The press talked to a few parents and financial experts for their tips on talking with kids about investing and the often confusing behavior of financial markets. Here’s a summary of what they had to say.
KEEP IT SIMPLE
Parents should make sure kids understand money basics before they try to conquer investing. Once they’re ready, don’t overwhelm kids with too much information at once — you risk them missing the lesson and losing interest. Kids need to understand what stocks are, why people invest and how the markets work before they can understand investing.
“The best way to get kids interested in investing is to speak their language,” said Carrie Schwab Pomerantz, financial literacy expert and senior vice president at Charles Schwab & Co. “Start by explaining that investing is a means of using your money to try to create more money.”
There are plenty of good resources — websites, apps, books — available to help guide the way in talking with kids about money and investing (or to help bolster parents’ own knowledge). Among them: “A Kids Book About Money” by Adam Stramwasser and Schwab MoneyWise.
PRACTICE TIME
If they seem ready, let kids give investing a try.
Consider one of the many apps and games out there that allow people to simulate investing experiences. Those provide a good first step in a safe environment, said Paul Golden, spokesman for the National Endowment for Financial Education.
Try one that shows gains over a long period of time, 10 or 20 years, as that better illustrates the benefits of long-term investing.
Parents can also help kids identify companies they are interested in and track them using fictitious money just for fun. That presents an opportunity to explain why a stock might rise and fall in value at different points.
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