Growth & Jobs | Educate your child about investing - financial adviser
IT IS important to educate your children about investing as they become more aware about money and finances, says Peta-Gaye Miller Walker, assistant vice-president of Sales & Client Services at JN Fund Managers.
Miller Walker said it is wise to start to familiarise them with the tenets of investing and arm them with the financial tools, which they can take into their adult life.
“Start by explaining to the child that he or she can earn their own money and build wealth for their future. Get together and discuss an exciting financial goal they want to work towards and invest.”
Miller Walker encourages parents to have the child use a portion of the funds from their allowances to build an investment portfolio towards achieving that exciting financial goal; have discussions with them about investing; and include them in family meetings.
“Let them do their own budgeting while you guide them in this process. Stick to a schedule, and where, or if possible, take the child with you to the bank or ATM. Let them make the deposit, or first let them watch while you do an online transfer and ask them to click the button to confirm the transaction,” she said.
Miller Walker added that parents can give children chores and reward them with a stipend as an incentive and encourage them to put a portion towards something they may want. She also advised parents to watch financial news with their children and be excited when talking about which stock they would be buying and why. She added that children should be encouraged to buy stocks in good companies with which they are familiar.
“Encourage them to invest monies they receive as gifts. Show them statements or cheques which you receive as dividends from your investment,” she advised.
Miller Walker noted that children should be educated about saving and investing concurrently, and the different approaches of these two activities, as this will teach them to be disciplined in putting money aside from an early age. “Explain to them exactly what you are doing and how it can benefit them in the future. Do not underestimate what a child can understand,” she said.
Explaining the type of investment suited for a child, the JN Fund Managers investment adviser said that because of their young age, they are able to take on more risks, with a longer investment period.
“We do recommend that parents or guardians have a portfolio with elements of stocks as a part of it. The stock market can be, and has proven to be, one of the highest-paying investment vehicles in the long term. Purchasing stocks are for persons who can take on a higher risk and have a longer investment period, preferably five years or more,” she said.
Miller Walker said that JN Fund Managers has products that are good for the child investor. “We can put together a portfolio with parents or guardians to possibly invest in our Global Equity, Global Diversified, and Global Fixed Income Mutual Funds. Our AIP (Automatic Investment Programme) also allows for persons to start with a minimum of J$10,000, and on a monthly basis, invest a minimum of J$10,000, once a standing order through your financial institution or salary deduction is established,” she added.