Updated article on Monday, December 12, 2022 at 10:59 a.m. since print issue was distributed

Teenagers are finding a sudden interest in investing—but it’s not piles of cash rolling into their bank accounts. 

According to economics teacher Ahsan Minhas, there are both positives and negatives about young people being interested in investing. He’s also the sponsor for the Wharton Investment Club at Venice, in which students learn formal financial literacy. 

“For me, one positive thing is that young people are interested in investing instead of just spending all the money they have,” he said. “I think young people are thinking about ways in which they can save their money, invest it, and build it so that they have more in the future. That’s something to be encouraged—saving and investing are really good habits.” 

A negative about the recent hyper-expansion of investing among teens, according to Minhas, is the emergence of cryptocurrency.

“Young people are getting interested in cryptocurrencies,” Minhas said. “I think these things  are very speculative, extremely risky investment assets. I think a lot of students are making the big mistake of not diversifying the investment portfolio.” 

Junior Krish Gupta-Garcia, the president of the Wharton Investment Club, said that teens are oblivious to volatility of riskier investments. 

“They aren’t getting that deep understanding that can be beneficial to them—and then obviously if they are sinking lots of money to that super volatile stuff, then it’s not good nor sustainable. It’s kind of a mixed reaction,” he said. 

Cryptocurrency and meme stocks, like the rise of GameStop shares in 2021, lack an actual purpose or relevance Minhas said. 

“I think the biggest problem of crypto is that no one can explain to me why this is useful, or what we can use it for besides money laundering and illegal activities,” he said. “It’s very good for criminals. Its real use is questionable, as a replacement for money I don’t see it happening.

“For me the whole point of the cryptocurrency is to start a cryptocurrency, raise the price by hyping it up, and then cash in. That’s called a pump-and-dump and I think with crypto currencies you are going to see a cycle of pump-and-dumps. The value will go up and down and then you’ll see a cycle. 

“You would be rolling the dice—it’s a gamble.”

Social media has played a crucial role in pushing misinformation and luring teens into risky trading on platforms like Reddit, Gupta-Garcia said. 

“My biggest concern is that basically young people who are easily influenced by celebrities are learning about financial literacy through them instead of becoming aware of how investments work and learning about investment strategies,” he said. 

Minhas sees a similar trend with younger investors. 

“These students are not only just going to possibly waste or lose whatever savings they have, but the opportunity cost is that instead of learning, they’re just doing YOLO. The stock market serves a purpose—the purpose is to connect people who want to invest to people who want to develop their companies.”

At the end of the day, students should invest in options that are credible, Minhas said. Investing is a serious business, where risky trading does not guarantee that you’ll be swimming in Benjamin Franklins.