Little investors start off small

MONEY skills are taught to children by many parents, and the next step – investing – doesn’t have to be daunting.

Once children start to understand the value of money, they can be told how it grows, financial experts say.

Rise High Financial Solutions director Marissa Schulze said primary school was a good time to start teaching basic investing concepts, and playing games such as Monopoly or Monopoly Junior could help.

“Your children will have fun while learning that the more money they have invested in property, the more rental income they will receive and the easier it is to become wealthy and win the game,” she said.

Investing doesn’t mean starting a share portfolio before age 10. Putting money into a bank’s bonus saver account – currently paying interest up to 4.75 per cent for kids – is a good start.

Ms Schulze said parents should discuss their own investments with teenage children and get them engaged.

“One of the best things my parents did for me growing up was encouraging me to read Robert Kiyosaki’s Rich Dad Poor Dad book. It is easy to read and changed my life as a teenager as it made me look at money differently,” she said.

Kristin Tunbridge said her five-year-old son Bailey was starting to understand the concept of saving by putting away money for a family holiday.

“The younger children have an understanding of the value of money, the better,” she said. “It’s a lifelong skill.”

Certified financial planner Patrick Canion said parents could offer children one lolly now or two lollies tonight, to see whether they understood how patience could be rewarded.

“If they make the wrong decision, it doesn’t matter. It’s an opportunity to explain it to them,” he said.

Mr Canion said younger children should be taught using physical cash, but older children could be introduced to online investing, with many investment funds showing just where their money was put.

He suggested educating children about the sharemarket from their early teens. Parents who do not invest directly themselves could show children their superannuation fund investments.

However, be careful of creating a successful young investor too early, because income earned in their own name above $416 a year can be taxed at up to 66 per cent, and funds often don’t allow under-18 investors.

“They can get slammed on tax,” Mr Canion said.

Holding investments in a parent’s name could be a way around this, he said.