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Investing in Your Child’s Dreams: Creating a Plan for Their Future Success

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If you want to teach your children to invest, but you don’t know where to start or what are the right ways, don’t worry, we will clarify all your doubts in this article. It is very important to teach children all kinds of finances, of course, but this is done gradually, and first, you can start with the basics of money, ways of saving, and types of investments by providing a kid debit card.

You have to have a plan

It doesn’t matter what age the children are, some various alternatives and methods are adaptable to the specific age of the child, from younger to teenage years. What is of utmost importance is to have a good plan. In the beginning, you, as a parent, roughly plan your children’s future, save for college, a car, or real estate, and later the children themselves refine and participate in that plan.

The first step is to get them a credit card

Children of almost any age can have a credit card for children that contains all kinds of financial literacy in one place. Thanks to this option on their smartphones, children can earn, buy, save, donate, spend, and of course invest money in various stocks, companies, and brands as they wish. In addition to this, responsibility tables were designed that are adaptable to all children and personalized according to obligations and forms of tasks and duties that must be completed within the given deadline. 

Parents have supervision over the activities that children perform using the card. This is perhaps one of the fastest, most efficient, and easiest ways of learning and introducing finances. Numerous studies have shown that children who have this type of tool from an early age will later grow up to become financially stable adults.

Custodial Roth IRA

If your child has some income from a part-time job, then the child can qualify and apply for a Roth IRA. Since this account is a custodial account, the parent or guardian opens the account in the name of the child, and the child will not be able to access the money in the account until he turns 18 or 21. 

The only way a child can spend funds is for, for example, large expenses if they arise from buying a car, a down payment for real estate, or something else. But keep in mind that this type of account must have been active for 5 years to be able to have these benefits.

529 plan

This is one of the most popular types of investment for the future of your children’s education and all the expenses that fall under education. You must be aware that you have two types of this plan, the first is where you pay tuition plans in advance as long as the prices don’t go up. 

Another type of plan is an education savings plan where you build balance and invest your money in the market, specific stocks, and companies. Here, the money can only be used for education costs, such as paying school fees, tutoring, accommodation, books, and all additional tools that fall under education.

Trust fund

Some accounts are designed as a type of foundation for minors and are under the control of parents or guardians. The parents open the account instead of the child, and deposit funds into it. Children cannot withdraw or handle funds until the age of 18, 21, or 25, depending on which country they are in. 

Also, parents can make certain types of donations, that is, invest that money in stocks, the market, or some kind of bond to increase the account balance over time. Children can withdraw money from these funds with parental approval and use it for education or some medical expenses. Only when the child is of legal age can then can take full control over the account and the funds on it.

The diversity of the investment portfolio

When you gradually introduce children to the world of investing and how it works, first start with some type of industry they are familiar with. Many children choose to invest their money in stocks like Apple or Netflix because they are close and familiar to them. And thanks to the mobile app, they can monitor and check the status of stocks at any time, whether they are rising, falling, or stagnant. 

Over time, children should switch to various types of industries and branches of the economy, in this way enriching their portfolio. This is not only about the diversity of the portfolio, but that the children have various types of income from various industries, and in this way, they will not particularly feel if a certain industry runs into certain problems. 

They have to think in several ways and several steps ahead, it is important that you as parents support and advise them on everything.

Jordan Wayne, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.

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