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How to get your kids started investing early

February 19, 2021. Summarized by summa-bot.

Compression ratio: 21.7%. 2 min read.

Investing isn't just a luxury reserved for adults; kids can get in on the financial rewards, too.

This can include paying your child an allowance or asking them to help you plan a grocery store trip with a set amount of money and sticking to it.

Once your child has a grasp on spending and saving fundamentals, you can introduce them to basic investing concepts, such as "what is a stock" or "what is a bond. " Keep the discussions simple and easy for your child to understand.

"The road to successful investing starts with good savings habits since you need money left over after expenses in order to invest," said Milo Benningfield, a certified financial planner and founding principal of Benningfield Financial Advisors.

"Talking about the in's and out's of cash flow and the parents' own savings goals can go a long way toward helping kids understand what it means to manage money responsibly.

"Savings accounts help kids see the long-term effects of disciplined saving, and they can then reap the rewards by spending that money on something meaningful or giving the money to a charity that's important to them," said Justin Pritchard, a certified financial planner and founder of Approach Financial.

From there, choosing an investment account will depend on one crucial factor: if your child does or does not have earned income.

If your child doesn't have earned income, consider a custodial brokerage account: Parents should expect to control investments in this account until their child reaches the age of majority, or the age of 18 or 21 -- depending on the state they live in.

There are a few ways parents can help their child decide what to invest in.

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