Welcome to The Global Investing Forum for Teens (GIFT)!
Who are we?
GIFT is an organization incorporated by 2 enthusiastic teenage investors to create financial literacy and investing prowess in young individuals across the globe.
Why did we start GIFT?
The Founder and CEO: Kush Malpani is a 15-year-old high school junior, investor, and social entrepreneur. Having been a keen investor since the age of 12, he felt there was a dearth of information and resources for teenagers wishing to learn about, and invest in the stock market. Given these restrictions, he wanted to establish an organization that helps teenagers invest in the stock market, focusing on the fundamental and technical facets of investing.
The Co-founder and CIO: Veer Jhaveri is a 16-year-old high school junior and investor. He has been deeply involved in the stock market since the age of 14 and is extremely passionate about stock movements and various technical and analytical aspects of the market. He saw the need and the opportunity to educate teenagers like himself and pushing them to get involved in the stock market, due to the lack of practical resources available to Indian teenagers.
What is our mission?
GIFT seeks to further the mission of financial literacy in teenagers across the globe, and generate a curiosity for learning about the technical and fundamental aspects of the stock market in young minds. Most teenagers around the world have no idea how the stock market works, therefore keep their money dormant in saving accounts. In the words of Robert Allen, “How many millionaires do you know who have become wealthy by investing in saving accounts?” Therefore, we seek to inculcate a habit of investing in youth from a young age, to enable them to invest as they grow older, thereby also contributing to the growth of the world economy. India, being a developing nation, is home to 1.4 billion people, out of which only 3% invest in the stock market. We seek to increase this number substantially and awaken investing prowess in our youth.
The Basics:
What is the stock market?
The stock market is a collection of exchanges and markets where the activities of buying, selling, and issuance of shares of publicly-held companies take place. What this means, is that the stock market is a place wherein you can buy a small part of any company that is available in the market.
However, it is important to note that you can only buy shares (parts) of companies which are listed in the market. For example, if there is a private company that an individual has started, and he does not wish to put his company on the stock market where the public can buy parts of it, he will not list it, therefore shares of private companies cannot be bought. However, shares of public companies like Reliance Industries, Tata Consultancy Services, Infosys, etc. which are listed on a stock exchange in the stock market, can be bought by any individual of the public, who is above the age of 18.
What is a stock exchange?
A stock exchange is a place where these stocks are listed. Some major stock exchanges of the world are the BSE (Bombay Stock Exchange), NYSE (New York Stock Exchange), Tokyo Stock Exchange, London Stock Exchange, etc. If an individual wishes to open parts of his company to be bought by regular individuals of the public, he can list his private company on the relevant stock exchange of his country. After going through regulatory approvals and processes by the Securities Exchange Board of India (SEBI), which manages all facets of the stock market, and ensures the legality of everyday trades, the company can be listed on the exchange through an IPO (Initial Public Offering), therefore offering the public a chance to buy shares of his company, which will now be known as a publicly held company.
How can the public buy these shares?
For one to buy shares of publicly-held companies, a ‘DEMAT’ account must be opened at a securities firm such as ICICI Securities, Zerodha, Axis Securities, etc. Through this DEMAT account, shares of publicly owned companies can be bought by individuals, sitting in the comfort of their homes.
If the shares in question are being bought of a company doing an IPO, then those who wish to buy shares must apply for them through their stock broking (securities) firms, who will carry out their request. Further information on IPOs will be covered by later articles.
If the shares in question are shares of a company that has finished its IPO or is listed in the market since a long time, they can be bought by regular buying and selling from other traders. Once an IPO is complete, the members of the public holding the shares they received through the IPO can decide whether to buy, hold, or sell them. If they wish to sell them, they can do so through their broking firms, who will list these shares in the market at either the prevalent market price, or the price that the individual selling them desires. Simultaneously, if an individual wishes to buy shares of those company, he will also place a buy order through his broker, at either the prevalent market price, or if he wants a price lower than the market, he can put a price ceiling for his buy order too. Therefore, if the prices desired by both parties match, the order can be executed, and trade of shares takes place.
How can teenagers invest in the stock market?
Unfortunately, the regulations of the Indian Stock Market prevent individuals under the age of 18 from explicitly investing in stocks. However, there are loopholes around this law. For one, teenagers can ask their parents to open a stock trading DEMAT account in the parent’s name, and with as little as Rs. 100, they can begin investing in the stocks they want. For those with little to no knowledge about the market, investing in index funds is a easier alternative. Index funds are collections of various stocks that are run by bigger investors and companies. By buying a share (part) of an index fund, one can essentially buy a small amount of multiple stocks. On the whole, teenagers in India can currently invest in stocks through their parent’s accounts.
On the other hand, teenagers in the USA or other countries can invest in the stock market by themselves. Recently, Fidelity, a US investment giant, announced that the ‘Fidelity Youth Account’ will allow teenagers from the ages of 13 to 17 to use the account as a DEMAT, and savings account, with no fees on any trades. Therefore, in other countries, teenagers can trade in this way.
Thank you for reading GIFT’s article. Be sure to read our weekly newsletter, and we hope to bring you more interesting and engaging content every week! Next week’s article will delve deeper into the stock market, and the mechanisms by which stock prices are decided. To be informed when our next newsletter and article is out, subscribe to us by using the ‘Join Us’ page on our website.
GIFT yourself financial literacy today!