Login
Password

Forgot your password?

How to Teach Teens about Investing in the Stock Market - Young Investor's Guide

By Edited May 1, 2015 1 0

It is really delightful and gratifying to see your teens' faces light up when you provide them important tips on how to invest their money in the stock market. Seeing them succeed at their young lives is truly your success too as a parent.

You can only make it happen if you teach your kids about the art of investing in the stock market while they are still young so that you can develop their interest as early as possible. By teaching your teens about investing their money in stocks, you are also encouraging them to become skillful and creative investors in how to handle their own funds for their future.

Generally, most teens already have a little background about investing and currency during their elementary years in school so all you have to do is enrich them. The earlier you start teaching your teens about managing their own investments in the stock market, then it's more likely that their interest and knowledge will develop in this area as they grow older.

These money management skills will truly benefit them in the future. So instead of buying your teens those expensive electronic gadgets and toys, consider giving them a certain allowance that may keep on accumulating and these are stocks.

Discuss how investors simply make money in layman' s terms. Teens will understand what you mean when you'll translate a complex or technical issue in terms that the average person can understand. If your teens can comprehend simple issues about money management to some degree then it's time to educate them about investing their money into the stock market in a lively and interesting way.

Difficulty:
 
Moderately Challenging

Instructions

    • 1

      Let your teens attend free seminars for young investors online or offline as much as they can. Discuss with them what they had learned after attending those seminars. 

      Compare popular web sites that have basic information for beginners about investing in the stock market. There are also schools that offer good courses in finance and economics specializing about investing in stocks. 

      You can select short courses online that are affordable for teens but be sure to enroll them in a well-established website that offer a good program. You can get some free information prior to enrolling them since most of these web sites will mail you free booklets if you're interested.

    • 2

      Encourage your teens to join clubs or organizations for young investors that offer free audio and investment reports on how to successfully invest money in the stock market including trading secrets and traders' weekly opinions. 

      Some well-recognized websites will allow your teens to sign up and they will email newsletters so that your kids will know how to become responsible young investors in their own way. It is important that your teens will know how to manage their money and also learn about the risks involved when they start investing.

    • 3

      Classify a particular company that your teens are interested into. Usually, these companies have products or services that your kids have a chosen preference. 

      Popular and well-established corporations that offer the latest style or fashion that's also in favor for the new generation can be more enjoyable to try and invest into. Teens know the latest thing about their own fad and trend so they likely have a strong interest and enthusiasm to own stocks that they are familiar with. 

      Keep in mind what they like most in terms of clothing, food, hobbies or among other things so that you can connect these things to the stocks that they want to own and invest. Your encouragement as a parent can help a lot!

    • 4

      Teach your teen how to invest in the stock market by becoming a dedicated investor so that he or she will have more options. Many businesses that offer mutual fund accounts will waive their regular minimum fees if you show your teen how to allocate and transfer his or her funds to an automatic investment plan where money is taken out from the bank account and placed directly into the mutual fund account that he or she has opened. 

      An automatic investment plan could be a good option for young investors because it trains them to become disciplined shareholders by paying first the things that they had invested into every month prior starting to spend for things that they like to buy or making payment to their school fees and bills. It's also affordable if they want to select the "dollar-cost-averaging" method where they will purchase more shares when the prices are low and only buy fewer shares when the prices are high. 

      Mutual funds could also be good for teens since they allow young investors to own many company stocks without having to spend large sums of money. Whatever your option is, there would be a positive outcome when your teen is well-guided in this type of endeavor.

    • 5

      Visit easy-to-use and kid-friendly websites that provide basic financial information on how to guide young people about investing in the stock market. Before opening any account for your teens, teach them about some investment vocabulary. 

      Teens should know the meaning of the important terms when they start to invest their money in the stock market like "equities" which is another name for stocks, "stock exchange" the place where shares of a company's stocks are bought then sold and "share price" so that they can tell the cost to buy one share of stock in a particular company. 

      These sample terms are important to learn because soon they will have a collection of stocks that they own which is called "portfolio". You also need to explain to them the term "return" which is the amount of money made on an investment that comes from the income created by the company's earnings or through the growth in the company's stock price. 

      Another thing to teach to your teens is about the "price to earnings ratio" which means the ratio of a company's price to its earnings. This number is vital to know because it measures the company's value and productivity.

    • 6

      Purchase a share of stock or shares of stocks in your teen' s name. If he or she is still a minor, a parent's or an adult custodian's name is required to fill-in the application form. 

      It's important that your teen has a absolute interest in the stocks that he or she has chosen before investing his or her money. You may later explain to your teen how you bought the stock or stocks so that he or she can do it next time.

    • 7

      Set up and build a schedule to evaluate the purchased stocks that your child had selected. For example, you could evaluate your teen' s investment portfolio and market results on a quarterly basis. 

      Assess and examine whether it is better to sell the stocks, wait for a little more time, just hold them for awhile or buy more. Let your kids feel that you're there for them in case they need more guidance but they are still the ones in-charge of the money that they're going to invest in the stock market.

Tips & Warnings

  • If your teens will begin to invest at a younger age, there are several banks and brokerage firms that will let a minor open an account as long as their parents will provide consent. 

    On the other hand, if you think that they are still so young to handle real money then you can just create a virtual account through an educational website so that your kids can use fake or play money. 

    When you teach your teens about investing in the stock market at an early age, then you're also preparing them to become responsible people in handling their money as they begin to earn.

  • There are stocks that are good to hold over a period of time (within years), while some for only a short time so you also need to consider this when buying a share or shares of stocks for your teens. 

    If you want to educate your kids about investing their money in the stock market, select the popular names of stocks that they easily recognize and have a full interest in owning them.

  • There are many free tools available offline or online. You may start looking for free information about stock market investing that are written by well-established investors and organizations that you can find in the public library or through reputable web sites that will help teach valuable investment lessons for your children.

  • Let your teens begin investing in the stock market by introducing it to them just like a fun activity, so that they wouldn't become so worried since they are dealing with money. 

    If kids realize that investing in the stock market can be good and enjoyable then it will make it more inspiring and appealing for them. Provide your children a small amount of money as a start while you're also continuously teaching them additional methods of investing in the stock market.

  • If you have been earning some money in the stock market, do not force your teens in investing their own money in it if they have no interest because they will just end up losing their funds.

Advertisement
Advertisement

Comments

Add a new comment - No HTML
You must be logged in and verified to post a comment. Please log in or sign up to comment.

Explore InfoBarrel

Auto Business & Money Entertainment Environment Health History Home & Garden InfoBarrel University Lifestyle Sports Technology Travel & Places
© Copyright 2008 - 2016 by Hinzie Media Inc. Terms of Service Privacy Policy XML Sitemap

Follow IB Business & Money