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Financial Advice Sought By A 13 Year Old Cryptocurrency Trader

Updated: 09/22/2018 by Financial Samurai 80 Comments

Financial advice for a 13-year old cryptocurrency trader on how not to screw up his lifeBesides the fact that there’s a massive generational wealth transfer underway, another reason why I’m not too worried about the financial future of our kids is because they are much more financially savvy than we once were.

Thanks to the internet, there is an endless amount of free information to consume. The information uptake compared to when I was a kid in the 1980s (pre-internet) must be 1,000X greater. Further, the ability to invest smaller sums of money is much easier and access to once unaccessible deals is much more available.

You used to have to spend $500 to buy Microsoft Excel software to help track your finances. Holy crap! Now you can just sign up for Personal Capital and manage your net worth and analyze your investments for free. Those who’ve taken advantage of such democratization have tremendously outperformed those who couldn’t be bothered.

Given the stock market is at an all-time high, here’s an interesting question I received from a 13 year old cryptocurrency trader who wants to know what financial mistakes to avoid. Perhaps you can give this middle schooler some advice after I’m done as well.

Question: I’m 13, live in an upper middle-class family, have good grades in school, and want to start planning out my future now. I want to learn the major mistakes other people have made before I can even grasp the chance to do the same.

I run an eBay account where I make ~$400 gross a month buying and reselling high tier shoes and clothing. The money usually ends up in my desk drawer, but I have been dabbling in the investment of cryptocurrency and I have turned around a $2,200 profit so far.

I know that money comes with work and gambling for it is the worst thing you could do. I want to be able to live a happy and wealthy life and I know I have all the utilities but I don’t know what to do. I am willing to work and take risks to sustain financial growth but I don’t know where to start.

If anyone is willing to give me three pieces of advice for my future I will take them with full consideration. Thanks! Daniel

My Answer:

Hi Daniel,

Congratulations! You are well ahead of your peers when it comes to planning for your financial future. Most folks in the US don’t care until it’s too late. When I was 13 years old all I did was chase girls, skateboard for hours after school, drink beer and occasionally sneak my parent’s car out for a spin! It was a helluva fun time living in Kuala Lumpur, Malaysia back in the late 1980s.

Your parents will cringe at my first piece of advice, but do know that your grades don’t really matter until high school. In other words, have fun in middle school. You get to start all over freshman year in high school. Freshman year is when you really need to start hitting the books because your GPA gets averaged over the next four years. Better grades mean an easier time getting into college and setting yourself up for an easier life.

The people today who complain about life not being fair more often than not didn’t take school extremely seriously. Education is what will set you free. Get the best grades and test scores possible to give yourself as many options as possible.

Related: Public Or Private University? Depends On Your Guilt And Risk Tolerance

My second piece of advice is to lose money early and learn from your mistakes. It’s much better losing $1,000 than losing $100,000. Investing in cryptocurrencies sounds like a great way to make and lose everything. If you end up losing your $2,200 profit by not at least taking some profits, you’ll always be reminded about this loss before making more significant investments.

The people who are in for a rude awakening are those who feel they just can’t lose because they only started investing after 2009. Never ever confuse brains with a bull market. Study the previous bubble implosions to better prepare yourself for the next one.

Related: The Proper Asset Allocation Of Stocks And Bonds By Age

Cryptocurrency performance since creation

Tulips, internet stocks, property, cryptocurrencies. History repeats itself.

My final piece of advice is to always focus on building your personal brand. The easiest way to do so is to establish a presence online that organically grows over time. What do you want people to think when they search for you online? Don’t post compromising pictures of yourself that might come back to haunt you. Don’t write hateful commentary, only love or nothing at all. Focus on helping someone first before asking for help. Be resilient.  Learn how to speak in a calm, clear, and professional manner. And never fail due to a lack of effort. If you can consistently tilt towards the positive, you will surround yourself with other positive people in return.

The abundance mindset will make you much wealthier than someone who holds onto a welfare mentality. There are janitors and elevator repairmen who make over $250,000. There are bloggers who make over $1,000,000. You don’t have to go the traditional route to make good money.

Oh yeah, and listen to your parents. The easiest way to never say, “I wish I knew then what I know now,” is to listen to the people who’ve been there. Find a mentor. Constantly ask yourself whether your next purchase will improve or hurt your lifestyle and net worth. I’ve done my best to share my experience and expertise on everything I’ve been through, good and bad, on Financial Samurai. Don’t let all the free advice go to waste!

Good luck! And thanks for reading. Your question has encouraged me to take some money off the table.

Sam

Related:

How To Invest In High Risk Assets Without Losing Your Shirt

The First Million Might Be The Easiest (the post where Daniel asked the question)

Updated for 2019 and beyond. 

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Filed Under: Investments

Author Bio: I started Financial Samurai in 2009 to help people achieve financial freedom sooner. Financial Samurai is now one of the largest independently run personal finance sites with about one million visitors a month.

I spent 13 years working at Goldman Sachs and Credit Suisse. In 1999, I earned my BA from William & Mary and in 2006, I received my MBA from UC Berkeley.

In 2012, I left banking after negotiating a severance package worth over five years of living expenses. Today, I enjoy being a stay-at-home dad to two young children, playing tennis, and writing.

Order a hardcopy of my upcoming book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. Not only will you build more wealth by reading my book, you’ll also make better choices when faced with some of life’s biggest decisions.

Current Recommendations:

1) Check out Fundrise, my favorite real estate investing platform. I’ve personally invested $810,000 in private real estate to take advantage of lower valuations and higher cap rates in the Sunbelt. Roughly $150,000 of my annual passive income comes from real estate. And passive income is the key to being free.

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Comments

  1. A Financial Savvy Doc says

    November 12, 2017 at 6:36 am

    This is absolutely incredible. I wish I had this kind of knowledge when I was his age. I didn’t even know how taxes worked when I was 13!

    I totally agree with the advice of losing early. You need to learn from your mistakes and making those early on is the best thing for an individual. I’ve made a lot of mistakes and luckily for me, I’m still in my 20’s. I agree completely.

    Reply
  2. Amanda says

    September 23, 2017 at 7:21 am

    My advice would be not follow any advice. Keep working in eBay, keep buying cryptocurrencies and forget if you lose 50% in one coin…this is normal volatility in cryptos.

    Reply
  3. Investor Girl 1234 says

    September 19, 2017 at 2:59 pm

    Sam – I know you mean very well and I get the gist of what you’re saying, but I would advise him to be “weary” who he listens to. Some parents (although) relatively successful, can be closed minded or give bad advice. My parents had a successful business, for example but were too scared to invest in the stock market and real estate and were always talking about it as “gambling.”So, although they were successful in their business, they had NO IDEA what they were talking about in other areas and would spew misinformation and garbage, and sadly even do so today even though I have shown them that the stock market and real estate are great investments!

    Although, I did get a lot of my knowledge from sort of advice hacking – listening to those who had done what I wanted to do and learn from their mistakes instead of making them myself. Just a thought as Tony Robbins says, “Your family can have the best intentions, but if they accidentally slip you poison, you’re still dead.” Some family members, while well meaning, don’t always give the best advice. Just a thought. I was always advised by others to listen to my parents and I’ve been very successful financially actually doing almost the opposite of what my parents did b/c they were so “fearful.” Not to say all parents are like that,but just to consider their knowledge b/f accepting advice blindly I guess.

    Reply
    • Financial Samurai says

      September 19, 2017 at 5:16 pm

      Sounds good and makes sense. What would you advise him to do instead?

      Reply
      • Investor Girl 1234 says

        September 20, 2017 at 9:29 am

        Hi Sam – I would advise him to take advice only from people (regardless of who they are) that have done what he wants to do AND are successful at it and strongly IGNORE advice from people who give advice on things they haven’t done or have done but never created success. (i.e. divorced people giving relationship advice, broke people giving financial advice, failed actors giving acting advice, etc).

        I believe that many are afraid to fail. So, they never try, and failure is a GREAT teacher, but ONLY if you create success and knowledge from that failure. A lot of people sadly DO NOT and they think b/c they have failed at something that that gives them the authority to talk about it. I met a guy who was married 4 times (yes, 4!) and he was trying to give me relationship advice when I told him I was getting married. I saw him again a year later and he was on wife number 5 now saying, “This one really is the ONE.” SMH. He was clueless.

        Reply
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