When did you start teaching your kids about investing ?

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confusedinvestor
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When did you start teaching your kids about investing ?

Post by confusedinvestor » Wed Jun 13, 2018 10:09 pm

Folks, Need some help, wisdom...

1. When did you start teaching your kids about both savings and investing (not just saving) ?

2. What type of account do you folks recommend to open for kids to introduce them about markets, investing, compounding, watching long term ?

Note: My kids are 7.5 yrs old, no earned income, so Roth IRA is not option, they already have 529s, I've looked into UGMA/UTMA (kid tax implications, custodial restrictions, etc), so, should I just open a typical taxable brokerage account ? I plan to put in $5 / month in Schwab Total Stock index (swstx) at Schwab to teach them savings, investing, DCA, etc... my daughter just got $9 from tooth-ferry and she says she want to invest :-) ...

Miriam2
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Re: When did you start teaching your kids about investing ?

Post by Miriam2 » Wed Jun 13, 2018 11:21 pm

confusedinvestor wrote: 1. When did you start teaching your kids about both savings and investing (not just saving) ?
2. What type of account do you folks recommend to open for kids to introduce them about markets, investing, compounding, watching long term ?
I would suggest savings comes first, then with savings, comes investing.

My kids started out with basic savings passbooks from the local bank. They took their birthday checks and cash into the bank, learned to endorse the check, filled out the deposit slip, then stood in line with the grown ups and deposited their money. They saw their savings account grow (we know pennies are not much, but it's growth :happy )

The kids grew older and we opened Vanguard taxable accounts in our name, but each child knew which account was their account. They invested larger birthday checks into the Vanguard Star Fund. They saw it grow bigger. Then the kids grew older and began working. First earned income year and they opened their own Roth IRA at Vanguard (also filed their first IRS 1040 :wink: ).

All our children are out of college and still own their first Roth IRAs, now invested in Vanguard Target Date Funds, and still own their first taxable accounts, now in their own names.

However . . . can't say it was always easy :mrgreen: One child habitually raided - and still raids - her bank accounts for, ah-hem, shopping and fun :oops: Another stashed away birthday money so he could buy a GameBoy (yeah, back then). Another time . . . well you get the picture.

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FiveK
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Re: When did you start teaching your kids about investing ?

Post by FiveK » Thu Jun 14, 2018 12:02 am

1. We hope "from an early age, by us not being profligate spenders." But that's difficult to measure.

Yes, they had saving's accounts, and some stock and saving's bonds gifted by relatives, but it's hard to say those made much of an impression.

Realistically, the first lesson that probably took hold was when we signed them up for a credit card in their name, with us as co-signers, after they turned 18. Coincident with the card application, we had them establish an automatic monthly "pay the balance in full" from their checking account. The expectation was clear that they would not spend more than they had in checking. And, none of them ever did (at least while we were on the account). What they have done since having a their own card, we don't know for sure - but have reason to believe they've continued the practice.

2. Not much in the way of investing until they were nearing or had graduated from college. Any investments in their name prior to college were cashed out to pay for it. We helped with payments, but also expected them to take the maximum loans offered for undergraduates so they would "have skin in the game."

When they started earning money, we offered to match Roth IRA contributions 1 for 1 for a year or two, and suggested they use a far off target date fund "and check it in ~10 years to see if a change might be appropriate." They were smart enough to take us up on that, and then continue to contribute to 401ks and IRAs as able.

So far so good....

MrPotatoHead
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Re: When did you start teaching your kids about investing ?

Post by MrPotatoHead » Thu Jun 14, 2018 12:02 am

Starting at age 4. It was part of their homeschooling. They all learned how to calculate compound interest for CDs. The also got an allowance that came as a pretend pay check, complete with federal, state, and SS deductions. And they were instructed to save a bit for their retirement, which they did. The also learned to do taxes at a very young age (you have not lived until you see 6-10 years old reading the instructions for the 1040, especially the alternative minimum tax). They were well versed in what stock, bonds, cds, Treasury Bills, Treasury notes, savings bonds, 529s, mutual funds, etc. They liked to quiz each other and were always making up quizzes and compound interest problems for one another.

In my view, once they can do math they are ready.

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FIREchief
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Re: When did you start teaching your kids about investing ?

Post by FIREchief » Thu Jun 14, 2018 12:36 am

Never give them free money. Always offer them opportunities to work for money. If somebody else will pay more for the same effort, great!!!

Once they have earned income, offer a 100%+ match to put money in a Roth. As partner, you dictate the investment choice (for a sixteen year old, 100% stocks is a great learning opportunity).
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

livesoft
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Re: When did you start teaching your kids about investing ?

Post by livesoft » Thu Jun 14, 2018 12:55 am

Us parents talked about our investing at the dinner table with no particular intent to teach the kids. Then I heard one day "Vanguard Spartan Index" from one of my kids.

But the real teaching started when one child came home from school and mentioned they were doing an investing lesson in algebra and needed some hot stock tips. That prompted a discussion of why one would not invest in individual stocks and all that jazz.
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MathWizard
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Re: When did you start teaching your kids about investing ?

Post by MathWizard » Thu Jun 14, 2018 1:10 pm

Probably about age 10. They started mowing lawns, and I showed them how CDs had a minimum
amount, and bigger amount and longer length of term gave better return.

I opened the bank of mom and dad, and allowed them buy into a 3 year CD, and I let them
know by how much their balance increased every month. I allowed them to withdraw money at any time,
or put it back in. Unfortunately, yields were pretty low, and only a little over 2%, but better than the
0.10% they got in savings.

I let them know that we were getting good return in our retirement funds, and advised (when asked)
when they set up 401k's and HSAs.

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