Curiosity about money is a signal to parents that it?s time to talk to their children about investing, according to a local adviser.
“When they start showing an interest, it?s time to talk,” said Patrick Collins, a principal at Greenspring Wealth Management, a Towson-based financial advising firm. “Go to the bank with them and show them how it works. Start talking about money by starting with an allowance, but rather than just giving them $10 a week, talk about budgeting and saving.”
When a child gets beyond the savings-account stage, there are specific strategies that can help parents pique the financial interest of their youngsters.
Among the first thing financial advisers say parents should consider is investing in the children?s education.
Mike Engler, president and owner of Community Pride Financial Advisors LLC in Baltimore, said parents should start by investing in their children?s higher education through any number of 529 College Savings Plans.
“It?s especially nice for [gay, lesbian, bisexual and transgender] parents because the account can list one parent as the owner of the plan with the child as a beneficiary and the second parent as a contingency owner,” Engler said. “The plan stays in the family without interference.”
With some of the funds allowing balances of $300,000 or more, parents can encourage grandparents, family members and friends to contribute. Some of the funds also allow the beneficiary to change to any immediate family member, giving parents some leverage if one child chooses not to go to college.
Beyond college, though, parents can easily instill interest in investing by encouraging children to learn about companies and causes that are important to them, Engler and Collins said.
“If your child loves Coca-Cola or there is a certain restaurant they love to go to, that?s a good place to start,” Collins said. “Look into what the company is all about; share with them a little information about the products they make, who runs the company and where the company is located. If it?s a first investment, it?s always good to put money into something you know.”
And, both financial advisers said investing in mutual funds is a definite winning strategy for children, with a strong mix of mutual funds available for consideration.
“The one thing kids have going for them is they have a longtime horizon. That lends itself to investing in a more aggressive investment with time to make up for any fluctuation in the market,” Collins said.
