How do you recommend teaching teenagers (or younger) about investing?
When my sons were younger, I taught them about investing by opening custodial accounts for them. I picked an investment that held blue-chip stocks that my sons could recognize, such as McDonald’s, Exxon and Apple and contributed to the accounts on a regular basis. Through the years, they learned not only about the stock market as they watched their account balances go up and down, but also about the power of compound interest and long-term investing.
There’s no one way to teach teenagers about investing, however, based on my experience, here are a few guidelines:
- Make the investment tangible. While a class or a book can teach the fundamentals of the market, tacit knowledge can cement these ideas to turn teenagers into lifelong investors.
- Make it regular. With an automatic investment plan, kids can be doubly rewarded: They grasp the discipline to set money aside for future use and they see the benefits of dollar cost averaging.
- Make it theirs. While you can show them the fluctuations of a certain company on a chart, stock ownership can have a bigger impact.
Frank Holmes is chief executive and chief investment officer of U.S. Global Investors Inc.
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