
Understanding types of mutual funds
Target date and target risk funds are two popular types of mutual funds.
Target date and target risk funds are two popular types of mutual funds.
03/18/2025
STARTING OUT
Kids learn by watching, so it makes sense to involve them early in your investing process. With the right approach, you can help shape how they think about investing for goals and the future.
Here are a few strategies to consider:
Demonstrate savings to younger kids with a savings jar in a visible spot in your house. Choose a family goal, label your jar, then encourage everyone to add cash on a regular basis. For example, the loose change in your pockets. Consider moving the cash to an investment account once it reaches a certain level, and then restart the jar—perhaps with a label that states the total balance already saved. As your family goal is achieved, you’ll be able to celebrate this saving accomplishment together.
In addition to setting family goals, ask your children to establish their own financial goals. Consider these options to match their savings, pay them interest—or do both:
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A 529 or Coverdell college savings account can be a great way to show kids the concepts of investing for a longer-term and higher cost goal. Once you have the account established and your children are old enough to talk about planning for the future, have your kids sit with you when you make regular plan investments, or when you look at how the account is doing. Explain why you chose your investments and how they’re designed to meet your needs.
Show how you can be more aggressive now, when they are younger, and more conservative with that money as they get closer to the time you need to withdraw it for college. The idea of investment risk is a good one for kids to learn. (See: The risk of avoiding risk)
One of the best ways to see growth is by checking in with your investments at regular intervals and discussing any progress.
Consider a monthly or quarterly family meeting to go over everything and provide a teaching moment:
If you take the time to show your kids investing basics at a young age, you’ll reinforce the idea that investing is a lifelong habit.
The concepts presented are intended for educational purposes only. This information should not be considered investment advice or a recommendation of any particular security, strategy, or product.