Get grounded. Take a minute to brush up on these financial terms your family might find helpful.
Start saving for school. Consider looking into tax-deferred savings accounts (e.g. 529) for your kids' education expenses. Speak to your tax advisor. It’s never too early to start! Savings aren’t just for college, expenses such as books, equipment, and other secondary schools costs may be eligible too. Check with a financial advisor to see what expenses may qualify.
You’re not the only one who may be able to contribute, others like grandparents and family members may have the opportunity to donate. Plans vary from state to state so always speak with a tax advisor first.
Get them interested in investing Don’t wait, involve your children in choosing a company or a simple ETF fund, to informally follow and learn about what it means to be an investor. Teach them about the risks of investing, not only the possible upsides. The stock of a single company may go through the roof, or crash overnight losing much of its value. Take time to explain the benefits of spreading investments around.
Get them thinking about what they’re already interested in and all the publicly-traded companies they could own, companies that make their favorite gadgets, games, foods, and fashions.
Have them follow the stock in the papers or online. Help them create a log or a binder of news clippings to keep track of how “their” company does over time.
After doing some research you may consider taking the plunge and start investing real money. It is always wise to speak with a financial advisor to learn about your options and how to get started. If your kids want to help with the family’s investment decisions, maybe they can make a contribution to “family” investments. It’s a good opportunity to offer them “matching funds” for things that are in line with your family values.
The research your children are doing is crucial for successful investing and they can take advantage of what they already know. If they and their friends all dislike what a certain company makes, that’s important information! It’s also a perfect time to remind them that just making popular things isn’t all it takes to run a good business. If they don’t believe it, have them track some of the competition too.
Teens, however, may be ready for a masterclass. Have them follow a few different stocks, not just one. Comparing companies both in the same business sector as well as in different types of industries is an excellent way to introduce the concept of asset diversification.
When they’re ready, encourage them to go online and check out resources like Yahoo Finance.
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