With an ever-fluctuating stock market and an uncertain future, saving as much as you can now can help make sure you are financially secure regardless of what happens in the rest of the world. But while you’re worried about how your portfolio is performing, you may be neglecting teaching your children how to properly invest in order to secure their own futures once they leave home.
Because investing can be complicated and confusing, many parents shy away from introducing financial concepts to their children until almost adulthood. But by then, the principles have little time to sink in before real money comes into their lives. So to help your children create a better future for themselves from a young age, here are three simple ways you can begin teaching your children about investing.
“Play” The Stock Market
One great way to start showing your kids how the stock market works is to “play” it with them. Andrew Beattie, a contributor to Investopedia.com, recommends letting your kids pick a few stocks that interest them in which to track throughout a period of time in order to see how those stocks perform. If you have some money to invest, that can make this experiment even more impactful because your child will see real gains and losses depending on how their stocks do. This will teach them concepts like risk and reward as well as understanding how the stock market works.
Teaching Patience With Investments
One virtue that many people lack, especially children, is patience. However, if you want to give yourself the chance to make money with investing, you’ll got to develop this trait. To teach children patience with investments, Elizabeth MacBride, a contributor to CNBC.com, suggests investing a small amount of money into an index fund with your child and then showing them how that money matures over a long period of time. This exercise will help them learn how to invest their money and leave it be in order to get the best return on their investment.
Build Toward A Reachable Financial Goal
Without having a financial goal on the horizon for your child to look forward to, it can be challenging for them to personally invest themselves in the idea of financial investing. For this reason, Tomer Garzberg, a contributor to TheStreet.com, shares that it’s crucial for children to have something they’re working toward with their financial investments to make this time of learning more enjoyable. This could be something like a new bike or video game console or even more personal freedoms within your family.
It’s more important than ever for people to be saving for their own futures. Use the tips mentioned above to teach your children how and why to invest from a young age.