It is well known that the sooner you start investing, the better. But as every habit, it is something you build over time. So if you can learn to invest while being a teenager, even better.
Investing can be complex, but it doesn’t have to be. It is a good idea to learn how to invest as a teenager, so by the time you reach an adult age, you are already in the game. Getting your first paycheck can be really exciting, but seeing it grow is even better.
One of the best things you can teach a teenager is how much money can grow over time. If they can visualize this, they will be more than engaged with the idea of investing.
Many online calculators will let you enter an amount of money and the number of years you plan to keep it and will provide you with the expected rate of return. This is an excellent way for teens to understand why it is so important to start investing earlier in life and will get them interested in doing so.
But it’s not only showing them how important this is for their futures. You can actually get them to invest real money in the real market so they can see it for themselves.
While teens should not, at any point, do this by themselves, if they participate in their parent's investments, they can see for themselves how money grows, how return rates work. You can get your teenager involved by letting them buy some shares of stock in a company of their choosing. Use this opportunity to educate them on how shares go up and down and why.
You can also start your children in the path of investment by opening a custodial individual retirement account. The best option is Roth IRA account, which allows deposits to grow tax-free as long as you wait until you are 60 to withdraw it.
There are many options for teens to learn and value the importance of saving and investing, so take the opportunity to walk them through the financial path and get them going.