Making Kids Money Savvy Early On

My niece learned to choose company stocks at the age of 15. And by stocks, I mean those instruments of ownership in a company that one buys from the stock market.

My best gift to her was to give her access to my online stock trading account and make her decide on her stock picks.

Because online trading companies require clients to be at least 18 years old, I opened an account under my name but allowed her to make the buying and selling decision for me. Think of it this way: This training ground is similar to a driving school where the student sits beside an instructor who can hit the brakes whenever the neophyte starts to drive like crazy.

Why would I risk the money I have in the account, you say? Well, one can open an online account for P5,000 only. I consider this as money I would be willing to spend for her investment training. Besides, that does not even compare to the amount other kids shell out for a VIP ticket to a Taylor Swift or a One Direction concert.

So, from that perspective, this is money I am willing to lose should my niece make bad stock choices. In return, the knowledge she gets from the actual (and not virtual) trading is priceless.

So far, so good. She stuck with the blue chips and avoided the penny stocks. In less than a year, one of her stocks earned a 20 percent return. On the overall, her stock picks were earning. Not bad at all.

So, what do I mean by this being a good, although unorthodox, way to teach a child about investing?

Well, for one, she gets to slowly understand how to earn from ownership of stocks. One time, she chanced upon a stock dividend news on a blue chip. Excited, she bought this company’s stock so as to avail of the upcoming stock dividend.

So, she waited for the day when the new stock dividends will be given to her. Sadly, it did not come. Her number of shares did not increase at all.

To make a long story short, my niece was not able to take note of the difference between the stock dividend’s ex-date and record date. That is, she had thought that as long as she bought the stock before the record date, she would be entitled to the dividend. Fortunately, because she already has a bit of background on the workings of the market, it was easy to explain to her that for her to avail of the dividend, she should have bought the stock on or before the ex-date.

Of course, now she knows better.

And the point of the story? Well, it is better to make mistakes while young and learn from that. I know of people in their forties who do not yet know the difference between the ex-date and the record date.

How about you–what are you doing to make your kids money-savvy? Or are you the type who expects their school to do this obligation for you?

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