How to Explain the Stock Market to a Child?
The Stock Market for Kids
The Stock Market for Kids? Surely not. For me, the Stock Market was always a foreign, unattainable enigma where only mathematical genius, business entrepreneurs and Leonardo Di Caprio’s character from ‘The Wolf of Wall Street’ lived.
Not a place a teacher should be entering.
I once was told, ‘Don’t put your money into something you don’t understand’. And he was right.
So, instead of turning away and accepting that this club wasn’t for me, I went away to ‘understand’.
I studied hard. I learned that the Stock Market isn’t an exclusive club that it may have been in years gone by, instead, I saw that with new online platforms, convenient readymade, passive funds, and with the growth of Robo Advisors, this money making machine really was accessible to Joe Blogs, the general public. And rightly so.
With the low interest rates offers by the banks, and under my mattress already filled with dust and socks, the best place for my money to grow and work for me is the Stock Market.
The 8th wonder of the world
The compound growth offered by this amazing ‘8th Wonder of the World’ as Einstein quite rightly put it, cannot be overlooked, particularly if you have time on your side. And do you know who has time?
Kids.
Explaining the Stock Market to a Kid
And so they should be taught about the stock exchange from as early as possible. It is only right that they have access to all of the amazing companies that will someday shape their future. Teaching our kids about the stock market is giving them the skills and knowledge on how to make money work for them.
Click here for Stock Market Resources to help introduce your children to the markets.
Stock Market Vocabulary
The Stock market doesn’t need to be complicated for kids. There is no need initially to go into the world of a day trader, learn their elaborate mathematical calculations and read their models, instead kids simply need to understand how the world markets work in general. Certain stock market vocabulary and terms will help them see that in almost all cases, the markets rise.
Ensuring kids understand risk is obviously important, knowing that risk really means uncertainty, but as they are kids they have the commodity of time to ride out all the corrections, crashes and recessions that will undoubtedly come. And importantly, seeing these Bear Markets as a time of discount prices and opportunities to grow.
In fact, I know people who actually looking forward to market crashes as equities go on sale! It’s like the best Black Friday Sale to them, they actually have money set aside for these crash period! They understand that every US crash, correction or recession has ALWAYS been followed by an amazing upside. The markets not only recover but exceed their value before the drop.
But they always have their emergency account well stocked before they begin their investing.
Simple knowledge like this and a confidence in the talents of our industries, should be passed on to our kids and students.
Teaching kids how to Dollar Cost Average a percentage of their money every month, learning how to diversify their portfolio both through investing in various sectors and geographically and doing these things within a tax efficient wrapper, will leave them set for financial freedom early and comfortably.
Stock Market Resources
I have created several introductory Stock Market Games, Quizzes, Vocabulary Workbooks and PowerPoints that aim to educate our young people of the Stock Market from an early age. Or certainly, introduce them to its terms which in turn should help them appreciate its value and not be intimated by it in their future.
I’ve used these Stocks Market worksheets and resources within my own class of 11 year olds. And although it did prove tricky for a few, some great discussions were had and I certainly have dispelled any fear or uncertainty they may have had about the markets. In fact, several children did not know of its existence. And so improving their Financial Literacy.
They all are aware now that growing your money now, early in their lives, starting their pensions or creating a tax free stocks and shares savings account is better than any piggy bank in the long run.
Stock Market Resources
Teaching children the Stock Market’s basic terms will be revolutionary in their future money journey and in turn grow their own personal Financial Literacy further.
Read more on how to teach Kids about the Stock Market and my 5 Top tips here!
