[How can I teach my young kids about investing?]

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BornInCA
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[How can I teach my young kids about investing?]

Post by BornInCA » Fri May 29, 2020 7:53 pm

[Moved into a new thread from: Better to teach kids about investing with ETFs or individual stocks? --admin LadyGeek]

Bumping this thread up since there are new developments since the prior post:

I would like to teach my little ones about investing by using both individual stocks and ETFs. Here are some brokerage firms I found of interest:

Fidelity: https://www.fidelity.com/trading/fractional-shares
Robinhood: https://robinhood.com/us/en/support/art ... al-shares/
Schwab: https://www.schwab.com/stock-slices

https://www.barrons.com/amp/articles/sc ... 1588696540

https://thecollegeinvestor.com/20432/bu ... es-invest/
https://thefinancebuff.com/etf-orders-d ... hares.html

Sadly, I cannot do this at Vanguard at the time of this post. I am inclined to use Fidelity since I understand that Schwab allows fractional shares for only S&P 500 stocks and not ETFs. I’d love to hear everyone’s thoughts on this.

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Re: Schwab and Fractional Shares for ETFs

Post by jason2459 » Fri May 29, 2020 10:59 pm

BornInCA wrote:
Fri May 29, 2020 10:42 pm
From another thread:

I would like to teach my little ones about investing by using both individual stocks and ETFs. Here are some brokerage firms I found of interest:

Fidelity: ‪https://www.fidelity.com/trading/fractional-shares‬
Robinhood: https://robinhood.com/us/en/support/art ... al-shares/
Schwab: ‪https://www.schwab.com/stock-slices‬

https://www.barrons.com/amp/articles/sc ... 1588696540
https://thecollegeinvestor.com/20432/bu ... es-invest/
https://thefinancebuff.com/etf-orders-d ... hares.html


Sadly, I cannot do this at Vanguard at the time of this post. I am inclined to use Fidelity since I understand that Schwab allows fractional shares for only S&P 500 stocks and not ETFs. I’d love to hear everyone’s thoughts on this.
I can do fractional shares aka dollar based investing at Fidelity with any ETF no transaction cost and can do the same kind of orders as a normal stock based buy like a limit

Limitations are that it has to be done in app which I found I like better then their website for ordering and getting quotes. And the order has to be placed during market hours. No automatic investing right now either. I'd prefer Fidelity over Robinhood 1000%. I do not trust them.

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BornInCA
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Re: Schwab to allow fractional stock trading (WSJ)

Post by BornInCA » Fri May 29, 2020 11:01 pm

[Post merged into here, see below. --admin LadyGeek]

I want to get my young kids started in investing and I believe the “dollar based investing of fractional shares” feature for stocks and ETFs is of tremendous help to my family and families who are considering this as well. I wish Vanguard offered this. I even wrote to Vanguard but the response is “my feedback will be passed on to management”. I want my kids to invest in ETFs, individual stocks, and mutual funds with tiny amounts. Thus, I am inclined to use Fidelity for this purpose. As I mentioned in other threads, I would love to hear everyone’s thoughts on this as well as other brokerage ideas.

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Re: Schwab and Fractional Shares for ETFs

Post by jason2459 » Fri May 29, 2020 11:07 pm

Just noticed you bumped like every fraction share topic... May not want to do that in the future. Just one would do or creating your own new thread. But hope you got the answers you're looking for. :)

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Re: Schwab and Fractional Shares for ETFs

Post by BornInCA » Fri May 29, 2020 11:10 pm

jason2459 wrote:
Fri May 29, 2020 11:07 pm
Just noticed you bumped like every fraction share topic... May not want to do that in the future. Just one would do or creating your own new thread. But hope you got the answers you're looking for. :)
Thanks for the feedback. This site is so popular that thread responses keep pouring in.

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Re: [How can I teach my young kids about investing?]

Post by LadyGeek » Sat May 30, 2020 8:46 am

BornInCA - In order to give appropriate advice, it's best to keep all the information in one spot. I merged all of your posts and replies into a single thread.

Additionally, each thread needs to focus on a single situation. Bumping a thread with a different topic detracts from helping the OP in that thread.

(Thanks to the member who reported the post. One of the reasons is "Duplicate thread".)
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Re: [How can I teach my young kids about investing?]

Post by tibbitts » Sat May 30, 2020 8:54 am

This thread is so confusing with all the red ink that I'm just going based on the topic. I don't think teaching young kids about investing is important, depending on your definition of young. To me young would be maybe pre-high-school. I think it's good to show them what you're doing and talk about it, but no more so than all the other things you do: maintenance on your house or your car, recreational activities, involvement in politics, etc. I would certainly teach them how you complete your tax returns before you teach them how to invest. They'll either show an interest in something or not, and if they do then certainly help them run with that. There are so many more things to teach them that will help them survive, and hopefully some day get to the point where they will have funds to invest.

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Re: [How can I teach my young kids about investing?]

Post by LadyGeek » Sat May 30, 2020 9:01 am

^^^ The thread should be easier to read now. I removed 8 duplicate posts.
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Re: [How can I teach my young kids about investing?]

Post by livesoft » Sat May 30, 2020 9:05 am

I suggest talking about investing at the dinner table with your spouse. Eventually your kids will ask questions or perhaps say something out of the blue, like "Let's get some Total Stock toy index fund."
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Re: [How can I teach my young kids about investing?]

Post by Ed 2 » Sat May 30, 2020 9:12 am

BornInCA wrote:
Fri May 29, 2020 7:53 pm
[Moved into a new thread from: Better to teach kids about investing with ETFs or individual stocks? --admin LadyGeek]

Bumping this thread up since there are new developments since the prior post:

I would like to teach my little ones about investing by using both individual stocks and ETFs. Here are some brokerage firms I found of interest:

Fidelity: https://www.fidelity.com/trading/fractional-shares
Robinhood: https://robinhood.com/us/en/support/art ... al-shares/
Schwab: https://www.schwab.com/stock-slices

https://www.barrons.com/amp/articles/sc ... 1588696540

https://thecollegeinvestor.com/20432/bu ... es-invest/
https://thefinancebuff.com/etf-orders-d ... hares.html

Sadly, I cannot do this at Vanguard at the time of this post. I am inclined to use Fidelity since I understand that Schwab allows fractional shares for only S&P 500 stocks and not ETFs. I’d love to hear everyone’s thoughts on this.
You can’t teach kids by just opening brokerage accounts. I started years ago by making my daughter to understand how to make money first by finding after school job at Subway and summer camps. After she realized how hard to earn money she was the first one who asked me how to invest . Then she opened Shwab brokerage. She is in second year in college , working and investing by her own .
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel

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BornInCA
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Re: [How can I teach my young kids about investing?]

Post by BornInCA » Sat May 30, 2020 11:32 am

LadyGeek wrote:
Sat May 30, 2020 8:46 am
BornInCA - In order to give appropriate advice, it's best to keep all the information in one spot. I merged all of your posts and replies into a single thread.

Additionally, each thread needs to focus on a single situation. Bumping a thread with a different topic detracts from helping the OP in that thread.

(Thanks to the member who reported the post. One of the reasons is "Duplicate thread".)
I don’t post on here often so I was unaware that I was doing anything inappropriate or in violation of forum policies/rules. Furthermore, I apologize for any inconvenience my multiple posts may have caused. This was not my intention.

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Re: [How can I teach my young kids about investing?]

Post by F150HD » Sun May 31, 2020 10:47 am

I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)

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Re: [How can I teach my young kids about investing?]

Post by MathWizard » Sun May 31, 2020 12:48 pm

F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)

Yes I agree completely, as you might expect from my username.

One is to expose them to at least logic, that will fare them well no matter what, and math to do the what if calculations.

I also exploited teaching opportunities. When my youngest was in line with me at the bank while I was waiting to get to a teller, we passed by a board with CD rates on it.

I showed him that there were better rates for longer duration CDs and better rates for larger denominations.

I explained that the longer duration meant that they needed to pay more since that locked up the money longer so you couldn't use it for something else (opportunity cost, but I didn't use that term).

For the larger denominations,I explained that it wasn't that they were being nicer to people with lots of money, as might be a knee-jerk reaction,but that it costs the bank as much time and money to deal with a $500 CD as it does a $50,000 CD, so they can pay at least some of that savings as extra interest.

I grew up poor, and heard a lot of talk about how everything favored the rich. While having money does convey advantages , I wanted my sons to learn where such advantages might come from, so that they may navigate the world more knowledgeably.

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Re: [How can I teach my young kids about investing?]

Post by RomeoMustDie » Sun May 31, 2020 1:51 pm

There are some apps on the marketplace that track chores for financial education if you're into that.

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Re: [How can I teach my young kids about investing?]

Post by BornInCA » Mon Jun 01, 2020 9:44 pm

Thanks for the replies so far. Definitely food for thought. I understand there was a time when you had to pay a load to buy mutual funds, this before the founding of Vanguard. There was a time when investors were forced to deal with multiple papers when investing in mutual funds from different fund families. Charles Schwab created the brokerage mutual fund supermarket. When ETFs came into existence, everyone had to pay a commission fee to buy or sell ETF shares, even Vanguard investors had to pay commissions to buy and sell Vanguard ETFs in Vanguard brokerage account. Then Schwab created commission fee ETFs. When TD Ameritrade, Fidelity, Vanguard, and others followed suit, only certain ETFs were commission free. Then Vanguard in 2018 made all ETFs (except leverage and inverse ETFs) commission free. Schwab, TD Ameritrade, and Fidelity followed suit in 2019. For the longest time, the minimum purchase of an ETF or individual stock was the price of one share. That changed in 2019 when Fidelity began offering people the opportunity to buy fractional shares of individual stocks and ETFs for as little as $0.01 and as little as 0.001 share with no commissions. Schwab has gotten in the game by offering fractional shares of individual stocks from the S&P 500 for as little as $5. Small name brokerages such as M1, Motif, Robinhood, and Zecco may have offered commission free trades & fractional shares for purchase long before the “big boys” began doing these. What Schwab and Fidelity have done lately excites me as a parent because I no longer need to invest $50+ at a time to get my kids excited about investing. I am so glad I can invest $5 or less for my kids’ accounts which I would use as teaching tools for both math and money. Again, I wish Vanguard will implement this feature sooner rather than later.

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Re: [How can I teach my young kids about investing?]

Post by Wannaretireearly » Tue Jun 02, 2020 2:45 am

F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I'm gonna try to teach the kids compound interest and the rule of 72 this week (3rd and 6th graders). Wish me luck
Buy Low, Sell High

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Re: [How can I teach my young kids about investing?]

Post by Schlabba » Tue Jun 02, 2020 3:39 am

F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I wouldn’t so much focus on the way to do it, but more on the results you can achieve; passive income, retirement, financial independence, and so on

They will want to learn how after explaining them why.
Secretly a dividend investor. Feel free to ask why.

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Re: [How can I teach my young kids about investing?]

Post by F150HD » Tue Jun 02, 2020 10:00 am

Wannaretireearly wrote:
Tue Jun 02, 2020 2:45 am
F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I'm gonna try to teach the kids compound interest and the rule of 72 this week (3rd and 6th graders). Wish me luck
In order for compound interest to be meaningful, I'd surmise they'd need to understand linear (arithmetic) growth first (?).
A 3rd grader doing and understanding geometric growth sounds like a big bite (to me).

8-)

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Re: [How can I teach my young kids about investing?]

Post by BornInCA » Tue Jun 02, 2020 11:29 am

Wannaretireearly wrote:
Tue Jun 02, 2020 2:45 am
F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I'm gonna try to teach the kids compound interest and the rule of 72 this week (3rd and 6th graders). Wish me luck
I wish you good luck. :mrgreen:

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BornInCA
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Re: [How can I teach my young kids about investing?]

Post by BornInCA » Tue Jun 02, 2020 11:31 am

F150HD wrote:
Tue Jun 02, 2020 10:00 am
Wannaretireearly wrote:
Tue Jun 02, 2020 2:45 am
F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I'm gonna try to teach the kids compound interest and the rule of 72 this week (3rd and 6th graders). Wish me luck
In order for compound interest to be meaningful, I'd surmise they'd need to understand linear (arithmetic) growth first (?).
A 3rd grader doing and understanding geometric growth sounds like a big bite (to me).

8-)
How about the analogy of planting a tree or a plant? The word “compound interest” doesn’t have to be mentioned until they are at higher grade levels.

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Re: [How can I teach my young kids about investing?]

Post by BornInCA » Tue Jun 02, 2020 11:35 am

F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I’d like to get Allan Roth’s take on this. He wrote a book called How A Second Grader Beat Wall Street. @Allan Roth

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Re: [How can I teach my young kids about investing?]

Post by Siaigi » Tue Jun 02, 2020 11:59 am

It depends on the age of the kids.

I believe it would be important to entrust first responsibility for managing the money to them.

Something like: "Mom and Dad can give you xxx money every month, to pay your expenses of ......"

and then give them time to grow, make mistakes and understand.

It is understood that if they have spent everything they will jump other expenses as would happen to us.

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Re: [How can I teach my young kids about investing?]

Post by Allan Roth » Tue Jun 02, 2020 12:57 pm

BornInCA wrote:
Tue Jun 02, 2020 11:35 am
F150HD wrote:
Sun May 31, 2020 10:47 am
I don't think teaching young kids about investing is important, depending on your definition of young.
if a young person doesn't understand compound interest or expo growth, some of it may be meaningless.
Time may be better spend focusing on math, and then down the road, 'investing' (define 'investing' as you wish)
I’d like to get Allan Roth’s take on this. He wrote a book called How A Second Grader Beat Wall Street. @Allan Roth
Having written a book titled "how a second grader beat wall street," I think teaching children about owning capitalism with broad diversification is important. Of course teaching one to save is also important and often much harder. The issue I have with fractional shares of individual companies is that, unlike MFs or ETFs, it's harder if not impossible to change custodians without paying taxes.

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Re: [How can I teach my young kids about investing?]

Post by LadyGeek » Tue Jun 02, 2020 2:32 pm

^^^For new investors, the wiki has some background info: Allan Roth
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