Introducing Your Kids To Investing

Ever so often I discuss ideas and tips that help clients educate their children on saving and investing. In this month’s Martens Report I thought I might share a strategy that has come up in several meetings lately. First I’d like to start with a question…How many of you remember your first job? I was a gas station attendant when I was 15 years old. I didn’t exactly make a lot of money, but I felt like a high roller. The funny thing about being a teenager is your expenses are ridiculously low, because (let’s be honest) Mom and Dad pick up the cost of almost everything in life. For me, basically everything I earned was “play money.” Enter Dad... the Financial Planner… I vividly remember Dad sitting me down at the kitchen table and introducing me to investing. If I was going to earn money, I needed to make sure I was smart with it. We went over the ups and downs of the stock market, how mutual funds were managed, the benefit of putting aside a little bit of money each month, and set an understanding of what type of return I might expect over time. It seemed fairly straight forward, so we set up a monthly deposit to a mutual fund. The reality was, I didn’t even notice the money was missing, once it got started. There were two benefits that came out of this meeting with my Dad, which I didn’t really comprehend at the time. 1. I had begun working with a professional to help guide me on how to save and invest. 2. I was looking forward to a huge benefit later in life, when all the small monthly deposits added up, and I was able to use these savings towards my first home. Getting back to the strategy I wanted to share. For minor children who want to start an investment plan, you are able to open an account in the parent’s (or grandparent’s) name, “In Trust” for the child. Once the child turns 18 you can turn the account over to them, but this is a way to get them started. Here is a guide from Invesco explaining, in more detail, how In Trust Accounts work (click here). I would also like to provide your children with the same opportunity that I had, and be the professional they can sit down with to start up their first investment plan. Sometimes I feel that there is a myth surrounding advisors, where we only deal with large wealthy investors. In our office we work with families, even if some members are young and just starting out. I will leave you with one last resource written by Tye Bousada of Edge Point Wealth. It is an open letter to his children titled ‘Read This Before Your 18th Birthday’ and is an excellent introduction piece for any age, but especially for the teenager in your life. Let’s help the next generation make responsible choices with their money, right from the beginning, and please feel comfortable involving us in the process. Thank you, Andrew & Peter


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