Posted by Fab Style on Apr 2, 2012 in Everything Kids
Piggy Bank
Stocks And Investing For Kids
We buy all types of things for our children: toys, clothes, shoes, but have you ever thought of buying stocks for your child, nephew, or niece. Well this could be a gift that could last a lifetime. In this time of uncertainty and recession, it is important to think about the financial future of children. This can help lay the foundation for a good financial future for a child. It has been said that it is best to start as early as you can and the best remedy for making money is time; the best friend of money is "compounding".
If you purchase a stock when a child is younger, by the time the child reaches adulthood, you can have built a nice nest egg for the child to start out with. If you have never looked into stock for your child, a way to get started is by learning all you can about stock. Find books and video recordings that will teach you and your child about investing and learn together. Repetition is key to teaching a child about stocks. Here are a few tips to help you choose companies that offer stock to start your child's pathway to their financial future. Purchasing a stock can teach a child how to build capital as well.
1. A good place to start is to choose companies that are well-known and have staying power. Think of brands that you use everyday, such as Disney, Coco-Cola, Pepsi, Golden-Flakes and many others. You want a company that pays a good dividend. A dividend is a payment paid by a company, which is usually paid regulary each quater, to its shareholders, who purchased stock in the company.
2. Purchase as soon as you can. The best friend of an investment is time. The sooner you purchase a stock for your child, the more time it has to mature and make interest from its initial investment. It's best to reinvest the money over and over again and not to touch it.
3. Make investing fun and get the child involved. Find literature that will help them understand but doesn't oversimply stock for the child. As always, stocks come with risk, but there are ways to introduce the child to stocks in a way they can understand the good and the bad.
One way to get started is by checking out OneShare. You can buy one share of a stock and have it framed. (There are downsides to this. It can get more expensive than the purchase of the stock once you add the price of framing and you may have to pay a high transfer fee.)
You can start a brokerage account in the child's name. You can pay low commissions and low have no minimum balance. Your child can add money to the account as well and you could teach the child how to access the account.
These are just a few tips and ways to get you thinking about the value of stocks as long-term gift ideas and creating a finacial future that could have a positive affect on your child's life. Buying stocks for your kids is not something that you have to do, but it is something to think about doing!
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