As an adult, financial advisors and those that have gone before you have no doubt emphasized the importance of investing your money. After all, in terms of your financial goals, your children’s, and your future, sufficiently putting your income towards investments can equate to an all-around better future.
Of course, as any financially-aware individual knows, the sooner you can start investing, the better. This is because the longer your money sits, the longer it has to grow. The majority of people don’t learn about or begin investing until their in the twenties and have their first real-world job.
While that’s perfectly fine, wouldn’t it be great if you could get started even earlier? Well your kids can, and you can work to help them wisely save their money for the future. Here are six tips to help your kids start investing.
1. Teach Them the Basics, Then Build
The first step towards getting your kids investing is to simply teach them a little about it. Of course the younger they are, the simpler you’ll want to start.
Begin by teaching them the difference between saving and investing and speak in a language they can understand. Explain why it’s important not to put all your “eggs” in one basket, aka diversification. Break down other concepts in a language your kids can understand.
For example, convey to your kids that investing is merely a way of creating more money or that a stock is really just a small portion of a company. In other words, the best way to get started is by simply talking through the concepts with your kids.
2. Create a Strategy
When it comes to investing, the most obvious and, usually, successful way to do so is through stocks. Of course there’s much more to it than just picking and choosing your favorite ones.
Teach your kids how to create a strategy for choosing and holding stocks. Teach them when to buy them and possibly when to sell. Moreover, take time to explain again the importance of diversification when deciding which stocks are right for them.
3. Get them Started with Stockpile
Unfortunately, price is often the tricky part when it comes to getting your kids started in investing. Stocks, for the most part, run at a high price, which means unless they have at least $1,000 to invest, purchasing an actual share of a company might not be possible.
Thankfully, Stockpile has made that possible. Stockpile gives you the ability to gift kids stock gift cards that they can in turn redeem in their Stockpile account. Then, they can purchase a portion of a share of a company of their choosing, like Apple or Amazon.
After which, kids can watch their investments grow, fluctuate, and buy, sell, or trade their stocks. Furthermore, Stockpile gives kids the ability to add stocks to their wish list and send a link to family and friends in order to receive the stocks of their choosing as a gift.
4. Utilize Information Resources
Sometimes trying to explain concepts and ideas with words alone isn’t enough. Instead, utilize helpful resources and visual aids to help your kids better understand investing. Sites like TheMint.org are geared towards kids. It provides useful information for kids and teens by breaking concepts down and explaining them.
TheMint also gives kids, teens, and parents useful resources under its “Try It” button like “The Compounding Calculator” and “Topics for Talk Challenge,” great ways to get kids started and give parents talking guides. It might also be a good idea for you to let your kids look at your own portfolios and charts to get a real-world look.
5. Consider Letting Older Kids Invest More
Once your kids reach teenage age it might be a good idea to allow them to invest a little more. After learning the basics and acquiring some investment knowledge, you may want to consider gifting them somewhere around $1,000 to invest.
Let your kids decide how they want to invest it, but make them leave the funds untouched for at least a full economic cycle, or five years. By doing so, you’ll give them the opportunity to really get into investing and allow them to see the ways in which the economic cycle can affect their investment.
6. Keep It Interesting & Fun
One of the biggest ways to get your kids investing early is to keep it interesting and fun. If investing feels like more school or a chore, it’s highly unlikely that they’ll stick with it. Talk about companies they know and love, like Disney or Apple, and find useful metaphors and examples they can relate to when discussing it. Moreover, when it comes down to actually investing find ways to make it exciting.
Consider turning their investments into a game or competition against one another to get them excited, then have some sort of reward for the winner. After all, anytime kids think they’re playing a game, they’re bound to have fun.
The Bottom Line
Investing can seem like an overly complicated subject, which is why it can be difficult to know just when to start with your kids on the investment path. Nonetheless, you don’t have to jump to real investing right away. By starting your kids early, you can begin by breaking down the basics and getting kids acquainted with investment concepts and ideas and building on their knowledge from there.
And through helpful resources like Stockpile gift cards, you can give them the opportunity to real life invest, in a kid-friendly environment at no cost to them, which in turn, allows your kids to view their stocks in realtime.
Through a little teaching early on, you can provide your kids with valuable tools and knowledge that’ll have them on a solid path to investing by the time they become teenagers. And upon hitting their twenties, your kids will no doubt be far ahead of their peers and already accumulating valuable savings.
At what age do you think you can begin to teach your kids about investing? What are some other resources to help them learn?