Back to School Basics: Investing

William Kruglyak: Hello, my name is William Kruglyak, and this is Ian Tam. Parents often talk about saving money for kids like me to go to college. What does that mean? I’m going to ask Ian about this.

Hi, Ian. What is investing, and how should I do it?

Ian Tam: Hey, William. It’s great to see you again. That’s a great question. So, investing is basically taking some of your money and lending it to somebody in the hopes that it will come back to you bigger than when you lent it out. So, investments tend to grow your money over time. So, I know that you’re really into Lego, right? And some of this Lego is like really, really expensive. So, maybe you can’t afford to buy that big Star Wars battleship today. But when you invest your money and wait with a bit of patience, that money will grow and enable you to then buy that Lego that you want in the future.

Kruglyak: Am I too young for investing?

Tam: No, William. That’s a great question. No, you’re definitely not too young for investing. Anyone can invest. And just like when you’re learning to play the piano, you start with really basic music. So, like playing the piano, investing is similar in that you start really small. You start with the basics, and then over time, as you become more skilled, you can play more complex music and invest in more complex investments.

Kruglyak: OK. If I invest now, when can I get my money back?

Tam: Great question, William. Most of the time when you invest, you can pretty much get the money back anytime you want. But here’s the thing, though. The longer you keep your money invested, the more it’s going to grow. So, if you’re saving for something really, really big, then you want to keep your money invested for quite a long time. But you can pull it out anytime you want.

Kruglyak: Thank you, Ian, for your time. For Morningstar, I am William Kruglyak.