How To Teach Your Children About Investing
Investing is a learned skill – and the earlier you start, the better it usually is. Plus, the more time you allow for investments to grow, the more money you will have waiting for you in the future.
The average person starts investing in stocks in their 20s and 30s, as it gives them plenty of time to grow those funds until they retire. However, you can help your children gain even more of an advantage by teaching them early on. Here is how you can do that.
1. Involve Them In Your Finances
Parents usually avoid involving their children in financial talks, thinking that they’ll find it boring or that it’s “too early for them.” However, the earlier you start, the better it will be for them. Even a casual dinner talk about how to put money aside or how to make a good purchase can help them in the long run.
2. Teach Them about Patience
A true investor knows that patience is a key factor. Your kid must know that making an investment is not a casino or a scheme to get rich quickly. You need to teach them that a small amount of money put aside steadily can have more benefits in the future.
Money is a tool for them to reach their dreams, and if they make small good choices in the long term, it will be much better than making a big purchase to get rich fast. They need to learn that patience.
3. Pick Their Interest with Known Companies
Do they have brands they are particularly interested in? Maybe they are interested in some famous chocolate companies. If that’s the case, talk about them. You might gain more of their interest than talking about a random company they don’t know.
You should ask them about the companies that they are interested in, and invite them to spend half an hour researching them. Compare prices, and see how their success changed. Depending on your kid’s age, you might spark their investor interest.
4. Consider Some Stock Market Games
Children love to play games. Something as simple as Monopoly can teach them how to use the money to build an empire and make smart purchases. This is why you may want to look up some stock market games to help them play the field – pun intended. These games often have fun ways to introduce them to things such as the Martingale trading strategy, picking their interest.
5. Open an Investment Account
Sometimes, the best way to teach them is to open an account in their name. This can be a custodial brokerage or a custodial Roth IRA – an account that you can be a part of, but technically, it’s theirs. Once they see any potential investments grow, their interest will begin to sparkle and will be open to finding out ways to make it grow.
The Bottom Line
The sooner you introduce your child to the investing world, the likelier they will be to stay in it. If you notice even a slight interest in the financial world, you should help them with the information as well. It may seem like something small, but it can potentially help secure their future.
