Let’s Talk… Kids and Investing!

Let’s talk… kids and investing!

Earlier this week, my sister-in-law asked what I would recommend for a pre-teen interested in learning about investments.

There is a clear difference between investing and trading. I am not opposed to having an investment account for kids so that they can invest their money into stocks. I am opposed to them trading a lot in an account like that. Here is my reasoning.

First, if they have their own investment account that they can access on, let’s say, an iPad, they are taking ownership of that account. It teaches them to be responsible and prudent because they are investing their own money.

Second, I am opposed to them moving in and out of stocks because it teaches them that Wall Street is a casino. I’ve seen adults basically online trade their accounts to zero in bull markets. What do you think a teen could do?

Third, take them through a process of selection when buying a stock. I would buy something they know and see everyday – say, their favorite coffee shop, car company or big-tech retailer. If they want to sell one stock and buy another, ask them for their reasoning behind the decision.

In the end, habits are formulated early, even when it comes to investing. If you are like me, you want to raise kids that are prudent and wise, rather than foolish and irrational.

The content in this material was created for educational and informational purposes only and is not intended as investment advice.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.