We highlight a few of these tips alongside some other investment advice worth passing onto kids to help get them ahead.
Get them to learn about interest from a young age
Open saving accounts for your kids from a young age, take them to the bank to make deposits to give them a sense of where the money is being stored and once they’re old enough to read, help them review monthly statements. It’ll help them to learn about interest on a small scale so you can eventually introduce them to investments that earn even greater interest.
Help them invest in companies they understand
The article refers to a conversation the paper had with Jason Moser, an analyst at an online investment-research company, who said he showed his six and eight-year-old daughters about investing over lunch at a local restaurant, when he casually mentioned to his daughters that “we own a little bit of this restaurant.”’ He went on to tell them about stock ownership and explains that it helps to have your kids invest in something they can relate to. They invest in a new stock every quarter, he throws in a couple of hundred bucks and they add a little of their own money from the tooth-fairy. It helps enhance the sense of ownership and reward.
Show them how inflation works to emphasise the importance of investing
“To really appreciate the importance of investing, another lesson must come first… children need to understand about inflation… they have a harder time understanding that investing can be necessary to prevent inflation from eating away at their savings.” One financial expert suggests using an inflation calculator to show your children the way money loses purchasing power as the years go by.
Teach by example through smart investing
In the bestselling book Rich Dad Poor Dad, author Robert Kiyosaki claims that financial independence comes from investing, owning businesses and furthering one’s financial knowledge to enhance one’s business rather than employment alone. He emphasises the importance of owning income-generating assets and not simply relying on a paycheck to build wealth, providing investment advice which people around the world have benefitted from.
In a summary of the book we learn that Kiyosaki professes that the rich get rich as a result of their assets generating “more than enough income to cover their expenses, and part of the income is then reinvested into new assets, therefore increasing the generated income even further… Reinvesting income into new assets triggers the power of compounded interest, to which Einstein once famously referred as the ‘eighth wonder of the world.’” Some income-generating assets highlighted include:
-
Businesses that don’t require your presence
-
Stocks
-
Bonds
-
Mutual funds
-
Royalties
-
Income-generating real estate
Investing in a second home abroad offers the ideal solution to teaching your children about smart income-generating assets. While collecting rent from tenants over the year provides positive income, occasional family visits to your beachside haven will show your kids the true value of investing. It not only improves your financial portfolio but also, your lifestyle.
For further investment advice or to find out more about property in Calpe perfectly suited for awesome beach holidays, get in touch with us. We offer an in-house letting agency and our portfolio of property in Calpe features some of the finest quality apartments and villas in the region.
