It’s generally well known today that kids absorb new knowledge the fastest while they’re still young, which is why most parents can and should aim to teach them valuable life lessons during this period so that they have a head start and don’t have to learn from their own mistakes and through trial and error down the line. Of course, there is nothing wrong with learning like that but it’s a relatively painful way to figure things out so it’s best for them to learn in other ways if at all possible. Today we’ll cover some of the different investment options for children that you can use with them to teach valuable financial decision making.
It is so important that your child understand the value of money and what it can do for them in the future. By investing their money, you are teaching your child how to be smart with their finances and plan for a better future. Here are some investment options for young children that can help them become financially savvy:
Set up a mutual fund
First of all, you could open up a mutual fund or other type of investment account specifically for your child. This can provide them with the opportunity to use their allowance money or any birthday/holiday gifts they might receive to invest in stocks, ETFs, bonds and other types of investments that can appreciate over time. It’s important to note that any investments made under the age of 18 will have to be done through an adult custodian such as yourself, so it’s best to educate yourself on the details before getting started.
Savings accounts are a good option
One of the oldest and most popular options that people use. It’s relatively old school compared to some of the other options on this list and, while it may be a bit dated, is still incredibly effective at teaching lessons to your kids of course as an investment option it isn’t half bad. Of course, the interest rates aren’t the best, but they’re a safe option and if you meet certain criteria the rates can be raised.
Consider this option if you’re looking for a traditional approach or you just want to start your kids off with something very simple as it’s hard to get more basic than this. There’s a reason why it’s still one of the most popular options among parents.
Cards are great
A more modern and increasingly popular option that parents are going for is bank cards for kids. They are accompanied by apps that allow you an incredible degree of control and monitoring options which can allow you to keep yourself safe. While you’re doing all of this your kid will feel a great degree of independence and won’t feel as if you’re breathing down their neck the entire time even if you are still keeping a watchful eye on them.
There are many different options and it can be pretty hard to figure out which is the best kids debit card, but the differences between them aren’t that massive so as long as you choose one of the relatively popular ones you’re pretty much guaranteed to have a good experience and can provide your kids with valuable life lessons while also helping their mental health with the independence that you’re giving them.
Stocks – risky but good
A decently popular option among wealthier people in the community and of course those who already have experience in stock trading. It offers potential for incredible growth and can allow your kids’ investments to reach incredible sums, but they are also incredibly high-risk when compared to most of the other options available and maybe a bit too complex to be a good learning tool for your kids.
The potential for them to be useful is certainly there, but the potential for frustration is equally high if not greater which is why not that many people utilize this option. Still, it’s worth noting and we believe that every tool at your disposal should be carefully considered so it’s certainly worthy of a mention.
529 college saving plans – a safe bet
An option that is unique to US citizens, but is so incredibly popular and useful that it simply deserves a mention even if it may not apply to the rest of the world as equally as the others on the list. It allows you to invest and watch those investments steadily grow, while also being able to withdraw the funds for various school-related expenses such as books.
Of course, the main point of this is to save for college educations for your kids, which is why they can be used to pay for most accredited colleges in every single state. It’s a relatively specific investment plan as it only can be used for education, but considering that their investments would probably go towards that anyway it’s a very useful tool that we recommend utilizing if you live in the US.
No matter which option you decide on to teach your kids about investing, make sure to educ- ate yourself on the details before getting started. Each of these options have their own pros and cons that you should be aware of before making a decision. That way, you can find the best one for your family and get your kids’ investments off to a great start!
There are an incredible number of investment options for children and, while we sadly can’t list them all here, we hope that the ones we have listed have piqued your interest and perhaps inspired you to help teach your kids about the various investment opportunities available to them.