How 5 Young People Actually Make Money In The Stock Market

Welcome to Taking Stock, a space where we can take a deep breath and try to figure out our finances. Every month, personal finance expert Paco de Leon will answer your most difficult, emotionally charged questions about money.
Last week, we talked about how to get involved in the stock market as a beginner. This week, Refinery29 spoke to readers on their own hit-or-miss experiences with investing.
Dawn, 26
Investing in the stock market might feel like something people do once they're well into adulthood, holding down a stable 9-to-5 job and enjoying nothing more than a long conversation about retirement plans. For Dawn, though, the journey began in early college in a very atypical way.
"I settled a negligence lawsuit against my high school — the lawsuit was about a traumatic hand injury I suffered while on the property," she says. "After I paid my lawyers and took a small sum to treat myself, I was left with about $120,000 (£90,000). I found a broker and invested the remaining amount in the stock market. My parents definitely pushed me to invest, but it didn't take a lot of persuading on their part. They did a good job of teaching my siblings and I the benefits of growing your wealth through the stock market from a young age. I've definitely learned by doing."
"The ultimate goal is to use my investments to retire, but I have also pulled from it to pay for small costs such as car repairs and moving," Dawn says. She also has two 401(k)s from two separate jobs, as well as a Roth IRA.
She stays away from picking individual stocks. "I tend to lean towards mutual funds more than anything. It may be terrible to say, but I don't have the motivation or patience to pick individual stocks," she says.
"If you're going to go through a broker, shop around and find the best person for you," Dawn advises. "Find someone who is supportive and attentive. You want someone who is going to give you sound advice when you're unsure, but also respects your wishes when you decide to go against what they suggest. I'm a young, unmarried woman who works in the arts and lives with her long-term domestic partner. The last thing that I wanted was someone who looked down on my profession or lifestyle and wasn't going to respect my decisions."
Emily, 35
"I would rate myself at an intermediate level of investing knowledge," says Emily. "The stock market intimidated me, and I wanted nothing to do with it until 2017, when I set up my Roth IRA."
"I learned from r/personalfinance that after depositing money into an IRA account, you then need to invest the funds — I found a Fidelity target date fund and started throwing my whole IRA balance at that. Later I branched out into environmental, social, governance [ESG] funds," she continues. "It wasn’t until last year that I started trading some individual stocks."
Emily's reason for investing is simple: early retirement. "I want to spend as little of my life as possible working a 9-to-5 job," she says.
"I have just under $100k (£80k) in my 401(k) in a 2055 target date fund. My employer matches up to 4%. I started out contributing 6% when I was hired six years ago, and then increased my contribution every year," says Emily. "Now I'm contributing 26%, which puts me just a hair under the IRS contribution limit — I didn't know until last year that the employer contribution has a separate limit and doesn't count towards the $19,500 IRS limit. I also have a Roth IRA that I've maxed out every year since 2018 that’s now sitting at about $30k. (£20k)"
Up until recently, Emily didn't care to get involved in stock picking. "I read a bunch of articles that basically said women investors typically outperform men in the long run because we buy safe stuff like index funds and then hold forever, unlike men who are more likely to actively trade individual stocks — a strategy that has underperformed on average. Unfortunately, women are less likely to invest in the stock market at all," Emily points out.
But that changed with the pandemic. "After the March 2020 crash, I saw the opportunity to buy some very established, too-big-to-fail companies’ stocks on sale," she says. "I opened my first non-retirement brokerage account and just barely dipped my toes into individual stock picking. As I gained more experience buying and selling, I got much more comfortable with it and I made good money. Now I regret not buying more during the crash."
Her advice for beginners is "don't YOLO" and "don't FOMO." By the former, she means not putting all your money on one stock on the off chance it could pay off big — redditors at r/WallStreetBets often talk about making YOLO trades; and by the latter, she means not buying a stock that's currently soaring because you think you're missing out on an opportunity.
"If you’re a new investor, try not to get caught up in the Gamestop/AMC fervor," she says. "WallStreetBets folks are hilarious, but they’re not your friends — they’re trying to make money, and they don’t care if you lose or win. At the same time, the national conversation around the Big Short Squeeze has further democratized investing by opening up accessible stock market education opportunities."
Kiran, 35
Kiran has been interested in investing for a few years now, but so far she's mostly invested in funds that allow her to take a hands-off approach. "My aunt who's made a living on stocks always advised me to only buy stocks for companies you personally believe in," she says. "My roommate made a ton of money last year investing in individual stocks."
"I have way too much money sitting in a health savings account (HSA), which is not so high-yield anymore. It seems like a waste when I could be earning way more on the stock market, especially over my lifetime.," says Kiran.
She's interested in learning more about investing in socially responsible funds, and has been pushing her company to add more socially responsible funds to their retirement plans. Kiran has picked individual stocks before, but it didn't result in a windfall or anything. "Honestly, I think I just have too nervous a disposition for it," she says.
Her questions on investing mostly revolve around how to invest in good companies. "What makes the most sense for someone looking to be a hands-off investor, but who doesn't want to pay a ton in management fees and also wants to invest ethically?" she wonders. "How much of my savings should I allocate to investing?"
Lily, 25
"My dad is very into the stock market, and for as long as I can remember, he's always had a ticker up on his computer screen tracking stocks throughout the day," says Lily. "My family actually lost a lot of money in the stock market when I was too little to remember — I think it was the dot-com bubble — but my dad really hates talking about it for obvious reasons, so I don't know much more.
"So, for most of my life, I've been terrified of the stock market," she continues. "I've been obsessed with financial security since I've been financially independent (mostly) from my parents. But the more I read about personal finance, the more I realised it was straight-up stupid to not be investing. The rude awakening for me was when I found out that leaving money in a low-interest checking account is actually losing value because of inflation."
"It still took me a while to get over my anxiety about sending my money out into the mysterious ether of the stock market, but in March 2020, when the market crashed, it was really obvious that it was the right time to invest," says Lily. "I opened a brokerage account with a chunk of my savings. Now I contribute about $400 monthly into total-market funds using automatic transfers from my checking account."
For Lily, the main purpose of investing is to have a retirement fund. "However, I do want to buy a house in three to five years," she says. "I'm still trying to figure out the right balance between keeping the money I'm saving for a house in a high-yield savings account versus in the market."
"I do have a partner who doesn't have any money baggage and comes from an upper middle-class background who invests much more aggressively than I do," she adds. "We would be buying a house together in a high-cost-of-living area. And I think it's possible that his parents would offer to help us with a down payment, but it's not something I'm counting on."
"Above all, I want financial stability, and everything I've read says that index funds, exchange traded funds, and mutual funds are the way to go in order to slowly but surely build wealth," Lily says. "My partner did get in on the GameStop drama when it was at around $80 (£60) per share, mostly because he totally believed that he was screwing over the hedge funds and also got swept up in the whole 'proletariat revolution' perspective that Reddit had on it."
"He knew that this sort of 'playing the market' thing made me nervous as hell, so he promised he was going to get out if shares went below $100 (£80) or above $1000 (£700)," she says. "He ended up selling when it crashed for the first time down to around $95 (£70), because of that promise to me."
"Since I first invested a year ago, the market has pretty much only gone up, so I know I'm going to freak out when it crashes for my first time; I'm always trying to mentally prepare myself for that. I'd be curious to hear how other people — especially those with a weird relationship with money — deal with the risk," says Lily. "I also would love to hear more about how other people save up for home down payments and how they decide how much to put down. Twenty percent feels kind of impossible?"
Lauren, 27
Lauren first learned about stocks through a 401(k) info session at her first job. "I am so thankful for that class — otherwise, I probably wouldn't have known what that is or what to do. Through that, I set up a 401k, a Roth IRA, and learned about super important terms like compounding interest and pre- and post-tax investing," she says. "A couple months later,  a conversation with a friend who likes investing for fun led to me asking another friend in banking for a brokerage recommendation. Then I opened a brokerage and purchased a few individual stocks. I only put in a little bit, but got hooked on researching stocks and companies." She now has around $50,000 (£35,000) in her 401(k).
"I would love, love, love financial independence," she says. "So yes, I am investing to build a retirement fund and retire earlier than 65 if possible, maybe buy a house, and prepare for other potential costs like a wedding and future children."
"To me, retirement isn't about just lounging on the beach on an exotic island. Ideally, I'd like to hit 'work optionality' as soon as possible — meaning, I can live off my investments and work if I want to," says Lauren.
"The other factor that motivates me is the average cost of living in the US," she says. "The cost of traditional cornerstones of American life, like buying a house, getting married, and raising children, looks so incredibly expensive." These days, for many it feels like just having a full-time job isn't nearly enough to prepare for a future, whether that's raising a family or retirement.
Though Lauren has picked stocks and has actually done fairly well with them, she believes the best investment strategy is to be passive. "For most investors, it's to buy and hold in index funds," she says. "That being said, so much of money management is emotion-driven. It seems like it would primarily be knowledge, but a lot of it is around managing the emotional baggage that society or our family has given us."