Teaching Your Children About Investing
How can you teach your children about investing in the stock market? What are some techniques you should consider?
For centuries parents have tried in vain to teach their children the value of a dollar. But don’t think that your kids are too young to learn about investing. As we all know, the key to making a good investment is to start investing early. Here are a few ways that you can introduce real-life investing to your child.
· Explain how interest works. Children have difficulty understanding how money can make more money. Explain that when you lend your money to the government or a company, that they pay you money back for the favor. Alternatively, you can describe that investments are like buying a little piece of a company and you earn money when the company gets
· Let your children choose a fun stock to follow like Disney or McDonalds. Follow the stock together and keep track of its daily progress on your refrigerator door. Children are easily excited at the prospect of doing well in a “game.” Also, look for news clippings on how the company is doing, and share them with your child.
· Suggest buying a few shares of a real stock. Though it’s more difficult to purchase single shares of stock rather than blocks of 100 shares, let your child have sole ownership of his or her investment. Children get a huge thrill when a monthly statement arrives with their name on it. Try and get a copy of the stock certificate. This will allow your child to hold and see their investment, and reinforce the fact that they actually own something.
· Make investing competitive. Children can’t resist a game or challenge. You could buy a single share of stock along with your child to see which grows the best. Or you could encourage your child to buy multiple investments and help them guess which one will make the most progress.