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Top tips to teach your children about investment

By HT School Web Desk,

Lessons on investment will help your child manage his finances better in the later years of life.

Once a child becomes 15 or 16, start involving him in your investment decisions.

Unfortunately, investment isn’t a subject taught in schools. In the absence readily available formal training on the subject, you, as a parent, need to take the onus of teaching your child about investment. Many parents think that school age isn’t the right time for kids to learn about complex financial concepts. However, this is something that needs to be incorporated during the growing years in an age-appropriate manner, say child psychologists. Lessons on investment will teach your child to value money and help him manage his finances better in the later years of life, allowing him to pursue his dreams. Here is how you can initiate your kid into the subject.  

Gift a piggy bank 

This can be a good starting step with kids in the age bracket of 3-5 years. While handing over the piggy bank, tell your child that he can buy something for herself once it’s full. This will go a long way in teaching him the concepts of saving and investing.  

Start gardening together 

This is a good way of introducing the concept of investment to your child. Buy a pot and involve your school kid to sow a few seeds in it. Have her water the seeds every day and show her how, with sunlight, air and a little care, they grow into plants. Once your child gets hooked on to the plants on the pot, tell her that money is very similar to the seeds she sowed. It will grow if she learns to invest in the right way. Comparing financial investment with watering a plant, an activity she was involved in, will surely make your daughter willing to learn more about it.  

Share interesting stories 

Kids learn best with stories. Share the life stories of famous investors with your son. Warren Buffet could be a good option. He went on to become one of the richest persons of the world from selling bottles of aerated drinks in his grandfather’s grocery store. These inspiring life stories, along with the tales of your own investment will help you make him interested in the subject. Avoid starting with information about mutual funds and stock markets. This will put him to sleep for sure.  

Play Monopoly 

This is one of the best business board games which all of us have grown up with. It teaches kids about money management, investment diversification, taking calculative risk as well as the impact of various investment choices. In Monopoly, players are required to use paper cash. This gives children a real-life feel of handling money.  

Start the tradition of pocket money 

As your child hits the age of 10, give her a small amount of pocket money which she is accountable for. Decide on an amount that will leave a small surplus after meeting her necessities. Teach her ways to keep a ledger of her expenses. Additionally, open a bank account for your daughter and encourage her to save the surplus. As your daughter’s math skills become strong and she steps into her teen years, introduce her to the concepts of various kinds of bank interests, asset classes and taxation.  

Encourage your child to make his first investment 

Once a child becomes 15 or 16, start involving him in your investment decisions in order to make him well-versed in the concepts of various options like stock and securities, mutual funds, gold, etc. Once he is aware of the options, encourage him to put a part of his savings into investments. You can also make a contribution to your child’s first investment. Once he chooses an investment plan, discuss about the risks and benefits. To start with, your child can invest in FDs, mutual funds and PPFs.