It seems investing is such a complicated task for a kid but it’s best to teach them the concept while they are young, and thus become a habit as they grow older. For a start, introduce them to their Educational Savings Account. This will not only be a good learning tool but it will aid you in teaching the fundamentals of investing.
When to Start with their Learning
As soon as you can gauge that your child’s learning ability is ready to accept the lesson, start teaching. The proper timing probably is when they are going to high school. By this time, you should have taught them the importance of managing their finances like how to budget their daily of weekly allowances, setting up a bank account or some other issues about income and budgeting.
What to Cover
For a start, sit down with your kid and discuss what investing is all about – why you need to invest and why investing is beneficial to them in the long run. Give your Kids some briefing on the basics of stock trading which they can easily access through online. But before your kids start plunging into the trade, be sure that they know the risks as well as rewards so they can avoid going bankrupt. Provide your kids with the basic resources and trust them to do it better than you do. Kids are more alert and can easily learn the trade. Notice that some online games are even more complicated that online trading, yet they manage to master them.
Once you have done with the groundwork and your kids had started investing, see to it that you monitor their movements. Check regularly on the statements and continue mentoring them. Their learning would depend on their ability to understand and analyze facts presented for them. Leaving your child to do all the decision making in the invested he had made will give him the feeling of responsibility that goes simultaneously with the trade. Following how the market flows went up and down will make him aware of how important it is to pay close attention to the trade.
As your child grows older, you can teach him a more in-depth lesson on stocks and trade. What is important here is the fact that you are cultivating his interest in the investment until it becomes a habit.
There are times when trading can be addictive only a very thin line separates it from gambling. To avoid this, teach your children the virtue of self-discipline and control as vital to investing. Emotions, too, need to be separated from the trade, so let your kid understand the strategy needed for them to gain success in trading investment.
To secure your kid’s investment, teach him to set up a control limit or a limitation cap and determine “stop loss” marks. When you see that your child is becoming more skillful in his trading investment, gradually leave him until he becomes totally independent.