1. 1. Conditions
for students to start investing in stocks
There is no annual income
requirement for stock investments. Therefore, even students without income
can participate in stock investment. In addition, for securities
companies, even minors can open a securities account depending on the
conditions, so even minor students can start investing in stocks.
However, there are the following
rules when minors start investing in stocks.
Submit parental consent
Parents have opened a securities
account with the same securities company
Only physical transactions are
possible
Therefore, minors cannot start
investing in stocks without telling their parents. In addition, it is
necessary to gain a certain amount of investment experience in order to carry
out margin trading.
1-1. How much money do students need to start
investing in stocks?
Stocks listed on the stock
market in Japan have various stock prices ranging from hundreds of yen to tens
of thousands of yen. With some exceptions, the number of shares
constituting one unit of domestic listed shares is unified in units of 100
shares, so investment funds of tens of thousands to millions of yen are
required.
However, if you use a securities
company that provides a service that allows you to trade shares less than one
unit, you can purchase shares from one share, so you can start investing in
shares from a small amount of about several hundred yen.
2. Benefits of
students starting shareholder investment
There are the following benefits
for students to start investing in stocks:
Increase your income source
Can study the economy
Can be used for job hunting
Easy to benefit from long-term
investment
More choices for people
Let's take a closer look at
each.
2-1. Increase your income source
By investing in stocks, you may
be able to obtain profits such as gains on sales and dividends, and you can
expect the benefit of increasing income sources other than part-time jobs and
remittances.
2-2. Can study about money
By starting a stock investment,
you can acquire knowledge about money such as profits, interest rates, and
commissions. In addition, you can learn while experiencing various things
such as knowledge about the economic situation in Japan and the world, knowledge
of management and business, and the importance of risk hedging. If you
have this knowledge, you can use it in your future life.
After becoming a member of
society, it becomes difficult to take time to study. Gaining knowledge of
money that cannot be learned at school is an advantage of investing in stocks
among students.
2-3. Can be used for job hunting
If you have the information
obtained from stock investment, it will be easier to select a company to apply
for job hunting.
When you invest in a stock, you
will collect information about the company and decide whether to invest in that
stock. In the process, you can get information on various companies and
industries, and knowing about companies and industries in interviews has a
positive effect. It is an advantage for students that stock investment can
also be used for job hunting.
2-4. Easy to benefit from long-term investment
The basis of investment is
compound interest management by long-term investment. Starting a stock
investment as a student makes it easier to benefit from compound interest.
Compound interest means that
interest accrues on interest. If you make a 10% profit one year later by
investing 1 million yen in stocks, your principal will be 1.1 million
yen. In the second year, you can invest 1.1 million yen, which is 1
million yen plus 100,000 yen, and if the profit margin is the same, the profit
will be 110,000 yen. By repeating this, you can increase your profits
steadily. This is the power of compound interest.
The longer the investment period,
the greater the power of compound interest. In other words, it is
important to start long-term investment as young as possible.
2-5. More choices in life
If you succeed in investing in
stocks, you will gain a lot of knowledge, and maybe you will get a lot of
assets. Knowledge and assets make it easier for you not only to continue
working in one company or industry, but also to choose the job you want to do
or start a business.
Equity investment can be the
foundation for more choices in life.
3. 3. Precautions
for students to start investing in stocks
On the other hand, when students
start investing in stocks, the following points should be noted.
Loss may occur
May be out of parental support
Parental consent required for
minor equity investment
I can't concentrate on my
studies
Let's take a closer look at
each.
3-1. Loss may occur
In the world of asset
management, there are the terms risk and return. Return represents
"results obtained from asset management", and risk represents
"variability of uncertainty". Stocks have credit risk (the
possibility that the invested company will go bankrupt) and price fluctuation
risk (the stock price at the time of sale may fluctuate from the stock price at
the time of purchase).
The possibility of obtaining
"profit" such as dividends and gain on sale from stock investment
also means that "loss" will occur as well. It's important to
understand that investing in stocks doesn't necessarily mean you're making a
profit.
3-2. May be out of parental support
If you make a profit from your
equity investment, you may be out of your parent's support.
Students have less income, so it
is common for them to be dependent on their parents. Students in this case
are called dependent relatives, and parents can receive a dependent deduction,
so they can reduce taxes paid.
However, in the following cases,
you will not be dependent on your parents (based on the tax system as of
February 19, 2021).
When the total income of
dependent relatives exceeds 480,000 yen
When the total income of specific
dependents exceeds 630,000 yen
Dependents are people aged 16
and over, and specific dependents are people aged 19 to 23.
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