Stock Market Investing for Kids
Children can learn a lot about the world of business and finance through basic lessons in the operations of the stock market. By understanding how shares are bought and sold, kids are introduced to such important concepts as investing, profits, and supply and demand. As children cannot trade on their own, the investing should be either be done through a surrogate or on a virtual stock market.
Other People Are Reading
-
Age Limit
-
To open a brokerage account --- a prerequisite for trading on the stock market --- an investor must be at least 18 years old. However, if a child is at least 13, a parent can open a custodian account for him, through which the parent can supervise his trades. In addition, minors can open practice accounts on various sites in which they trade real stocks with fake money.
Features
-
Before attempting to invest money, real or fake, children should be introduced to the mechanics of the stock market. Kids should understand the basic process of how stocks are bought and sold. Using pictures or acting out the process, a teacher can show the various roles played by an investor, a broker and stock traders. This can be followed by an explanation of how the actions of these people affect a stock's price.
-
Function
-
After children understand the players in the stock market, the teacher can move on to introducing the role that stock trading plays in the real world. This explanation should include trading's benefits to both investors, in the form of a return on their investment, and the reasons that a company sells stock, such as to raise money to hire more employees, conduct research, modernize their facilities and make new products.
Criteria
-
Children should understand how investors go about picking stocks. Depending on the age group of the children, this should include explanations of either basic concepts or more advanced ones. For younger students, a teacher can discuss the relative popularity of various products and services; older students can be introduced to concepts like price-to-earnings ratios and returns on equity.
The Process
-
It may be a good exercise to have children pick a number of stocks and watch them over a period of time. Younger students might be encouraged to pick companies they know and like, such as McDonald's or Coca-Cola, while older students should probably do more careful research. As the stock moves up and down, the teacher can explain factors that may have contributed to this movement.
-
