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Advice on Getting Your Kids Started in Investing

By Jason Moser - Mar 25, 2014 at 1:37PM

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If time is an investor's best friend, then there's no better time to start investing than childhood. Here are some tips to help your kids get started.

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "I would like to start my teenage kids off with $1,000.00 and then follow up with periodic contributions. Can someone give me some ideas on which index funds would work best for this strategy?"

Jason and Brendan both think teaching kids to invest is a great way to create investors for life. When it comes to getting started investors can look at a couple of different vehicles in index funds and exchange-traded funds (ETFs). While both vehicles will basically just try to match the market's returns, that's also not a bad thing given the superior returns markets witness over longer periods of time. A potential advantage of ETFs is that they trade more like stocks as opposed to index funds which trade just once each day at the close of the market. Jason also mentions that it can be very rewarding for young investors to also own shares of individual companies, as long as they remain diversified.

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