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So, you’re interested in teaching kids about investing, right? Well, let me be the first to say, you’re one smart cookie. I mean, let’s be honest, you rarely find people who have the desire to want to invest for or even with the next generation. Sadly, it is a concept that many people don’t try to want to understand, much less follow through with. In reality, the hardest part is getting started!
The crazy thing is, if a good amount of adults already have a hard time starting, I can only imagine how tough it is to teach kids about investing. I mean, I will admit that the concept is not as entertaining as binging one of my favorite Netflix tv shows. Although you cannot force true motivation, there are some helpful tricks that might spark your child’s interest. One thing you can get started with is knowing the importance of investing. Why should people want to invest in the first place?
Why should you be talking to your kids about investing?
A universally known rule of investing is that it works best in the long run. The concept has been proven time and time again. This means that patience is required, which is built on believing or trusting in something over a period of time. If your kids do not know or understand the importance of getting a head start on their finances, then they might quit as soon as they are on their own because they never had a real reason to continue the journey by themselves. This is why it is super important that you set up a foundation for teaching kids the importance of the stock market. While you’re at it, spill the beans on the benefits that come with taking advantage of the system while young like developing good financial habits, saving for college, and compound interest!
I bet that will get some brain juices flowing!
The conversations that start at home can be the ones running through your child’s mind in the future as a continued motivation for investing.
Here are a couple of advantages you can mention while teaching kids to invest:
Compound interest works in their favor
It would probably be best if you slipped this part in the conservation where you are talking about the benefits on the long-term side. For example, did you know that if you invest $100 a month, you could be a MILLIONAIRE in 46 years?! For a 13-year-old, they won’t even be 60 yet! Of course, every family is different, so the variables vary – but the point is, compound interest can really do its thing and make you some money!
They will be better prepared for unexpected financial emergencies in the future.
Nobody can predict what is going to happen in the future. Every day, we hope that we do not have to face any negative situations or difficult times, but unfortunately, life is not fair. In that case, it’s good to try and have some money stashed away as savings. It wouldn’t hurt and it’s pretty logical. I know you have heard the statement, ‘money can’t buy happiness’ – but it can solve some problems! It pays off to be prepared for any unfortunate situation, no matter how big or small.
Kids have more time to be flexible and learn from mistakes.
I bet if you had the chance to go back and learn from your mistakes, you would. Not only that, but children have less responsibility than adults so by default they have more room to make mistakes and learn from them. You can try to explain that now is a great time to get started!
You can grow your money faster.
That compound interest, baby! It’s as good as gold! How many millionaires do you know? I am sure your child will get excited at the thought of potentially becoming a self-made millionaire.
Create generational wealth
Investing means giving your family a better chance of building an inheritance that will last for generations. Talk to your kids about building a legacy and leaving something here on this earth that will surpass them. Leave something that people can remember you by and can set your family up for a more comfortable life.
Teach your friends
When starting an activity, it is always way more fun when your friends are involved. Not telling your friends about the importance of investing is like sitting on a goldmine. Why not share the knowledge? Having people around with the same goals and support increases motivation. Not only that, but how powerful would it be if you saw a group of kids interested in investing and doing it for themselves? They could be making real change!
How many parents teach their kids about investing?
Studies show that about 70% of parents are having these conversations or teaching their kids about money in general. However, about 42% of parents are not teaching kids to invest. To be honest, I personally thought this number was going to be MUCH lower. When I was growing up, I knew my parents invested but certainly none of my friends did. With that being said, one thing everyone should agree on is that this number definitely has room for improvement. It goes back to telling more people and getting friends involved. It helps when others are doing it with you! However, let’s get back to the point. The idea here is to show you that parents can give their children the opportunity to get a huge head start in life if they teach them to invest. As we have explained: the earlier, the better!
Great techniques to get your children interested in investing
I don’t know about you but this Gen Z is just a little different, right? I’m sure your child would much rather scroll on Tiktok, play a video game, watch cartoons, or even go out with their friends before they want to sit down and learn about investing. Well, who am I to judge? I understand. Granted, investing may not be the most fun for everyone, especially for kids, but here are a few recommendations that could help in teaching kids about investing.
Interactive games and activities
I will just go ahead and say that, for most people, this idea is definitely easier said than done. However, it could possibly be the most helpful in sparking your kids’ interest in investing. Mixing business and pleasure? What could go wrong?
Luckily, you do not have to go far to get started. In fact, in the Invstr app, you have a chance to immerse yourself in Fantasy Finance. This is a fun and social way to learn how to invest. This feature allows people to sharpen their skills in investing by managing a $1 million virtual portfolio.
In Fantasy Finance you can be able to join a league. As a player, you can put your skills to the test by competing with people from around the globe to finish the month in the top 25 of the Raw League, Supreme League, or Xtreme League. As a reward, players win in-app prizes or cash vouchers to help grow a real investment portfolio. Prizes are given each month, so there is always a chance to win something!
Furthermore, people can create their own personalized leagues. This way you can invite others such as friends, family, colleagues, classmates, or whoever to join in on the fun! I bet that could be an enticing argument if you are trying to get your kids interested in investing. Tell them to invite their friends! The more, the merrier, and plus, who would want to turn down bragging rights?
If you want to participate with your friends or not, it’s okay, you can still have fun. Once a person decides they want to start Fantasy Finance, they can then earn points, badges, and rewards as they continue to progress and grow through the game. Each person will start off as an intern and work their way up to the ultimate level: the Fantasy Finance Guru!
Introducing them to real-life investing scenarios
Once all of the fun and games are out of the way, then you can start to introduce a more realistic aspect of investing. One way of doing this is teaching your kids not only about the benefits of investing but actual evidence like real-life stories. Granted, it is easier if you yourself are already investing. But if you are a “do as I say and not as I do” type of parent, then perhaps a five-year investing simulation could work well as an example. This can help show how much your investment would be worth based on the year and stock. Sometimes it can be helpful to see what a person can look forward to or accomplish while investing.
Let’s say someone was able to save $100 and wanted to invest it. Here are a couple of notable investments that might be worth mentioning if you are teaching your kids about stocks:
If you invested two years ago, your investment would be worth about $159. If you invested five years ago, your investment would be worth $809. And if you invested ten years ago, your investment would be worth $9,425! Wow!
If you invested two years ago, your investment would be worth $138. If you invested five years ago, the investment would be worth $389, and if you decided to invest 10 years ago, your investment would be $660!
If you invested two years ago, your investment would be worth $114. If you started five years ago, the investment is now worth $218, and if you invested ten years ago, the investment would be worth about $513!
If you invested two years ago, your investment would be worth $108. If you started five years ago, your investment would be worth $183, and if you started investing 10 years ago, your investment would be worth about $196.
If you invested two years ago, your investment would be worth $62. You might be wondering, wait, didn’t they lose money? And this is true. Sometimes, companies have ups and downs but it gets better. If you started five years ago, your investment would be worth $199, and if you invested ten years ago, the investment would be worth $817! See, that was a total increase of about 716%!! I bet that kind of gain has nothing on losing $40 in the first two years.
One thing in common these stocks have is that after some time, the investment was worth more than double what was put in. Granted, some companies definitely grow faster than others so when teaching kids about investing, it is important to do your research on whatever company they may decide to invest in. Better yet, let them research on their own so they can have an idea of the potential growth rate of the stock. Just remember investing is a long-term game!
Another idea is to get them started in some type of paper stock investing. This just means investing without money, or mock trading. The best part is that you don’t have to look too far if you want to get started. In fact, you can download the Invstr Jr, our investing app for minors and teens for free which will allow you to practice with real-time stocks. Not only that but if you want to make it more fun and interactive for your kids, you can create a league that will allow them to compete to see which investor is receiving the most gains!
Incorporating investing into their allowance and allowance chores
Now that we’ve done the basics, this is the time when you can start to pull out the big guns. Once you feel like your child is ready to invest, encourage them to get started by incorporating investing into their allowance. If you want to get them interested, you and your child can set up a system where you give them money to invest, motivating them with an incentive. One way of doing this is bumping up the allowance just for investing purposes or even making an agreement that a certain percentage of the given allowance goes toward stocks. There are plenty of different ways a parent can incorporate investing in their child’s life through their allowance. Providing the necessary tools possible is a great push into getting your kids started. Of course, if you are a parent that does not do allowances, you can always just give or “loan” your kids the money. Will it be fair to say that in a couple of years, they are going to make back at least double?
5 Creative Ways to Get Kids Interested in Investing
Now, let’s get into the bread and butter of this whole operation. Since we have already talked about a couple of techniques that can help, we can now focus on delivering more creative tips as to how parents can get their kids interested in investing and can help teach kids about stocks. Please use the recommendations below and see if you find one that works for you and your family!
Talk about money
How do you expect your kids to know about investing without ever talking about it? Having those conversations at home is a significant part of teaching kids to invest. For instance, I bet we have all heard a million stories about how a person became a great cook because their parents always cooked at home or got into a certain sport for the same reason. The point is that parents can have a great influence on their children, so if you want to spark your child’s interest in investing, start at home with a simple conversation and see where it goes!
Teach them aspects of budgeting and saving
Budgeting and saving are not only useful in terms of investing but they are also important life skills. An easy way to do this is just to explain certain concepts of running a household. Sometimes you have to save up for a vacation or create a monthly budget that incorporates all of the bills and grocery shopping needs. Take your child along for the ride. Show them the ropes or even allow them to help you set up different budgeting and saving strategies. An even better idea is to ask your child about something they want to save up for. Then you guys can sit and come up with a budgeting and saving plan that works for them. This way, your child can become interested in something that directly affects them and will also motivate them to obtain their goal.
Set them up with an investment app for kids
One of the best ways to teach our child about investing is to actually do it! As I have mentioned before, Invstr is a free app that allows anyone to practice investing and even have the opportunity to invest for real through Invstr Pro. However, this gets better! Invstr has launched another feature, Invstr Jr! This is our investment app focused on kids, teens, and everything in between! For just under $7, any parent or guardian can set up an account for up to four kids to join in on the fun – and they get a free adult account! Not only that, but you will also have access to accounts with an accessible debit card for each child, banking, brokerage, and crypto! Users also have access to the free Invstr Academy. Here, modules provide an exciting learning experience that helps to equip children to learn about and boost their confidence in investing. The app also has features so adults can transfer money to the kids, set allowances, and award them for the completion of chores. You can even accept or deny investing proposals. That way you can invest side by side with your child!
Encourage them to set long-term financial long term goals
If you can get your child to want to save for the future, then you are literally half a step behind actually investing. It’s basically the same concept, so it will be easier for them to take the plunge! It might be hard to convince someone to look that far ahead but start with something smaller and attainable. For instance, I doubt your kids are looking to start saving for retirement at this point, but what about college? Or their first car or an apartment? If none of that is convincing enough, then try explaining why it is so important to save up for the future. Having a rainy day fund, building generation wealth, and being ahead of everyone else in money skills are already three substantial reasons in themselves, however, I bet the list could go on and on if you were to tell your child about why you wish you started saving for your long term goals earlier.
Show them the fun side of investing like choosing stocks of companies they like
Investing does not have to be boring. The variety of stocks available is so big that there is something for everybody. Imagine telling your child they can own part of Disney. I mean, WHAT!? I know for me personally, if I was younger and someone told me that, there is no way I would ever pass up that opportunity. That’s all I would need to hear! Whether it is a certain industry such as cars or a specific company like Snapchat, Lululemon, or McDonald’s, I have no doubt that the market will have a company that your child will take pride in taking part ownership in.
In conclusion, there are many different strategies that you can try in order to get your kids to invest. Although investing may seem like a boring and complicated concept, the opposite can be true with the right exposure. For the sake of your child’s future, it is crucial that they are well versed in the area of money and the stock market is a great tool in order to accomplish this. Hopefully, these ideas will help to get your child to be interested in investing. Now, what are you waiting for? Go have that conversation with your kid!
All investing involves risk and can lead to losses.
Past performance does not guarantee future results.
Invstr Financial LLC (Invstr) is registered as an advisor with the SEC. Securities trading is offered to self-directed investors by Social Invstr LLC, a member of FINRA.
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