Children are the luckiest investors because they have time. Time is sweet when building a financial portfolio, allowing ample opportunities to accrue benefits and adjust for losses. By teaching your children early about the ins and outs of wise investing, you'll help to make their futures secure.
Most of us have a complicated relationship with money, wanting it but not wanting to be seen wanting it, trying to gather it in but regarding it as scarce. Be clear about money for your children. Think of the dollars you'll accumulate as something more innocuous, like popcorn.
Compound interest is a child's devoted handmaiden. Demonstrate the miracle of compound interest with the eye-opening question, "Which would you rather have, a million dollars or a penny doubled every day for a month?"
A young child's first savings account is a thrilling venture. Many financial institutions offer children's accounts with lower minimums, fees and taxes. Savings bonds are safe and are favorite gifts of grandparents.
Inform the extended family of the children's accounts, as they may choose to contribute at Christmas and on birthdays.
Playing the stock market is fun. Start your child off with virtual money. Track selected stocks in the newspaper or online at free virtual investing sites.
If you're not already a successful investor, play along with your children, doubling everyone's fun. Celebrate increases, and laugh over losses while learning from them.
When the children are ready, switch to real money. Kids like to invest in things that they know, such as fast food, entertainment, athletic equipment and electronics.
Watch the portfolio grow. As the time nears for using the funds, say, at college entrance, switch the money to a stable repository like a cash account.