A Christmas Present With A Future
One Christmas Eve when I was eleven, my grandparen'ts gave me, among other things, a very different kind of present. I received an envelope with a savings bond in it. I was told that I was to keep it for one year and then it would be worth $25.00.
I remember that gift very well – because of how disappointed I was! A year was a desperately long
time – I could not imagine what I or the world would be like after all that time. Acting on my mother's advice, I put the bond in a safe place and promptly forgot about it. Imagine my pleasure when the following year I had $25.00 to buy whatever I wanted!
Since then I've often wondered: what is the best way to teach a child about investment?
I turned to Investopedia to see what advice it might give me. Investopedia is an online financial dictionary which also includes articles, tutorials and video. Once owned by Forbes Inc, the site has been owned by ValueClick since April of 2010. (Just to be clear, it's for investors of all types; it's not a children's site, although it does have some information for paren'ts and young investors.)
There I found an article by James E. McWhinney entitled Teaching Your Child to be Financially Savvy. In it the author suggests that the early teen years are a good time to start teaching your children about researching and owning stocks. As the child grows older, subjects such as asset allocation, diversification and fixed-income investments can be broached.
Another article from the same website is called Teach Your Child About Investing by Andrew Beatty. He too suggests starting a child out with stocks and introducing them to bonds later.
Yahoo Finance's How-To Guide: Teach Your Children the Value of Money touches briefly on the topic of investing as well.
Have a look at this book, held at the Toronto Public Library, that also addresses this important topic:
One caveat: if you decide to give your child stocks or bonds for Christmas, remember to give them something more immediately gratifying as well. I would have been mightily disappointed if a piece of paper with a promise was all I got that Christmas. It may have turned me off investing, and delayed gratification in general, altogether. Be careful!
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