How to Teach Children About the Stock Market
Many financial experts say that the earlier children learn about investing, the better their chances for financial stability in the long term. A piggy bank and allowance are just the beginning; children should also learn the basic principles of investing, since actual investments are the only means of actually creating stable wealth. Once children know the difference between a dime and a dollar, they can already grasp the basic principle of investing.
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Instructions
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Buy what they like. Kids of course will want to buy stocks in companies they can relate to, such as their favorite fast food restaurant or amusement park. Fortunately, these types of stocks often do well anyway and are good long-term play. Research a company your kids like and consider investing a token amount on their behalf.
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Get stock certificates. For a few dollars, you can have stock certificates printed up. These can be hung in your children's bedrooms and can give your children a certain amount of pride that they are shareholders.
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Follow the progress of your children's stocks. Discuss their investments in the morning over breakfast. Show your children the stock quotes in the newspaper and teach them to read a stock chart.
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Incorporate school subjects when teaching your kids about the stock market. Use examples from math, history, current events and geography to explain investing. Your children may also become more interested in these subjects in school.
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Play a game with pretend money. Give your children $100,000 each in fake money to use for investing. Make a contest among your kids or their friends to see who can be the most successful investor.
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Teach your children about the importance of long-term growth and dividend stocks. While they may not be as excited about conservative investments, choose some safe names they like in order to teach them the value of dividends.
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Tips & Warnings
Look for investment contests at your child's school.
Avoid high risk stocks that may discourage a child if they lose money.
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Comments
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John is going to Holland's school this week to speak to her class on Career Sharing Day. He is making stock certificates and having the kids do a trade on the cookie exchange with real cookies. He is even creating a Chinese Wall with red yarn so the kids do not participate in Insider Cookie Trading. Too cute. Guess I will be baking again. I love it.
