10 Reasons to Teach Your Kids to Invest
"I wish that I knew what I know now -- when I was younger."
--The Faces, "Ooh La La"
Imagine if you had first entered adulthood with the financial knowledge you possess now. Unfortunately, most children grow up without learning anything about the world of investing, and this can have a serious impact on their long-term financial success. Here are 10 good reasons to make sure your children buck the trend and enter the real world as investing-savvy young adults.
1. It will bring you closer together
You don't have to talk about investing every day or even every week. But it is something you can talk about whenever you spend money with a publicly traded company. For example, you buy a new iPad and say, "Did you know that Apple is a company that you can own a little piece of?" The more you have in common with your kids, the more quality time you get to spend together.
2. They will know you care and they'll remember that when they're older
Kids are smart and absorb a lot, even if it doesn't seem like it when they're younger. The older we get, the more we remember what our parents did and sacrificed for us. They'll remember this.
3. Your job as a parent is to raise your children to take care of themselves when they grow up. Investing gives them a wonderful financial head start
Money isn't everything, but obviously we need it to live. It's a competitive world out there, and the lessons from investing (along with the financial rewards) will put them in a great position to forge their own way in life.
4. Chances are they won't learn it in school
Call me a cynic, but I've done a fair amount of research into this, and my big takeaway was that while we are making slow progress in our schools, it all begins in the home. To believe otherwise is misguided, in my opinion.
5. Investing makes us smarter through examining the world around us
I have so much fun going places with my kids and showing them that many of the brands they interact with on a daily basis are also publicly traded companies. Whether we're going to Disney World or brewing a pot of Starbucks coffee in our house, they begin to think beyond the consumer mindset and more about how these businesses impact the day-to-day lives of people around the world.
6. Your child may discover new interests
The more companies you learn about, the more things you discover out there in the world. One trip to Dick's Sporting Goods, for example, can open up a whole new world of athletic interests.
7. It will make your child think more about the long-term implications of their behavior and the world around them
Investing -- particularly Foolish investing -- teaches you to have a long-term, big-picture perspective. So when it comes to topics from our national energy policy to health care, investing can teach us to recognize what matters most and not get dazzled or frightened by flashy headlines and day-to-day noise.
8. It will make you a better parent and a better investor
It's as simple as it sounds. Nobody knows everything, and talking about investing with your kids can make for some interesting and fun discussions in which you actually find yourself learning a thing or two.
9. The earlier you start, the more time a portfolio has to compound
It's one thing to explain the benefits of investing to children, but if they don't ultimately see actual results, they will lose interest fast. Having them start young and keep score will give them the opportunity to see what can happen firsthand, and you won't feel rushed to teach them the fundamentals later. You could say to them, "When you were 8 you started out with this amount of money. You've been investing for 12 years, and now you have this amount of money." You want to be able to show them concrete, indisputable evidence of the power of long-term investing.
10. It truly is some of the most fun you can have with your child
This, too, is as simple as it sounds. We've had some great dinnertime discussions in our house about investing, and it has brought our family closer together. My girls and I have even made a few investing videos together. And it's been a blast.
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