How to Convince Your Teenager to Invest

Money management is an important skill for a teenager to master while still living as a dependent in her parent̵7;s home. Along with budgeting and saving, investing is also something to talk about with your teenager. Investing can be especially advantageous when a teenager has specific goals for the future, such as college or major purchases such as a house or car. With your guidance and support, you can instill strong financial skills in your teenager.

Instructions

    • 1

      Talk to your teen about his long-term goals to explore the specific ideas and desires he has for the future, advises the Stanford Federal Credit Union. Because many long-term goals entail finances to achieve them, help your teenager understand that his desire for an advanced college degree or a new car will require financial planning.

    • 2

      Introduce the concept of investing to your teenager. Most kids understand how to save money, so tie investing in with saving as you explain it. You might say, ̶0;You̵7;ve been making deposits in your savings account since you were really young, and the bank pays you a very small percentage in interest for keeping your money there. If you invested part of your money instead of just saving it, you might earn more money back by placing your money in specific accounts or with specific companies and allowing them to use it.̶1;

    • 3

      Focus on conservative investing to ensure that your teen understands that risks are involved with investing. Stocks, bonds and cash are the main asset categories, according to the U.S. Securities and Exchange Commission. Stocks usually carry the highest investment risk with bonds offering less risk and lower returns. For the purpose of learning about investing, it might be prudent for your teenager to allocate a small amount of money to begin.

    • 4

      Encourage your teenager to read the business section of the newspaper every day to learn about investing and to track stocks, advises the Stanford Federal Credit Union. Your teenager will become better acquainted with the stock market by watching its daily fluctuations.

    • 5

      Offer to help your teenager with opening a custodial investment account. Because your teen is a minor, he needs an adult̵7;s involvement in opening and overseeing the account, according to the Charles Schwab website. Once opened, your child can use the advice of investing professionals to begin making introductory investment purchases.

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