7 Reasons to Teach Your Child About Investing

7 Reasons to Teach Your Child About Investing

As parents, we all want our children to have a successful financial future and the best way to do that is to teach them how to invest. We want them to be financially independent and to be clever with the way they manage their money.

We are invested in their future success, which is why we are willing to go the extra mile to make sure our children do well at school; why we invest in tutoring and mentoring programmes, and do whatever we can to make sure they succeed at everything they do. 

However, part of making sure our children are successful is to plan for their financial future and teach them how to manage their finances! 

Although there are many ways to do this, setting up an investment account for your child can be one of the best ways to teach your child about investing in the financial markets and ultimately making a huge difference in your future and your child’s future.

With that being said, here are 7 reasons why your child should learn about investing:

1. The Sooner They Learn to Invest the Better

It is important that you teach your child investing from a young age. It is even better when you start an investment account when your children are born. They’ll get back more when they start earlier because investing works on compound interest that continues to increase over the years! 

We’ll break it down here to show you just how important it is to start early:

If you invest £200 per month, from your child’s birth, every single month, for 40 years, they could retire with £1.2 Million in the bank

But if you don’t and they only start investing the same amount per month in their 30’s, they’d only have around £41,000 by the age of 40.

This is the power of the difference that we, as parents, can make in our child’s lives and why we at GT Scholars are so passionate about teaching young people about the importance of investing from an early age!

2. Investing Is Better Than Saving

There are a few reasons why it is better for our children to invest than to save. The biggest difference between savings and investing is that they’ll make a significant amount more when they invest money because they’ll gain interest whereas they won’t when they save.  

Again, as time passes the difference between the amount they’ll get from an investment versus the amount they’ll get from saving becomes more significant.

Let’s take our calculation from earlier; if we invest £200 per month for 40 years at a 10% compound interest rate, we’ll have £1.2Million in the bank. But if you take the same amount and put it away in a savings account every month, then you’ll have £96,000. 

It may not seem like a huge difference but as time passes, your investment returns end up being a lot more than your savings. While saving is great for short term goals, investing is what will set you apart in the long run. 

3. They Won’t Have to Work for Every Penny 

We want to empower young people at GT Scholars. This means that we want to show parents how they can teach their children to earn smart. Investing allows them to do this because compound interest values time more than long hours do so they’ll knock off years of hard work when they invest. 

What do we mean by that? The amount that our children can get in return for their investment is much higher than they could potentially earn in their work one day. 

Investing is like making money while you’re sleeping. By investing, our children get to earn an income that they work for while accumulating a significant amount of money on the side.

This is exactly why we at GT Scholars believe it is important for parents to learn how to teach their children about investing. 

4. It’ll Allow Them to Plan Ahead

When our children are young, they’re hardly thinking about their long-term financial goals. This is something that we as parents should be putting in place so that we can teach them how to focus on these goals as they get older.

So what would these long term goals look like? 

It may sound odd but teaching your child to think about their retirement plan from the age of 10 is likely to help them succeed at reaching their financial goals for their retirement as adults. Investing helps them to do that. 

Additionally, although it’s not always predictable, our children can plan long term investments so that they can estimate their net worth after a period of time. This means that they will know exactly what their earning potential is, in any given amount of time. 

They can then work towards increasing this or continue at the same rate if they’re happy with their financial progress.

5. They Won’t Be Tied Down to a Location 

We live in a world where many people want flexibility in their lives and in their jobs. Investing gives them this. By teaching our children how to invest, we give them the option to work from and live anywhere they want to.

This is because investing can be done from anywhere and that allows you to travel and continue investing in the financial markets, no matter where you are in the world. At GT Scholars, we believe in opportunities, young people who learn to become successful investors will be open to an array of opportunities. 

They get to travel if they want to and explore so many more options than what is available to them in just one location. This also gives them the freedom to choose a career that involves more travel.

We can teach our children about the value of flexibility and experience and how investing can help them to achieve that goal.

6. It’ll Give Them the Freedom to Follow Their Dreams 

We all want our children to have the freedom to follow their dreams. One of our biggest goals at GT Scholars is to help all young people to reach their goals and dreams regardless of the resources they have available to them. This is where starting a children’s investment fund for your child from a young age will help them build up the funds they need to achieve many of their goals.

The reality is that many young people struggle to pursue their goals and dreams due to a lack of finance. There are so many students who want to study further, or who want to travel but they just don’t have the financial means to do so. 

Investing gives them the opportunity to think ahead and plan for their future, giving them the financial freedom they need to do what they’re passionate about. Whether that means going to a top university or becoming an athlete. 

Investing gives our children the chance to build a significant amount of money for their future. 

7. They can retire early 

Wouldn’t it be a dream come true if our children could retire when they wanted to? None of us wants our children to work hard for the rest of their lives. Being smart about our child’s financial future can help them to retire at an early age.

When they simply put money away in savings in the hopes of successfully retiring one day, they are earning no interest and they only get what they put in. This means it’ll take them much longer to save up enough money to retire compared to if they had an investment.

This is because when they invest to retire, it allows them to make money on top of what they earn and that money gains interest, giving generous returns at a younger age. This allows them to retire at a much younger age too.

By teaching our children to start investing at a young age, we are boosting their financial future and giving them the opportunity to prepare well for retirement one day.

Read our blog: Early Retirement: Teach Your Kids How 

The Bottom Line

Isn’t it great to know that our children can have a sound financial future? That they can live their dreams, have flexibility where they live and work, and retire early? All we need to do is give them the tools they need to become young investors! 

If you want to know more, you can watch our webinar replay for free where Dr. Aderemi Banjoko talks about how to teach your children about wealth, finance and investing.

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