How to get your children or grandchildren excited about investing

The old saying, “the early bird catches the worm” could be useful advice when it comes to investing.

Typically, holding an investment over a longer period means that it has more time to grow. That’s why investing as early as possible could mean that you’re more likely to achieve your long-term financial goals.

However, most teenagers or people in their early twenties aren’t thinking about investing in the stock market. Indeed, FTAdviser reports that the average woman will start investing at the age of 32, with men waiting until 35.

To encourage a positive attitude towards saving, you might want to teach your children or grandchildren about investing and encourage them to start growing their wealth from a young age. This could mean that they’re better equipped to meet their financial goals later in life.

Read on to learn four ways to get children or grandchildren excited about investing.

1. Encourage them to save

Before you try to teach your children or grandchildren about the intricacies of the stock market, it’s important to explain the general concept of setting aside money for the future. Encouraging basic saving behaviours could be a good place to start.

You might do this by giving them a small amount of pocket money when they’re young. If there are certain toys they want to buy, you could help your child work out a plan to save up for them. This demonstrates the value of saving a portion of their money each month to achieve a goal in the future.

As they get older, you could also open a savings account for them and contribute to it on their behalf. Seeing their pot grow over time may encourage them to continue saving as they reach adulthood. It could also give them a fund to help towards early milestones such as going to university or buying a car.

2. Open a Junior Stocks and Shares ISA

Having their own stocks and shares, even if you have to manage them on their behalf, may encourage your children to engage with the process because they feel some ownership over the investments.

A parent or legal guardian can open a Junior Stocks and Shares ISA for a child of any age and contribute up to £9,000 a year, separate from the adult ISA allowance of £20,000 in the 2024/25 tax year.

You will manage the investments on their behalf until they’re 16, when they can take over themselves. They can then access the funds from age 18.

It may be worth working with a financial planner to find suitable investments to make on behalf of your child. You could then set aside a separate amount of money and ask your child to help you choose some investments of their own. They might pick certain brands and companies they engage with, and this gives them a sense of agency over their investments.

You can show them the progress of their investments periodically to demonstrate how the value may rise and fall over time.

3. Play games and virtual stock markets

Investing without any prior knowledge or experience can be risky. That’s why it may be useful to encourage your children to learn about investment strategies through simple games. Board games such as Monopoly, for example, can teach children about purchasing assets and growing their wealth.

As they get older, they could play virtual stock exchange games that mirror the real markets.

For example, MarketWatch allows you to play with virtual money, making trades in the same way that you would in real life. This is a brilliant risk-free way for children to learn how investing works, explore different strategies, and understand concepts such as diversification.

Using a virtual stock market could help your children learn from common mistakes such as home bias or panic-selling. It may also demonstrate how difficult investing can be and why they may benefit from seeking professional guidance when they’re investing their wealth as an adult.

4. Talk to them about your own investments

It can be difficult to engage children with investing as they don’t see instant results. You can purchase shares on their behalf and track their performance together, but it could take years before they see any significant gains.

That’s why it may be beneficial to discuss your investments with them. If you have stocks and shares that you’ve held for five to 10 years, your investments may have increased in value by quite a lot. By showing your child how your wealth has grown in the long term, you can demonstrate the power of a patient approach to investing.

Equally, you can explain how you plan to use your investments to fund your lifestyle when you’re older, so they can see how they fit into your wider financial plan. This added context might make it easier for children to understand the benefits of investing over time.

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Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Approved by the Openwork Partnership on 06/06/2024