How to teach your child about investing

How to teach your child about investing

People with experience in trading stocks often say they wish someone had introduced them to the stock market earlier. This is because of the great benefits that the stock market has to offer. Introducing your kids to the dynamics of the stock market will boost their confidence and expose them to many exciting opportunities that exist in the stock market. When they get older, they will have many options and know-how to invest their money. Perhaps this has led you to wonder if you should teach your child about investing.

Children mature at different rates and their understanding is also different. Some kids can wrap their minds around the basic concepts of investing at quite a young age. So if you are want to teach your child about investing, look for signs of potential and if they are present, encourage and guide them accordingly.

Talking about investing with kids requires you to find ways of relaying information about the stock market to daily activities. By doing so, your children will find it easier to understand and identify the highest dividend stocks and invest in them. We have listed activities that you can involve your child in to help them learn about the stock market.

Visiting the shops

Taking your children to the shops should not only be about shopping. This can be a great opportunity for the child to learn about parent and child companies. Explain to the kids how major brands have smaller child companies when the opportunity presents itself while you are in the mall. An example is the Yum Brand that owns Kentucky Fried Chicken, Taco Bell, and Pizza Hut.

When you stop to get a pizza for lunch, for instance, inform the child that the company you are buying the pizza from is owned by a larger company. Further, explain the benefits of that arrangement. You can point out that it diversifies the parent company’s market share, thus leading to more profits.

Additionally, explain the importance of investing in brands that have a presence in many parts of the world. This guarantees that the company will be in business for a long time.

The concept of parent and child companies also presents a good chance to explain to the child how buying stocks in a company is like owning a small part of the company.

Taking a cruise

We all love a good getaway. When you make a good chunk of money from trading in stocks, take a cruise with your family. Don’t forget to explain to the kids how the trip is paid for. Knowing the benefits of investing in stocks will make your kids excited about trading stocks.

Travel destinations expose our children to new cultures and food that are different from what they are used to at home. A memorable trip will be etched in the children’s memory and have them aiming to take their family on such a get-away trip when they are older.

Open a trading account for your kids

There is no better way to learn about trading stocks than through experience. Modern technology has enabled stock broker companies to avail tools to customers for trading stocks that are fast and easy to use.

Some stockbroker companies, for instance, allow you to open and operate dummy accounts with virtual money that your kids can learn on before they become confident enough to invest with real money.

Opening such an account for your children and monitoring their activity on it makes tracking their progress easy. Moreover, it is safe since you don’t invest with real money. Mistakes can be corrected without losing money with such accounts.

Watching television

Watching the news with your kids can be a great way to teach them how events that happen in the world affect a stock’s valuation. Explain to them that the news that makes headlines, such as the introduction of new government policies, also affects stock prices in the stock market.

Strike up conversations with your child about how they think an item that made it to the prime time news would affect a given stock either negatively or positively. This offers a great opportunity to make the child interested in stocks. You might find them even pushing you to find out if their prediction about how the stock would be affected was true.

Other sources of how the stock market is performing are also available in the daily papers and online journals. You can always find good teaching moments with kids. Teaching them about money is always good for their financial future.

Would you like to teach your child about investing? Or perhaps this is something you are already doing? Do share in a comment below.

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