Teaching your children early on about investing greatly increases their chances for financial stability in the future. Piggy banks and allowances are a great start, but valuable lessons in investing can be just as easily understood. Once children know the difference between a quarter and a dollar, they can already grasp the basic principles. Consider investing a small amount on their behalf as an investment in their education — their financial education!
1. Choose something they like.
Pick a stock they relate to such as an amusement park (Disney: DIS) or a recognizable restaurant (McDonald’s: MCD). These types of stocks do well and are a good long term play.
2. Get stock certificates.
For a few dollars you can print up certificates and frame them in your children’s rooms. Being shareholders will give them a sense of pride.
3. Follow the progress of their stocks.
Discuss their investments on the way to school or over dinner. Show them how to view their stocks online and teach them how to read a stock chart.
4. Use their stock to help with school projects.
This is a great opportunity to incorporate math, history, geography, and current events outside the classroom. Knowing that these factors affect their money encourages them to become more engaged in the process. It may even peak their interest in these subjects at school!
5. Have a friendly competition.
Give your children $100,000 in pretend money for investing. Have them compete with each other or with friends to see who becomes the most successful investor. Purchase the winner a share of stock in the company of their choice.
6. Teach your children the importance of long term growth and dividends.
Though they may not be quite as excited about conservative investments, you can demonstrate how these choices pay off. Choose some safe names they like to teach them the value of dividends and how reinvesting those dividends can lead to more shares.
To offer a lesson in investing, you must be first be well-versed in the subject. For advice and consulting on investing, contact Wall Titus today.
Subscribe to our blog below for more tips on Kids & Money.