Kids And Stock Market Education
Most people do not think that kids and stock market education is a logical mix. In fact, most people believe that kids should be playing with all their electronic gadgets rather than dabbling in the stock market. The very thought of kids joining the stock market community seems preposterous to many people. |
However, kids and stock market go together very well. By teaching them about the stock market, you can teach them how to wisely save and invest their money. This is a better option that blowing their pocket money on useless things.
To begin your kid's stock market education, you should first introduce him to the basics. You have to educate the kid that investing is a completely different ballgame to saving. A kid can save money to buy a new bicycle but he needs to invest if he wants to go to college. The next step in kids and stock market education would be cover topics like portfolio diversification, liquidity and risk reward ratios. Make sure you keep explanations simple and to the point. Do not confuse your kid.
Once your kid is familiar with all the terms and terminologies of stock market, you can then allow your kid to have a practice portfolio. There are many online simulation games that can teach kids about stock investing. Once the practice portfolio is ready, allow your kid to invest with practice money in companies that he knows like Disney, Coca Cola or Nike. Make sure you help your kid keep a track of his investment portfolio.
This way you can teach your kid to track his investments, learn money management techniques, monitor the performance of different company, conduct research before making an investment and study the trends of the stock market. The chances are that you kid will understand the way a stock market functions rather quickly.
When you feel that your child is conversant with the basic of investing and stock market, you can select certain investment options for him. Of course, it is safest to select a mutual fund for him. There are several mutual funds that are kid-friendly and they also give information and educational material on stock market investing.
Since kids are not allowed to own stocks or operate brokerage accounts, you can get a custodial account set for your kid under the Uniform Gifts to Minors Act. Of course, be ready to pay taxes!
Stock market education for kids is the first step in teaching your kid how to control his financial future. It will be a valuable lesson for which he will thank you later in life.
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