a bunch of Gamestop stocks to increase the stock’s value in an attempt to earn a lot of money. And the outcome? Well, some people gained millions of dollars, and others lost a lot of money.

The stock market is a very risky place; one must have a decent amount of knowledge on it before getting involved in it. Just as the situation with Gamestop revealed, buying and exchanging stocks can earn you a lot of money, but if you play your cards wrong, those earnings could be long gone.

Before getting involved with the stock market, people should be aware of the differences between short-term investing and long-term investing. Both have their pros and cons, and knowing those differences are highly beneficial for those who are interested in purchasing and exchanging stocks in the future.

Short-term investments are assets that people hold for one year or less. Commonly, investors will hold these investments for only a couple of months, if not a couple of weeks. On the other hand, long-term investments are assets that people hold on to for more than a year, most holding them for multiple.

Each type of investment has its benefits. With short-term investments, people will not earn as much profit unless they are lucky, but their investments won’t be very risky. It is very unlikely that a person will lose or gain a lot of money in such a short period of time.

However, long-term investments are the complete opposite. Since assets are held for multiple years, the risk is much greater, as there is more time for stocks to increase and decrease in value in tremendous amounts. But if someone was lucky or smart enough, their long-term investments could earn them a large amount of money. As many people say, where there’s high-risk, there’s high-reward.

Knowing this difference is important for teenagers who want to get involved with the stock market. With the recent Gamestop events, following the stock market and the economy has become a lot more popular, but teens need to be aware of the risks before they get involved, as poor decision making can result in devastating consequences.

(For people under the age of 18, make sure to use a guardian or custodial account with parent/guardian supervision, as it is illegal for people under the age of 18—21 in some states—to purchase stocks.)

Before buying stocks, make sure to do as much research as possible so that you feel confident going in. You can then start off with some small, harmless short-term investments, and with time and experience, long-term investments will become a breeze. 

If you have zero experience or knowledge when it comes to the stock market, the best option is to stay away from stocks. But for the passionate investors out there, be careful and best of luck to you.

Last modified March 9, 2021 to include the requirements needed to purchase stocks as a minor.