How can you get your child interested in investing?

I feel this is a really important question as learning is a lifelong practice. And, investing well over a lifetime is about learning the basics so that over time you make increasingly better decisions.

This question is also really important to me personally, as I learned to invest with my Grandfather, and some of my best memories are seeing the pride in his eyes as I learned alongside him.

Hands-down, the best way to get children interested in stocks is to get them a stock (or a fractional share) in a company that they’re familiar with.

I’ve bought my kids (and friends' kids) shares in Apple, Amazon, and others. I've taken my kids into their stores, and mention it to them when we receive something from Amazon. Their response is fascinating… because they ask to go to their stores and are learning to understand that they own a (very) small piece of these companies.

Getting them a stock is only the first step, and it begs two further questions

What should you teach them about investing?

Teach them about dividends. Both Apple and Google distribute dividends, and for me as a young teenager (when I started) the idea that my money can make me money was a really big insight even though back then (in the 80's) there were very few options for buying stocks (and no internet brokerages).

I’ll never forget getting the quarterly statements in the mail showing me the amount I “earned” (it was pennies — I had five shares in a utility — maybe $100 worth of shares)… but the idea that my money could make money stuck with me deeply.

Then, TEACH THEM ABOUT COMPOUNDING by reinvesting dividends and show them the dividends increasing each quarter. Even if it’s small, you can show them percentages… they might get a 10–15% raise each year. It takes time, but you will teach your children well.

Remember, Albert Einstein was rumored to have said that compounding is the 8^th wonder of the world. Whether it’s true or not that he said it, the sentiment is absolutely correct. And, when teaching kids, this is how they can learn to understand the value of time on their portfolio.

How can you/they get started investing modestly?

This has gotten easier over time, with zero commission trading and fractional share purchases at Fidelity, or with the best custodial implementation at Stockpile (neither of which has affiliate links, I'm sharing because they get the job done).

With Stockpile your kids will have their own accounts that you control. They can see, but they can't do without supervision. At traditional brokerages, the custodial account is just another account, and in order to give your kids access, you're giving them access to making their own trades too. I'm not comfortable with that (I use Stockpile).

What metrics should you measure?

I've put three metrics at the bottom of a (long) post I've written elsewhere on this site. You should check it out if you like. The metrics part is the last section, and something I feel is unique about my book.

If you're a parent or grandparent... I'd love to hear what you think in the comments below. Past experience tells me that doing vs being told what to do make a big difference when teaching our kiddos.

And, if you're looking for an investing book that's written with young-adults and twenty-somethings in mind, maybe you can check out my book?