Difficulties Convincing Kids To Invest Money
Equity Ownership is a hard pill to swallow!
No wonder I’m having difficulties convincing my kids to invest money! You tell them that They will get $2 if they invest $100 for an entire year, every year. But that doesn’t really sound that appealing when you have $100 in your hand already!
I think part of the problem is that they don’t totally believe that they would ever see the original $100 after investing it. They act as if someone on the street came up to them and said they would give them two dollars if the kids give the stranger one hundred dollars. Until you put the money into investments, then take it out again, it is kind of hard to believe! Experience and exposure makes a huge difference to kids, and really anybody including adults! I’m sure I would be the same way if I were in their shoes.
To make it more appealing, I’ve debated on doubling the payout, but even $4 is still pretty lame if you have the $100 in your hand already! I also though about doubling what they put in, but that can get pricey really quickly!
So what’s a dad to do when he wants to teach a lesson?
Work through it! Unfortunately, the pain and doubts at the beginning is an important lesson when it comes to compound interest! In year two, the payout money will double anyway… Then the third year, the payout (if the dividend keeps it dividend payout percentage in tact), the pay out triples! It’s part of the lesson of compound interest! By the fifth year, the payout would be $10, and if I were to double it as I mentioned earlier, it would be $20! Not to shabby, and it would set the precedence for the future.
Anyway that’s ETZ’s dad’s strategy for convincing his kids to invest money in the stock market.
Thanks for reading!