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Investing for Kids: How to Raise a Millionaire
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” – Albert Einstein
As parents, we want our children to have a sound financial future. But this isn’t something that happens without intentionally working towards it. Many parents don’t know where to start and how to go about saving up for their child’s future. That’s why we’re writing this article about teaching your child investing!
One of the best ways to make sure your children are financially stable is to start an investment fund. By investing in the financial markets, your child could be financially set from a young age.
However, many parents either worry that starting an investment account for their children, or themselves, is too difficult – that they need to have expert knowledge. They also worry that it is too expensive to start investing.
This is not true and you can learn about investing, starting today. We’re going to talk about how much it costs to start an investment account and the benefits of doing so. So, if you’d like to learn more about investing and how you can raise a millionaire today, then continue reading!
Step 1: Teach Them About Investing
Did you know that you don’t need a lot of money to start investing in your child’s future and that you can start investing in the financial markets with as little as £25 or $25 per month?
Also, if you invest £200 every single month, for 40 years, you could retire with £1 Million!
Perhaps you’re wondering how this is possible? Well here’s the Maths…
£200 per month x 10 years x 9.2% compound interest = £39,000
£200 per month x 40 years x 9.2% compound interest = £1 Million
And if you’re wondering how to get a 9.2% interest rate, here’s another fact for you – the USA S&P has averaged an annual return of 9.2% since its inception in 1926.
What’s even more interesting is that using a compound interest calculator, shows that you’d have only paid in £100,000 over the period of 40 years and you’d have earned over £900,000 in compound interest – It’s no wonder Einstein said that compound interest is the eighth wonder of the world!
So there you go! That’s the formula for raising a millionaire – It’s as simple as investing early and taking advantage of the power of compound interest!
Remember that investments are never guaranteed to go up so you must always educate yourself and do your research before you make any financial decisions. The course does not guarantee that your child will retire as a millionaire, BUT it can definitely help them with understanding how to make financial decisions from an early age!
By teaching your children about financial literacy, you are ultimately contributing to their financial success!
Step 2: Open an Investment Account For Your child
Dr. Aderemi, one of our recent guest speakers for our webinar – How to Teach your Child about Wealth, Finance & Investing – and instructor for the Young Investor Course, talks about planting and nurturing your money tree.
He is an avid private trader and investor in the financial markets with over 20 years of experience trading and investing in the global financial markets and is passionate about teaching financial literacy for kids. So, what does Dr. Aderemi mean by planting and nurturing a money tree?
To grow a money tree you need seed money, water – which is the money you put into your investment on a regular basis – and time. The key to growing a healthy money tree is to consistently nurture it.
This means putting money into your child’s investment fund regularly and being mindful of what you take out in the long run. Remember that investing takes time and patience and the reward is not immediate but rather long term. It’s really important that we teach this to our children.
To keep your investments strong and healthy, you want to plant more money trees by reinvesting a percentage of the money you get out. And teaching your children to do the same when they’re older.
Step 3: Teach Your Child How To Spend
Remember, it’s not just about making money! What’s the point in having all of the money in the world but not knowing what to do with it? It is equally important that having money doesn’t impact our health or relationships in a negative way.
That’s why being financial literate is just as important as knowing how to invest in the financial markets. What do we mean by financial literacy? As parents, we want our children to be financially literate, meaning, they know how to handle their money.
This is something that we need to teach them. We believe that apart from understanding how to budget, save and invest, the following are very important.
Knowledge is More Important Than Money When it Comes to Investing
Dr. Aderemi emphasizes that knowing how to spend and save your money is more important. Without knowledge – financial literacy – we would not be able to make our money last. That’s why we should be teaching our children about things like budgeting and ways to spend work.
It ultimately comes down to knowing what to do with your earnings; what percentage to invest, spend and give.
Investing Doesn’t Mean Never Spending
Many people believe that it is bad to spend any of their money on things they like or enjoy doing. And that they should be putting all their spare money into savings or investments.
This is not true, however. Life is also about compromising and enjoying the money that you worked hard for. The key is to teach our children how to spend in moderation, and always keep an amount of money to invest or save.
Giving is Also Important
We need to be teaching our children to use their money for good too. We can do this by teaching them to give a portion or percentage of their earnings to a charity each month. By teaching them to give too, you’re teaching them about generosity and humanity.
It is an important lesson to teach when it comes to financial literacy.
The Bottom Line
And that’s it figured out – how to raise a millionaire! Anyone can do it, and it’s a lot easier than many parents believe. Even if you don’t know anything about investing, you can easily learn and become a successful investor in no time.
It will certainly be worth it and you can make a huge difference in your child’s financial future. If you’d like to learn more about why investing is so beneficial for your children’s future, read our blog 7 Reasons to Teach Your Child Investing!
Additionally, If you’d like to learn more about investing in the financial markets, you can watch our webinar replay for free on How to Teach your Child about Wealth, Finance & Investing.
We hope that this article will set you on the path to learning and teaching your children all about investing and securing a legacy of wealth and wisdom for your family!