Many times, a parent will ask me when I think is a good time to get their children involved in the subject of investing. I really believe that the age at which a parent gets the ball rolling with their child depends on the financial maturity of the child. For some, it can be as early as 10 years old, although some may not be ready to broach the subject of investing until they reach college. Now, you may already be turned off to this article, because you either feel like you are not a college student, or you don’t have one yet. No worries, this is still applicable to people who are not college students.
So let’s assume you are about to send your child away to college this fall and you want to equip him/her with, at least, a start in investing. One of the first things that I tell a teenager who wants to get educated about the stock market is to start researching a company that they are already interested in. For example, they know the latest sneakers that are popular right now. They also know which videogames are extremely hot. I tell them to find out the company’s stock symbol and go to a familiar website such as Yahoo Finance and start looking at how that stock performed in the past month or six months or for the past year. Once they do that I’ll ask them questions like why do you think the company did really well in a particular month? And sometimes they’ll answer, “Well, it could be because on a particular date, Dwayne Wade came out with a brand-new version of a sneaker. Before you know it, he or she will be on Google for at least an hour trying to find out trends in what has been going on with that company or when certain models were released. They engage in their own research and go on a wild goose chase and they don’t even realize that they are doing what a lot of financial analysts are doing (and getting paid for) everyday.
Once this teen is now engaged in an investing mindset, it’s time for them to start putting money behind their research. I suggest websites such as Share Builder or even starting them as members in an investment club. Now many times they’ll say to you that there are no investment clubs in your area or at the school they are attending. It’s at that point when you can tell them to go ahead and start one with a group of three or four friends. Think about it. Would you rather your child sitting in the front of a video game console for three or four hours straight? Or would you rather see them with their friends like potential board members strategizing on how they’re going to become the next financial moguls in their family?
It’s unfortunate that many high schools and even colleges are not preparing these young men and women to be financially literate. I’ve sat down with scientists, teachers and business owners who are very good at what they do for a living, but who also were not trained in how to properly invest for the future. So while your teenager (or even you) is off to dive into a culture of learning why not also let it serve to be a financial lesson as well. They may finish with a degree in the field that they choose but they will also walk away with a few financial life lessons of their own.
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