When you think about investing, it may seem like something you do when you're older, not something you'd think of teaching your child as they enter elementary school. But whether your children are young kids or young adults, there are many creative ways to engage them in the world of investing.
Since you can't invest what you haven't saved, a good place to start is a quick introduction or reminder about the importance of spending less than you earn, or saving. It's easy for them to use your money for something they want. It's harder to develop the necessary discipline to work hard and save towards a goal.
Engaging young kids and preteens
The fundamental lesson of buying low and selling high can begin at a young age. This summer, as I visited many farmers' markets, I often noticed young children helping their parents sell pies, produce and more. Helping out in a family-run business, even for a day, teaches kids the basic concepts of selling something for more than you paid for it, making a profit, and reinvesting in the business.
When my daughter was born almost 20 years ago, my brother bought her one share in the Walt Disney Company. It was a gift that introduced her to dividends (on a small scale), stock splits, and share price appreciation. And although she was more interested in the pictures of the Disney characters in the company's annual report than the financial statements, it was a great way to get the conversation about investing started.
Engaging teenagers
With older children, you can encourage them to pick and follow a few stocks in publicly traded companies they're interested in, like Nike, Google or Apple. This can lead to discussions about what a stock is (an ownership stake in a company), the relationship between risk and return (the greater the potential to earn higher returns, the greater the risk), and how some companies' shares are stable while others are volatile.
If you think your child could be the next Warren Buffet, many high schools offer business courses that introduce basic concepts of investing and money management.
“I've taken courses such as introduction to business technology in grade 9, accounting in grade 10, financial securities in grade 11, and this year I'm taking international business fundamentals," says Jacob Danovitch, a grade 12 student at Northern Secondary School in Toronto. “And as president of my school's DECA chapter, I participated in a case study competition which involved designing investment strategies and considering risk tolerance."
Jacob is also a member of the school's investment club, where students are given an identical nest egg and compete to build the best-performing mock stock portfolio throughout the school year. Unlike in the real world, learning with mock stocks means there's no downside.
Engaging young adults
If your child prefers self-study, there are many ways to learn more about investing, whether from books, blogs, podcasts, the news, or videos like those from Khan Academy.
Many communities and universities also offer adult education classes aimed at beginner investors of any age. The University of Toronto School of Continuing Studies offers an Investing for Beginners course and University of Calgary Continuing Education offers Investing for Success levels 1 and 2.
If you seek out the right resources, learning about investing doesn't have to be boring or overwhelming. In fact, it can be exciting and fun – at any age.
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