FINANCIAL GUIDANCE: Something more than just ‘Love’ for your Child

FINANCIAL GUIDANCE: Something more than just ‘Love’ for your Child

Stock Markets, Investments, Equities, Mutual Funds etc have been in news for ages. Compared to the US and China, where the Investors in securities are 180 and 10 % respectively, in India it’s just 1.5%!!! Most of the Investors do not discuss Stocks and Investments with their families. So, the children who are aware of the same is too less.

Wouldn’t it be really good to educate your child about investments and financial security at an early age- in a simple manner that stays in their mind? It will be useful for their future in attaining Financial Freedom

One could start using the simplest words that are easily understandable for a child. E.g.:- it is a way to grow People’s money by investing in Stocks and Bonds. Though words like stocks and bonds don’t enter the brain quickly, Grow & Money certainly will… Once the child is eager to know more, one could start explaining. You certainly need not be an expert in the subject to explain.

A. Go to a Shop/Toy Store with the child. Ask the child about the brands he knows; try to explain about the product and the parent company.

  • Small products are owned by big companies
  • The big company owns many different products for different purposes and uses- to get a bigger share of the market
  •  Investing in stocks is similar to buying small portions of companies
  • People buy shares of companies that are popular and grow well

Eg: – (Nestle- owns Kitkat, Maggi, Milo, Nescafe, Cerelac, Garnier, etc), (Mattel- owns Barbie, Hotwheels, He-Man toys etc), (Yum Brands- owns Pizza Hut, KFC, Taco Bell etc), (Unilever- owns Axe, Dove, Surf, Lux, etc)

B.  Placing Sticky Notes on products from major companies- It shows the kids which companies provide different services we use and those companies that represent our homes.

C. Look at charts and graphs of their favorite companies.

  • Children learn the basics of Charts and graphs in school; it’s easy to teach them at an early age.
  • With a little education, they will identify when a stock price goes up or down
  • Tell them about stock performance of their favorite toy company, brands over the past month, year or 5 years.
  • Don’t scare the child- after all this is not an easy topic. But everybody- young/ old should have at least the basic knowledge about stocks and investments. Teach them using simple terms and examples.

D. The Important Part of the Story- Opening a Trading account for your kid

  • This is the 1st step in guiding your child towards the world of Investment!
  • Let the child pick 3-4 stocks they prefer (could be a brand that interests them or can guess for the future). Check the performance every month, with the child
  • Add a little to the child’s investments every month and check the fund performances, with the child.

Today, on the 14th of November, as we celebrate Children’s Day, let us take a new resolution- to educate our children, to teach them about investments and guide them towards Financial Freedom.