Investing with grandchildren in a fun way

Introduction

Investing can seem like a grown-up topic, but it doesn’t have to be. By involving your kids or grandchildren in this financial journey, you not only equip them with valuable life skills but also create a unique opportunity to connect with them on another level. In this blog post, we will explore seven elements to help you spark their interest in investing, along with providing some powerful resources to help you on your quest.

Before we start, we need to say that it is very important to loop the child’s parents into this process early on if you are a grandparent, aunt or uncle or God parent – essentially any family member or close friend who is not the parent. You don’t want to get to the point of investing real money only to find that the parents feel that the stock market is an evil, satanic institution that is no more than gambling. I’m dramatizing here but the idea with this is to bring family together and create closer connections, not to create problems. Communication is important and remembering who the parents are will go a long way toward being successful.

The Seven Elements

1. Lay the Foundation: Teach the Basics and Keep it Light

Before diving into the stock market, it’s important to lay a solid foundation. Start by explaining the concept of money, saving, and the importance of investing for the future. Also, sharing your own investment journey, the ups and downs, and what you’ve learned is a way to make it real for them. Use relatable examples, such as their favorite toys or games, to simplify complex financial ideas. It’s a good idea to break down complex investment terms into simple explanations. For instance, compare stocks to pieces of a pizza representing ownership in a company.  

Some books on investing to help you get started

By encouraging questions and fostering an open dialogue, you can pique their curiosity and set the stage for an exciting journey ahead. Try to keep these discussions light, have fun, make jokes and laugh while you are doing it to the extent that you can. If they start to perceive this as work, things will become difficult.

2. Make It Tangible: Start with Virtual Trading and saving

Introduce the concept of investing by using virtual trading platforms tailored for kids or beginners. These platforms allow them to experience the thrill of buying and selling stocks without any real financial risk. Encourage them to explore different industries and companies and track their progress. This hands-on approach will make investing more tangible and less intimidating. The platform from Investopedia seems intuitive and is free to use and there are more options out there. Here is where you can begin to talk about risk and what it means to lose and what it means to sell, hold or buy. You can also introduce the difference between very low risk, such as a savings account and trading stocks.

3. Choose Familiar Companies: Invest in What They Know

To make investing relatable, encourage your kids or grandchildren to invest in companies they are familiar with, such as their favorite toy brands, entertainment companies, or even local businesses they frequent. This connection to familiar brands will help maintain their interest and make the stock market feel more accessible.

4. Be Their Research Buddy: Engage in Learning Together

Investing is not just about buying and selling; it’s also about understanding the companies behind the stocks. Research companies together, read news articles, and discuss market trends. Encourage them to ask questions and share their opinions. By being their research buddy, you foster a sense of collaboration and ignite their curiosity for learning. If funds are available, the trading might become real at this point. Whenever it does, it will be important to set goals for the investment, either in terms of balance by a certain date or the ability to buy something they really want. There are different approaches you can take, such as matching their investment, similar to how companies provide a match for 401k accounts.

5. Let Them Take the Wheel: Empower with Decision-Making

As your student gains confidence, empower them to make their own investment decisions. Guide them through the process of evaluating risks, understanding market trends, and analyzing financial statements. There is a beginner course on analyzing financial statements here -> Financial Statement Analysis | Coursera. Depending on the age and experience of the young person you are mentoring, you could either take it yourself and use the materials to show teach them at their level or take the course with them as an option.

By giving them the responsibility to make informed choices, you foster independence and critical thinking skills. This could be a good time to talk more about dollar cost averaging, or simply investing every month to grow the portfolio. It will be important to counter the concept of trying to time the market before it becomes too ingrained.

6. Track Progress and Celebrate Milestones

Keep track of their investment portfolio together and celebrate milestones. Whether it’s a successful trade, a dividend payment, or a significant increase in the value of their investments, acknowledge their achievements and reinforce the importance of long-term investing. This positive reinforcement will fuel their enthusiasm and motivate them to continue learning.

If you want to get into this one more deeply, depending on their age and interest, all the major brokerage firms, Schwab, Fidelity, Vanguard, and others have custodial accounts where you can provide the funds in an account that can be under your control until the child reaches 21 years old. At that point it becomes their account. This account should be used for you and your grandchild to decide on which stocks to pick and watch them grow (or lose) for real if you are so inclined. What we are advocating for here is to involve them, make it fun and something for you to talk about with them. It will help to keep you connected as they get into their teens and older.

7. Share Real-Life Examples: Inspire and Teach

Introduce your kids or grandchildren to real-life examples of successful investors. Share stories of individuals who started small and achieved great wealth through investing. Highlight the positive impact investing can have on their future financial goals, such as saving for college or starting their own business. Talking about how your decisions have been impacted by retirement and other longer-term goals. By showcasing these success stories, you inspire them and reinforce the idea that investing is a vital tool for building wealth. The book “Money Masters of Our Time” by John Train is a good on to start with as it covers a lot of investor biographies in a single book that is a pretty fast read.

Resources

When it comes to teaching kids about financial literacy and investing in the stock market, there are several resources available to aid their education. These resources can help make the learning process engaging and enjoyable for children. Here are some resources that can assist in teaching kids about investing and financial literacy:

1. Books: Books are a great way to introduce kids to the concepts of money management and investment. Some recommended books include “The Everything Kids Money Book”. Also, “Money and Financial Literacy (U.S. Edition): Consumer Math (Ages 12+) Personal Finance for Kids and Young Adults” by Humble Math and “Financial Literacy Lessons and Activities, Grade 6-8, Homeschool and Classroom Resource Workbook” by Evan-Moor Educational Publishers. These books can be purchased via this link -> Recommendations to Help with Mentoring Young People on Investing and Finance

2. Podcasts and YouTube: There are podcasts and videos specifically designed to teach kids about financial literacy and investing. These podcasts provide valuable insights and stories that can make learning about money fun and relatable. Some of them are designed for the grandparents, so that you can learn new strategies for how to talk about finances with children. Depending on their age, the kids will enjoy some of them, but it will be important for you to listen as well so that you can create a touchpoint and talk about it with them. Search your favorite streaming platform and YouTube to find episodes that you feel they will be interested in.

3. Comics and Educational Materials: The Federal Reserve has published a series of educational comics that engage kids and help parents and teachers teach financial literacy. These materials can make learning about money more enjoyable for children.

By utilizing these resources, parents and grandparents can make investing and financial literacy an interactive and enjoyable experience for their kids or grandchildren. Incorporating storytelling and real-life examples can further enhance the learning process and create a deeper connection between generations.

Gaming

Yes, there are several online financial games available that can help kids learn about money management and financial literacy. These games are designed to be engaging and educational, making the learning process enjoyable for children. Here are a few examples:

Check It Out!: This game is suitable for ages 14-22 and focuses on financial responsibility. Players must answer financial questions correctly to advance further in the game. The introduction to the game provides a good idea of what it is all about.

You’re on your own…

Ever wonder what it would be like to be out of school and on your own? You get to have a job, no curfew, and make your own decisions about your time and your money. Sounds pretty cool, huh? It can be cool, but it’s also a big responsibility to have a full-time job and manage a household budget.

Want to see what it’s like? Play the Check It Out game and find out! To start the game, you’ll have one month’s worth of income…and one month’s worth of bills. (You didn’t think we’d just give you an apartment, did you?) You’re in charge – you decide which bills to pay and when to pay them. Your goal: to meet your monthly financial obligations on time, without spending more than you have. After all, you can’t always get by on your gorgeous smile, you know.

Money Talks: Created for teens and young adults, Money Talks is an interactive online digital card game that provides comprehensive guides and resources for different stages of life, from the first job to living independently. The questions or tasks on the cards are designed to spark conversation, so it will be important to play this along with your grandchild so that it can go a little deeper. Not one to leave them with on their own.

Monopoly: Monopoly is a classic board game that can teach kids financial literacy lessons.  There are online versions available that can be played with friends or even against computer opponents. We like the idea of the board game version that everyone can play together around a table – a great way to connect. The game can take a while so you might want to set it up in its own space where you can leave and come back to it depending on how it goes.

Financial Literacy Games for Students: Various websites offer financial literacy games for students, covering topics such as budgeting, stock market simulation, and money management. These games often include embedded lessons to reinforce financial literacy skills. Money Prodigy offers a few that look good for high school students. With these games you will want to play along with them or even act as the teacher would to assign tasks for them to do as these are truly meant for the classroom.

Peter Pig’s Money Counter suitable for ages 5-8: This interactive game helps kids practice identifying, counting, and saving money while learning fun facts about U.S. currency. Players are rewarded with a virtual store where they can buy accessories within a budget and dress up Peter Pig in fun scenes. This link takes you to a site that allows you to watch a video of the game to determine if it is something you will want to pursue. It is available on Apple or Google play so a tablet would be best for this one.

Financial Literacy Games for Children and Adults: There are various financial literacy games available for different age groups. These games are designed to be engaging and offer comprehensive digital personal finance guides.

It’s important to note that while these games can be valuable tools for teaching financial literacy, it’s also essential to provide real-life examples and discussions to reinforce the concepts learned in the games. By combining online financial games with storytelling and practical applications, parents and educators can create a well-rounded learning experience for kids and create strong and invaluable connections with them.

Conclusion

Investing can be an exciting and educational journey for both kids and grandparents. By incorporating your life’s financial story into the process, you create a fun and engaging way to connect on a deeper level. Lay the foundation, make it tangible, choose familiar companies, be their research buddy, empower decision-making, track progress, and share inspiring stories. Together, you can embark on a grand adventure, unlocking the treasures of the stock market and building a lasting bond that will benefit them for a lifetime.