How To Teach Teens To Invest

Investing is a great opportunity for teenagers to begin to save for life’s goals. Whether they want a new computer, extra money for tuition, or a house and car in the future, teens who harness the power of investing will be one step closer to their goals. Stocks, bonds, RRSPs, TFSAs, and other financial instruments can intimidate some teenagers. So you might want to know how to teach teens to invest? Exposing teenagers to finance and savings in a safe environment can make them more comfortable working with difficult concepts. 

The most important concept to teach kids is how to save. Taking a portion of their paycheque and storing it in a Tax-free savings account will start to build a nest-egg for them to fall back on. It’s important for teens to save while they are young. Youth gives them access to one of the most valuable investment tools: time. The more time they spend saving their money, the more interest they will earn. This ensures they have money saved for the future. 

Once teens have built up their savings account and developed a routine of saving a portion of their paycheque or allowance, you can show them a new way to earn money: Investing! Again, time is on their side. The earlier teens start investing their money the more time they will have to benefit from the magic of compound interest. 

Getting teens involved in investing can be as simple as looking at what they are buying. If your teen has an iPhone, a Macbook, and matching AirPods, ask them if they would like to own a piece of Apple. Or if they have a love for running shoes, suggest that they buy stock in Nike. You want to keep their investments in line with their interests to keep them engaged. It can be exciting for teens to announce they are part owners of major companies! 

Have them check up on their stocks daily and teach them about the external factors causing stocks to soar and plummet. When they are comfortable, have your teens invest in low-cost index funds, such as the S&P 500,  through their TFSA. Explain to them that they will now own shares in many companies and have to pay zero tax on their returns. This will teach them about the benefits and safety in diversifying their portfolio, instead of taking on risk and investing in individual stocks. 

And if you need extra assistance helping your teen join the investing world, Explorer Hop is here to help! Our comprehensive investing program can help teens become investment wizards in a stress free environment. At Explorer Hop we value teaching financial literacy at a young age. We ensure that our students diversify their investments to consistently earn high returns year over year.