Simple way to teach your kids how & why to Invest

You can make money with stocks in the long run - your children have the time.
I was speaking with an older gentlemen the other day and he was explaining to me how he was retired from AT&T before it was broken up by the government. He explained to me how he now owns stock in AT&T, Verizon, Sprint and many other “phone” companies because he was smart enough to put his retirement fund at his job to buy stocks.
After the years went buy and the government broke up Ma Bell [AT&T] he just keep getting stocks every time a new company was split off. Now he is 65 years old and receives high devidens from all these companies. He laughed as he said that several times he received checks for $2000 dollars on several occasions in the year because the companies were merging and splitting and merging again... He advised me that I should buy good stocks and hold on to them.

How do you teach your children the importance of investing?
In a simple fashion they can understand?

The goal is not to invest for them, but teach them how to manage money, make money and how to invest thier money. So when thier grown they can do it - and take care of you when your old :)

Here is how I started:

How Does Money Grow?

how to teach kids how to invest
Investing is a way to make money with your money. First, you have to earn money. As a kid, you get money from allowance, gifts, services, or from selling goods such as lemonade or small business. Try to save some, if not all of this money. The next step is to make your money grow through investing. The chart illustrates this process.

Why Should I Invest?

There are two main reasons why you should invest:
* To stay ahead of inflation
* To achieve financial goals
Inflation causes the increase of prices. When a Big Mac goes up from $1.20 to $1.50 or when gas goes up from $1.30 to $1.70 a gallon, we say that is inflation. You need to make more money just to keep up with the rising cost of living.

Financial goals can be separated into two types:

* Short-term goals - Things that you need or want now or within the year, such as a bike, a computer, or a video game. Generally, it takes less money to reach these short-term goals.

*Long-term goals - Things that you need or want in a few years or more, for example, going to college, buying a house, and even starting a business. Generally, these goals are expensive and require some planning.

When Should I Invest?

The earlier you start investing, the sooner you can reach your financial goals. Investing is like "planting" money. A small amount of money invested will often grow to a larger sum over time. You’ve heard the phrase, "Time is money." With investing, time also makes money.

What are the Risks?

Although investing can make money with money, the downside of investing is that there is a risk of losing your money.

The key to investing is to minimize the risk and to maximize the financial reward. For this reason, it is important to understand the many ways to invest money.

save money and invest children
There are hundreds of ways to reduce risk - which have to be learned. That is why it is very important to always be learning and to work with smarter people than you are. People that are in the field you need to learn and understand, like stock brokers, day traders - all complicated terms for people who know and make money with stocks, bonds and all sorts of investing.

But the technical stuff comes later - first lets start small because learning also comes from doing. Also - only invest what you can afford to lose. Don’t bet the grocery money or the mortgage payment.

To start investing first save.. Save your income [ allowance, gift, earned income thru chores and etc.] and split it into three saving banks [ pools ].
1- saving long term [ can be split in 2 - short and long ]
2- saving charity, giving
3- saving money to invest [ money that can be lost with out you going hungry ]

While your investing money [ #3 ] grows, learn about the companies you like, are interested in, how to invest, become friends with brokers and day traders and etc.. When you reach that specified number [amount] open an account and start investing.[ you may lose money - but that is part of the learning process ].


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