Tomorrow is Father's day. Parents can be very influential in how kids approach money. Kids do not have all that much capital. But one thing that kids have is - tremendous amount of time.
Here is a good thought exercise to ask a kid: Would you rather have a million dollars in cash or a penny that doubles in value every day for a month? The answer is sure to surprise. Bonus extra credit: have them do the math. Answer below.
Money is an overloaded concept and investing is pretty abstract so the challenge is to be both specific and tangible as possible. There are some good resources out there to do just that
- Growing Money: A Complete Investing Guide for Kids - hands on examples for kids to learn the nuts and bolts of investing, why it matters, and how to put it into practice. Everything they need to know to buy their first stock. Highly recommended.
- Great Piggybank Adventure - free online game, I was skeptical at first. But its rock solid, back end by T. Rowe Price and front end by Disney. So its fun, and the best kind of infotainment - they will play it just to play it and have no idea that they are learning stuff. For example, you have to go on adventures and save up to do certain things, but then the evil Inflation Wolf (Yes this a character in the game) comes along and raises the prices on what you were saving for
- Blue Chip on His Shoulder: Investing Lessons from Dad - a great set of tips for how to pass investing wisdom from generation to generation. A really neat idea to run a family portfolio complete with annual letters
- Lou Ann Lofton's Warren Buffett Invests Like A Girl - has an interview with Lauren Templeton which is a very useful case study on how kids can get started. Some of the key points - finding companies like Walmart and Disney that kids can relate, letting kids get wins and losses their way, and the key insight that they can buy and be a part owner of great businesses.
- Lou Ann Lofton gave a beautiful talk where she describes how she got started investing, and how her father influenced her approach
Happy Father's day to all the dads - What resources, tools, tips have you seen work well?
Answer: Its the Penny! Part of what I like about this example is the power patience. In this simple example, you feel like an idiot for choosing the penny until day 28, but after that, you will feel pretty happy you went with the counterintuitive penny