5 Essential Tips for Teaching Kids About Investing

As parents and financial professionals, we often see money used for instant gratification. But with the right guidance, kids can learn to see money as a tool for growth, freedom, and opportunity. Here are five lessons to help your child take their first steps toward becoming an informed investor.

1. Teach the Power of Compound Growth

One of the most exciting concepts in investing is compounding. With compounding, your money can earn money, and then that money can earn even more. Make this concept come alive with a story: Would you rather have a penny that doubles every day for a month or $1,000,000 in cash on day 31? As the magic penny ends up being worth over $10 million, this is a fun and unforgettable way to show how patience and consistency in investing can pay off in big ways.

This foundational lesson helps kids see that even small amounts of money, when invested wisely and given time, can grow into something significant.

2. Invest in What You Know

Your kids are already interacting with publicly traded companies every day, whether it’s through their favorite sneakers, streaming platforms, or even breakfast cereal. This familiarity offers the perfect starting point to explore what makes a company worth investing in.

Help them evaluate businesses by asking:

• Is it publicly traded?
• Will it make more money in the future?
• Does anyone do it better?

These questions lay the groundwork for identifying competitive advantages and understanding what drives long-term success in business.

3. Make Sense of Stock Charts

Numbers can feel intimidating, but charts bring them to life. Pull up a simple stock chart for a company they like and look at how the price has changed over time, such as one year, three years, or five years.

Questions to ask:

• Is the company growing?
• What patterns or trends do they notice?
• Why might a stock go up or down?

These conversations help kids understand that the market reflects real-world events and company performance—not just numbers on a screen.

4. Consider When to Sell a Stock

When a stock your child picks rises in value, their first instinct might be to sell and celebrate the win. But this is the perfect moment to introduce the idea of a sell strategy.

Questions to ask:

• What has changed about the company?
• Are the original reasons for buying still valid?
• Do you have a better investment in mind?

Encouraging your child to think through their reasoning before making decisions teaches emotional discipline and could build a long-term investor mindset.

5. Diversify Like a Pro

Help kids understand that no one company can do it all. Use fun, real-world examples like Eastman Kodak, which actually invented the digital camera but still fell behind in the digital age.

Talk about:

• How technology and trends change
• Why putting all your money in one stock is risky
• The value of owning a mix of companies, industries, or even index funds

This lesson helps kids build resilience into their portfolios, so they can ride out changes in the market and keep their goals on track.

Empowering the Next Generation of Investors

Teaching kids about investing is not only a financial lesson but also a life skill. When you introduce these concepts early, you’re helping them build confidence, patience, and a mindset focused on opportunity and growth.

The information provided is educational and general in nature and is not intended to be, nor should it be construed as, specific investment, tax, or legal advice. The content does not purport to present a complete picture, but Focus Partners believes the information is representative of issues and needs facing some clients. This reflects the opinions of Focus Partners or its representatives, may contain forward-looking statements, and presents information that may change. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. Market conditions can vary widely over time, and certain market and economic events having a positive impact on performance may not repeat themselves. Investing involves risk, including, but not limited to, loss of principal. Focus Partners’ opinions may change over time due to market conditions and other factors. Numerous representatives of Focus Partners may provide investment philosophies, strategies, or market opinions that vary. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

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