Advice for Parents, Investing with Youth
based on my personal experience investing in stocks at age 17
When I was younger, I put all of my Christmas and birthday cheques into a chequing and/or savings account. I don't want to say it was ALL by personal choice -- thank you Dad -- but I don't remember necessarily being upset by doing this.
I was given a debit card at age 14, much to my Dad's displeasure. (I think my Mom saw it as for emergencies, but also what if I wanted to hang out with friends once in awhile?) Honestly, I rarely used the thing.
At some point, my Dad took most of my money, and my Brother's money, and put everything into (what he thought were) mutual funds. It's been over a decade now, and I don't remember the entire situation anymore, but they weren't what my Dad had expected, and as soon as he could he got our money back ... so that he could invest everything in stocks.
My Brother is on the low-functioning side of the Autism spectrum, so my Dad chose all of his stocks. (And may I just say, my investments did much better for most of the past 9 years!)
What my Dad did with me was hand me a book called The Wealthy Barber, and asked me to read it. For 17-year-old Kaitlyn, it was a challenge -- I loved to read, but by that point in my life, school had sucked all the fun out of it ... so I wasn't reading ANYTHING, let alone personal growth books. But I did it. (Couldn't tell you what I learned from it, but at the time it was helpful!) I believe he gave me another book as well, or we looked at financial websites -- something that taught me what KINDS of stocks to invest in, to make wise choices.
And for the most part, I took this advice. But I also invested in what I wanted to invest in. I wasn't going to support random companies with my money, even if they were the best investment. I invested in a bank I actually used (at the time). I invested in Pepsi (because I love pop, and much prefer Pepsi over Coca-Cola). I also invested in Disney ... because what kid wouldn't want to own stocks in the Happiest Place on Earth!? (My Dad thought it wasn't a wise move, to invest in entertainment ... but guess who tripled her investment by buying each share at $33, then selling them around $99?)
I was 17. The fact that I was investing at all before becoming an adult is incredible -- no one else I know who's my age, even now, has invested in stocks. Some people have expressed to me that they want to, after sharing my experiences ... but I'm still the only one of all my friends who has actually done it.
After almost a decade of having investments in stocks, I can confidently say that I am grateful to my Dad for giving me this opportunity. It was fun for me, an adventure. Not all youths might get as excited as I did, but I enjoyed picking out my own stocks, watching the progression over the years.
I'm at a different place in my life now, financially, so I've sold everything and am planning to re-invest in the New Year (with a new bank -- that's one thing I didn't get a choice in; now I do). I valued the wisdom and advice my Dad imparted onto me at the time, and I know in the future when I re-invest I'll be sure to do some homework first. But, full-disclosure, I will DEFINITELY be buying back my Disney stocks!
I'm not a parent; I'm only speaking as a (former) youth. But my advice to parents is this: Start investing WITH your kids. It doesn't have to be with ALL of their money -- ask them to part with $100 to start, or put aside $100 of your money if you can, specifically to start them off. Teach them about stocks that offer dividends, that way they can take that money earned and re-invest it into more stocks (rather than using more of their allowance or birthday cheques). But also, let them CHOOSE the stocks -- you can give them all the advice in the world, but they won't learn much if you don't let them at least make SOME of the decisions. If they lose a little money, so what? The stock market -- at least, as it was explained to me -- is a long-term game; your children will have time to recover their lost money.
You know what might also be fun? Having them choose YOUR investments. If you're deciding between two stocks, have them choose for you, then show them the progress over a week, two weeks, a month ... they may ask you questions, and decide for themselves that they WANT to invest, too.
Again, this is all just advice coming from my personal experience as a young investor. One last thing I will say though: Depending on how young your kids are when this starts, they may not need to rely on student loans, or they could put a down payment on a house, or backpack through Europe for a Summer (when things calm down with the world) ... something to consider.