Best First Investments for Kids
Parents often think that it’s "too early for their kids to start investing" and that they can "do that when they come of age". However, it’s never too early to teach your kids how to invest. The earlier they start, the easier it will be for them to make money as they advance further in life. It’s simpler for you to learn when you are small, which is why you may want to consider giving your children and grandchildren an early start.
However, it’s not always easy to get the little ones to be interested in stocks and whatnot. At that point, most of them only know how to spend money. To get them to save some as well, you need to guide them through the way, teach them your wisdom – and most importantly, do it with something that they might have an interest in. This article will give you a few ideas on how to make your children and grandchildren financially unstoppable using stocks for children.
Tips to Teach Children Investing
Investing is sometimes difficult to do even as an adult. This is why, if you want to teach your child how to invest, you need to learn how to weave around them. Here are some beginning tips for you:
- Teach Them Saving First
Rather than jumping straight into the investing wagon, you need to teach your children how to save first. Don’t go straight for index funds, mutual funds, and stocks; what your child needs to understand is that some of the money is meant for use at this very moment and that some is meant to be saved for later.
Here, the classic jar with pennies example is a good option as it teaches your children something called "delayed gratification". The kids will have a visual of the money growing over time, teaching them that not every dollar they receive is to be spent at this very moment.
- Teach Them Interest
Once they got the idea, move to investments by adding a "grow" jar that teaches them interest. For every sum that is added in the saving jar, add some change in the "grow jar" every month – but only as long as the child does not touch the main jar. This will teach them how interest works, as well as the concept of "invest, wait and then earn".
- Allow Time to Work Its Magic
Don’t expect children to learn right away how investing and saving works; this may take quite a bit of time. At the same time, you might want to teach them that the earlier they start, the interest will grow and the more they will be able to earn.
Once you have your child’s interest picked, it’s time to move onto actually buying stocks for kids. When their stocks account is opened, that money that went in the savings jar will now go into their official investment – and then on, they will be able to watch their investments grow.
Best Stocks for Kids to Try First
Your child (sort of) knows the principles of how interest and savings work right now. So, the next obvious move would be buying the first stocks. Here are some ideas of investments for kids that will certainly catch their interest.
- Disney (DIS)
When it comes to kids, Disney is certainly a surefire way to go. It can’t get any easier than that. No matter the age of the children, they will certainly relate to the Disney characters they see at theme parks or on screen. Moreover, these stocks will pay small dividends that your child can collect later on. This will be a nice way for you to teach the little ones about dividends and how they can help their money grow.
- Taco Bell (YUM) or McDonald's (MCD)
We have yet to see children that do not like tacos or fast-food burgers, which is why Taco Bell and McDonald's might prove to be the best investment for kids that you might go for. This way, you can correlate their ownership of the stocks with their investment. Next time you step into a McDonald’s with them, ask them what they think of the business since they own a piece of it. Does it seem successful? Does it have many customers? Do they have any suggestions to make it an even better business? This will prepare them later on for life.
- Hasbro (HAS) or Mattel (MAT)
A toy company is also a surefire stock to go for – particularly if your child has an interest in, say, Hot Wheels cars. Some children can spot a Hot Wheels car from other brands in a heartbeat. As they are watching the stocks grow, this is a time for you to talk to them about the product quality and its importance. How important is this quality for them? Does it necessarily result in a good performance of the stocks? Well, only time will tell here.
- Tesla (TSLA) or Ford (F)
If your child seems to have an interest in cars and technology, one good stock to get them started would be the up-and-coming Tesla or the classic Ford. Plus, since you see them in parking lots and on the road every day, you can spark a lot of conversations every day about them. You can talk about what makes them run – what makes them successful. As your child watches the stocks and earnings grow, you can help them understand why that’s happening – getting their opinion on it as well.
- Coca-Cola (NYSE: KO)
Coca-Cola may once more be an obvious choice when it comes to the best investment for child. Not every parent allows kids to drink a glass of Coke, but the little ones sure jump at it whenever they have the chance. Plus, not only do children know about it, but they also have a business model that is very easy to understand. Whenever your child drinks a glass of Coca-Cola, ask them what they think of it – why they like it and why they expect it to grow. Smaller children may not be reading the annual reports, but it may help them understand the competition between businesses and brands.
- Walmart (WMT) or Target (TGT)
This one is also a no-brainer when it comes to investment for children. What kid hasn’t been dragged through Target before? How many times have you noticed your child stopping in front of the toys aisle, staring at all the colorful items lined in front of them? As you are shopping for goodies, try talking to them about the advantages and drawbacks of this type of business. Plus, these stocks offer some nice dividends, so you might want to bring those up a well – get them interested.
Final Thoughts
It’s never too early to teach your child about investing in kids' stock. Indeed, they won’t be experts in it from the very beginning – and chances are, for a good time, you’ll be making these investments for them. However, these will increase over the years – and by the time your children grow up and are seriously interested, they will already have a nice investment gathered up.
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