Chances are that you want your kid to financially successful. You probably want to teach your kids how to invest, so that they can grow wealth.
But, you don’t want to teach them like they’d learn in school, so how can you teach them without them realizing it?
1. Compound games
Compounding your money is the number one thing to aim for in Rule One Investing. Essentially, compounding your money is where your money grows each day, month and year.
Your kids will probably find you standing up in front of them and drawing diagrams on a white board quite boring. Instead, you can use a simple game that I quite like.
For this game you will need:
- A pen
- Different color post-it notes (IMPORTANT)
- Calculator (the one on your phone will do)
- Paper (to keep scores on
Once you have got them, you can begin.
Each different color post-it note is a different stock in this case. However, you can call them something different to further the aim of your kid not knowing that you are teaching them to invest.
Then, explain to your kid that they have a certain amount of money to ‘spend’, $1000 is usually a good place to start.
Tell them that each different color is a different stock/whatever you have chosen to call them. Explain to them that they cost different amounts for one, and have different payouts and appreciate differently each year. Write these on the post-it notes themselves.
Tell them that they don’t need to spend it all on one color, nor all of it at one time.
Allow them to buy some shares before the game begins.
Then begin the game. Give your child a dice, allow them to dictate the market- ie. 1 equals a market in a peak, 3/4 equals a calm market and 6 equals a recession.
Each time they roll the dice, they will have the chance to invest, with the prices rising or lowering according to the number on the dice. A maximum increase of 50% of the start price a no more than a 50% decrease of the start price.
Each time they roll the dice, the stocks they have owned will appreciate (as it is a new year). This is by the amount on the post-it note.
Use the piece of paper to mark down the amount of money each person has in their portfolio. They will also have the ability to sell stocks before they roll the dice, in order to buy more stocks if necessary.
Once someone reaches a portfolio value of a predetermined number, say $1 million, they have won. Without realizing it, you have just taught your kids how to invest, and especially the importance of compound interest.
This game is better when it is played by more people. If willing, get your spouse or other half to play alongside your kids. Not only will you teach your kids how to invest, but maybe your spouse too!
2. The power of stories
As a kid, you probably loved it when your parents told you stories. I did too! This is probably better to teach your kids how to invest, when they are still quite young.
You probably don’t want to tell them biographies of famous investors like Warren Buffett, Ray Dalio and Jack Bogle. That will simply put them off investing.
Instead, tell them about legendary investor “Sir Sharesalot” or “Lady Stockson”.
You can use these characters to create a narrative with a certain theme, whether it’s the significance of investing, compound interest, or not to invest in trends, such as Bitcoin.
Not only will these stories slowly teach your kids how to invest, but also get them excited about investing, and ready to do it for themselves when they reach adulthood.
Once they get a bit older, you can also teach them the importance of reading. They don’t necessarily have to be investing related, although many good investing books do exist! They can be on literally anything!
If possible, find what your child is passionate about (besides investing). Whether that is aviation, media, gaming or something else! Encourage them to become an expert in their field, by following the latest news, old news and literally everything about that subject!
This will also help when it comes to reading, as these books could be on whatever your child is passionate about!
3. Inverted monopoly
Did you ever play monopoly as a kid? Probably. It likely taught some fundamental life skills, especially financial ones, when you didn’t even realize it!
Again, you can use your monopoly for education purposes. However, we need to change the rules a little bit.
Do you remember how you had to go around the board in order to obtain the properties? This time, you don’t. This time, you go around and invest a percentage in the properties. However, no more than 55% percent in any one property and you can’t invest in more than 10 individual slots.
This is including the stations and utilities.
Not only does this teach your kids how to invest, but also how to avoid over diversification.
As the players go around the board and land on different squares, they must divide the price, by the amount of shareholders, ie. the shareholder with 55% will get 55% of the money, whilst the one with 10% will get only 10%.
This too teaches your kids how to invest, but also the nature of how investing really works. Where the investors with the most shares, get the most amount in dividends from the company. The same is here too!
4. The power of apps and websites
All of these examples could’ve been used twenty years ago for teaching your kids how to invest. But this is a more modern approach.
Kapitall Investing is probably the best website that I’ve ever used to teach my kids how to invest.
It is designed for that very purpose too! As it has its own free stock simulator, which is based on its own platform.
It is user friendly and teaches your kids how to invest via a drag and drop function which allows you to buy or sell stocks, bonds and other securities.
It also allows you to open a brokerage account once you are confident to start investing. This means that once you have taught your kids how to invest, they can easily start investing on the same platform they were taught on!
There are also other stock simulators from other brokerages and even Investopedia, which all serve to teach your kids how to invest! I just find that Kapitall is the easiest one to teach children with!
5. Cards as shares!
This operates similarly to the compound game from earlier (number one on this list).
Essentially, you cut up several different colored card and call them different companies. These can either be real companies like Pepsi or Coke (beware of issues such as your kid thinking they are a good investment, when that may not be the case!) Or, you can call them fake companies such as Bob’s restaurant or John’s fish and chips.
Again, these cards represent these different companies with the same information on them, minus appreciation (price and dividend payment). Except there is one major difference: red and green cards.
Cut up a bunch of red and green card. On each green piece of paper, place a positive (whole) number between 1 and 100. On each red piece of paper, place a negative number between 1 and 100.
Place all of the cards in a bag or hat and shuffle them. Each time the dice is rolled, the scorekeeper places his/her hand inside the bag/hat and picks one out at random.
That is that day’s fluctuation of the price. at the end of four rolls (of everyone), that is one year. Tally up what each person’s is worth at the end of that year.
The first person to be worth over $1 million wins!
Not only does this also help to teach your kids how to invest, but also how day to day fluctuations affect every industry. Whether it is the biotech industry or the aviation industry!
Got any other ways you can teach your kids how to invest? Share them in the comments!
