As your kids get older and more mature, you should start teaching them about investing. This is especially important when they have an understanding of the essence of money, as well as an understanding of some financial concepts. You can teach the basics, and tell them about the tools that will be useful to them when the opportunity arises to invest in something.
It’s hard to say when to start explaining this because every child is different and everyone matures at a different rate. So, it’s up to you to decide when to start teaching your children by giving them comprehensive information, but it’s never too early to introduce them to the basics to prepare them for adulthood.
Talk about stocks and bonds
Perhaps your family has special savings account that you use to save up money for your child’s college admissions or to have a rainy-day fund for the child when they enter adulthood. Using the example of such an account, you can talk about other ways of accumulating and exaggerating wealth.
Speaking of stocks, you can talk about the fact that there are ways to invest that are quite risky but can bring a lot of income if you approach everything wisely. Explain that there is no guarantee that a large profit can be made since everything depends on constant fluctuations in value. There are risks and falls that not every person can predict with 100% certainty. Therefore, it is important not only to invest in something but also to understand how investments work.
Unlike stocks, there is another way to invest in bonds, which are characterized by low risks, but also low returns. Although the yield may be small, they are provided by stable institutions. If stocks depend on companies that can provide false information, then banks and governments are more reliable in this regard.
Maintain your child’s focus
If you monotonously tell the theory, then you are unlikely to get hold of your child’s attention. That is why you should find a way to maintain your child’s focus. For example, if you can not only talk about investing, but also demonstrate how you invest money by your example, then this will be a great experience.
You can demonstrate the rise or fall of prices using the example of popular companies that your children know about. You can suggest that the child choose several companies and see what the situation is at the moment. Take, for example, Adidas, TikTok, Lego, etc.
A great way to attract attention is to buy shares if your financial capabilities allow it. Have your child choose a company whose shares you can buy. Once acquired, encourage your child to review your investment weekly. This way, your child will understand how they work and will also be able to see the ups and downs.
Let them try
It’s good to show everything by example, but children also need to understand that this is a big responsibility. To teach children about responsibility, we give them chores around the house or buy a dog to take care of, and to learn about responsibility in investing, you can invite your child to start investing himself.
If the child has savings, then you can let him buy some shares. You can also talk about the fact that you should not invest all the money you have, since there is a big risk of ending up with nothing.
It is not necessary to invest in stocks right away, because you can start by choosing long-term investments in precious metals. At https://www.pacificpreciousmetals.com, demonstrate that you can invest in various precious metals, as well as that you can buy bullion bars, coins, or jewelry. By doing so, you will explain the differences between long and short-term investments.
Teaching your child the basics of investing will help lay the foundation for future investments, as well as open up this side of life for him, making it more accessible. Over time, your child will become well versed in risk, return, different ways of investing, and how the market works. Try to offer practical experience instead of only theory to make learning fun. You can show how to invest by example, and then let the child try to start investing on his own, by choosing short or long-term investments. That’s another great way to learn about responsibility.