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10 Reasons to Teach Your Kids to Invest


"I wish that I knew what I know now -- when I was younger."
--The Faces, "Ooh La La"

Imagine if you had first entered adulthood with the financial knowledge you possess now. Unfortunately, most children grow up without learning anything about the world of investing, and this can have a serious impact on their long-term financial success. Here are 10 good reasons to make sure your children buck the trend and enter the real world as investing-savvy young adults.

1. It will bring you closer together
You don't have to talk about investing every day or even every week. But it is something you can talk about whenever you spend money with a publicly traded company. For example, you buy a new iPad and say, "Did you know that Apple is a company that you can own a little piece of?" The more you have in common with your kids, the more quality time you get to spend together.

2. They will know you care and they'll remember that when they're older
Kids are smart and absorb a lot, even if it doesn't seem like it when they're younger. The older we get, the more we remember what our parents did and sacrificed for us. They'll remember this.

3. Your job as a parent is to raise your children to take care of themselves when they grow up. Investing gives them a wonderful financial head start
Money isn't everything, but obviously we need it to live. It's a competitive world out there, and the lessons from investing (along with the financial rewards) will put them in a great position to forge their own way in life.

4. Chances are they won't learn it in school
Call me a cynic, but I've done a fair amount of research into this, and my big takeaway was that while we are making slow progress in our schools, it all begins in the home. To believe otherwise is misguided, in my opinion.

5. Investing makes us smarter through examining the world around us
I have so much fun going places with my kids and showing them that many of the brands they interact with on a daily basis are also publicly traded companies. Whether we're going to Disney World or brewing a pot of Starbucks coffee in our house, they begin to think beyond the consumer mindset and more about how these businesses impact the day-to-day lives of people around the world.

6. Your child may discover new interests
The more companies you learn about, the more things you discover out there in the world. One trip to Dick's Sporting Goods, for example, can open up a whole new world of athletic interests.

7. It will make your child think more about the long-term implications of their behavior and the world around them
Investing -- particularly Foolish investing -- teaches you to have a long-term, big-picture perspective. So when it comes to topics from our national energy policy to health care, investing can teach us to recognize what matters most and not get dazzled or frightened by flashy headlines and day-to-day noise.

8. It will make you a better parent and a better investor
It's as simple as it sounds. Nobody knows everything, and talking about investing with your kids can make for some interesting and fun discussions in which you actually find yourself learning a thing or two.

9. The earlier you start, the more time a portfolio has to compound
It's one thing to explain the benefits of investing to children, but if they don't ultimately see actual results, they will lose interest fast. Having them start young and keep score will give them the opportunity to see what can happen firsthand, and you won't feel rushed to teach them the fundamentals later. You could say to them, "When you were 8 you started out with this amount of money. You've been investing for 12 years, and now you have this amount of money." You want to be able to show them concrete, indisputable evidence of the power of long-term investing.

10. It truly is some of the most fun you can have with your child
This, too, is as simple as it sounds. We've had some great dinnertime discussions in our house about investing, and it has brought our family closer together. My girls and I have even made a few investing videos together. And it's been a blast.

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Read/Post Comments (9) | Recommend This Article (23)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 08, 2014, at 8:35 PM, DavidDavis wrote:

    Smart parents to every family, at least one will good enough too.

  • Report this Comment On December 29, 2014, at 11:35 AM, KayakerRW wrote:

    Good advice. I bought Apple & Marvel stock for my nephew several years ago. Now, I like to show him what the stock is worth versus the Ipod he got for Christmas the same year.

    I agree with point #4.

    "4. Chances are they won't learn it in school"

    One problem for schools is that financial education typically consists of a one-time class, which only allows students to experience a short term situation. While this is fine for letting kids see how a seed grows into a plant, it doesn’t let them see how a good investment in a dividend paying company grows over a 10 year basis (or longer).

    It would be helpful if schools could set up both real and simulated accounts for students consisting of an S&P index fund and of several stocks so they could follow the results from 1st grade to 12th grade. The students could pick anything they want in the simulated account and trade frequently (with some guidelines) if they want; this might show them the dangers of overtrading. The real money account would be subject to adult oversight obviously.

    The real money account could be an account for the entire grade. For example, the first grade class starts with $500 and adds a bit each year. When the students are seniors, the money in the account could be used to fund senior year activities (including graduation expenses).

    If a philanthropist or business wanted to start a few pilot programs with schools by providing real money for students of parents who don’t traditionally invest, it would be interesting to see the results on the students and their families.

  • Report this Comment On December 29, 2014, at 12:52 PM, NadiaAndJulia wrote:

    Love it.

  • Report this Comment On December 29, 2014, at 12:55 PM, NadiaAndJulia wrote:

    Love the picture of your beautiful girls, JMo. You are a lucky man!

    Best Wishes to your family in 2015.

  • Report this Comment On December 29, 2014, at 8:22 PM, lovepeace wrote:

    Talk some sense into them while you still can! Then after they get over the "parents don't know anything" stage (don't say I didn't warn you!), they'll come back to you for advice (at approximately age 21).

  • Report this Comment On December 30, 2014, at 11:25 PM, TMFJMo wrote:

    @KayakerRW: Thank you! I've done a lot of research in to what many will learn in school regarding financial literacy and it's no given that they will learn what they need.

    @NadiaAndJulia: Thank you for your kind words. I do know, I am a very lucky man indeed. Best wishes to you and your family as well...I hope 2015 is a great year for you all.

    @lovepeace: You speak the truth. I and my wife are doing all we can!

  • Report this Comment On December 31, 2014, at 11:56 AM, Vismxr wrote:

    Inspiring picture of those two precious girls.

    Thank you, Obi-Wan for another terrific article.

  • Report this Comment On December 31, 2014, at 4:03 PM, TMFJMo wrote:

    @Vismxr: Tugging at my Star Wars strings...you had me at Obi-Wan. Thanks!

  • Report this Comment On February 10, 2015, at 1:57 AM, DevJonson wrote:

    Jason shared some great points here, which every parent must follow. Make your child future financially successful by teaching them the value of investing and money when they are young and ready to acquire such skills. It will make you a great parent and saves the future of your child. Kids are very smart nowadays and are always ready to acquire the lessons of investing. I feel starting at the tender age of 3 is a great idea. You can start with some practical lessons like waiting and then rewarding them for it. Move progressively with teaching lessons as per their age. Make your child learn the art of investing with some great lessons taught here: http://compoundwisdom.com/how-and-when-to-teach-your-child-a...

    Nice website concept! Looking forward to read more articles here.

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