How to Teach Your Kids About Investing
The time is drawing nearer; we are two weeks away from kicking off the pilot session of our I Am An Investor! program. In this blog post we explain how you can teach your kids about investing at home.
Step 1: Make it FUN!
No one, and I mean no one, wants to be bored, especially not children! If you want your children to have a positive outlook on investing you have to make it fun and they have to be able to relate to it.
Monopoly is a popular board game because children love earning money and owning things; just like adults. Chances are, it won’t be a struggle to teach your children how to make their money multiply or owning a part (share) of their favorite company. Like Monopoly, you can even make it a competition! There is something for everyone in the stock market. You can compare quarterly and annual gains while competing for the investor title of Biggest Winner!
Step 2: Focus on What They Love!
Next, you have to make investing something they can relate to. The easiest way to do this is to encourage them to invest in companies that they already use and are excited about. The XBOX player of the house may be interested in buying stock in Microsoft (MSFT) or video game company Electronic Arts (EA). The sneaker connoisseur of the house may want shares of stock in Nike (NKE). Are your teenagers iPhone users? Apple stock (AAPL) might be a good choice. Ask your children about their most valued possessions, the brands that they are loyal to, and start the conversation about them owning a share in the companies they already love.
Step 3: Stir Up Dinner Conversations
Getting the whole family involved in investing is a sure-fire way to start shifting the mindset of your children from consuming to wealth-generating. It is important that you teach them to be patient investors. Help them understand that stock prices rise and fall in cycles. As long as the earnings and management of a company are sound there is usually very little cause for concern.
It has been said that billionaire Warren Buffett made his first stock investment at age 11 — three shares of Cities Service oil company at $38 per share. The stock dropped to $27, but the young Buffett held his position, and later sold it when they reached $40 a share. I am sure he was relieved to clear at least a small profit until of course when the shares rose to nearly $200 a share, leaving Buffett with an early lesson in patient investing that he never forgot. This is a lesson that you too can drive home while grooming your young investors.
Now that you have piqued your children’s interests, stirred up conversations on investing and devised a fun and creative way to keep your children interested in investing, it is time to put your money where your mouth is!
You will need to find a broker so that you can purchase shares of stocks in the stock market. Most online brokers also offer education and additional resources to help you with your trades.
Some brokers to consider are:
Loyal 3: https://www.loyal3.com
Share Builder: https://www.sharebuilder.com/
TD Ameritrade: https://www.tdameritrade.com/
You can also review several online brokers at http://www.stockbrokers.com
Investor’s Business Daily (http://www.investors.com/) is also a very good resource for accurate information about the stock market and great articles about investing.
Still Not Convinced? Check out this article…
Meet the Ellerbroek’s. This middle-class family is making investing a family affair.
Read their story here: http://money.cnn.com/2014/11/01/investing/teach-kids-to-invest/
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Executive Director & Founder