Three Ways To Teach Your Kids To Invest Smart

Three ways to teach your kids to invest “smart” is something I take to heart because even though she’s 22 years old, I still assist my daughter in navigating the financial landscape.

When I was a boy, my paternal grandfather – a depression-era blue-collar sort  – repeatedly advised me to invest smart, not stupid. Fidelity Investments’ recent move to allow 13-17-year-olds to open accounts and trade stocks and ETFs helped me realize how they may be the ‘grandpa’ of today where kids are left confused and on their own to handle a critical moment.

I give credit to grandpa for the inspiration, but candidly, he never really explained himself. How do I see it? There were snippets of driveby words, and occasionally, wisdom spilled out with them. Strange how much I looked forward to these moments because at least he was paying attention to me! And the greater the flow of homemade wine, so the volume of the education. After downing grandpa’s brew, I get the volume thing.

Invest smart, not stupid, was heavy in the lesson rotation.

It entertains me to recall grandma nodding positively in the background, although I don’t think she knew what gramps was talking about. Perhaps investing smart sounded good to her because she was what I consider a good investor. Grandpa, not so much. He maintained most of the family’s investment dollars in certificates of deposit.  His stock investing was relegated to penny stocks, all losers usually touted by friends and family as the ‘next big thing.’

Invest smart, not stupid, can be whatever you want it to be!

Over the years, I took his cryptic words to heart and formed my own definitions. Invest smart, not stupid became sort of a voice in my head, especially during times of distress and euphoria. When emotions are strong and fueled with money, the words take on a personal, greater resonance. 

Overall, it could be a positive for teens to maintain their own brokerage accounts. However, if left with little guidance about investing smart, not stupid, it’s almost like placing them on Main Street in a western town unarmed against the guys in black hats.

A wrong move, one negative experience, can make or break how your kids decide to invest over their lifetimes. That’s why I created the following three ways to teach your kids to invest smart, not stupid, through what I consider stupidly dangerous times.

 

#1: Are you the proper and responsible pilot?

Kids watch your relationship with money. You don’t think they observe what you do or hear what you say, good or bad, but they do. The foundation of their money scripts is laid by the people closest to them. My parents were horrific with money; we were fraught with financial insecurity. I learned what not to do by observing their debt and spending habits. I wouldn’t have sought them as pilots to assist ‘teen me’ with financial decisions.

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Disclosure: Real Investment Advice is powered by RIA Advisors, an investment advisory firm located in Houston, Texas with more than $800 million under management. As a team of certified and ...

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