Get your kids investing

Don’t assume your kids can just ignore investing now and learn about it later in adulthood. Teens and preteens have the most to gain by starting to invest early because they have a huge advantage over the rest of us: time. A single $1,000 investment can grow to $4,661 in 20 years (averaging annual growth of 8 percent), but it could become $21,725 over 40 years.

First get them interested in investing; then you can help them actually invest. Showing them how much money they can amass might pique their interest. Discussing money and investing with them regularly is smart, too: Let them see you managing household finances, perhaps using a budget. Talk about your experiences with debt and how you’ve achieved or are working toward financial goals.

Discuss your own investing and lessons you’ve learned. Talk about companies in which you’re invested and companies in which they may want to invest, and follow them and their developments in the news. Kids are familiar with many great companies: Activision Blizzard, Amazon.com, Apple, Costco, Disney, Etsy, Mcdonald’s, Microsoft, Netflix, Nike, Pepsico, Starbucks and many others.

Our book, “The Motley Fool Investment Guide for Teens: 8 steps to having more money than your parents ever dreamed of” by David and Tom Gardner with Selena Maranjian (Touchstone, $17), can also teach them a lot.

Before they can actually invest, you’ll need to open an account for them. If they have earned income, they can save for retirement with an IRA account. (A Roth IRA is especially good for kids, as their tax liability on money going into the account is very low, and withdrawals will be tax-free.)

With Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) accounts, you can give them money to invest while you serve as custodian. A new option is the Fidelity Youth Account for teens, which allows the teen owner, not parents or other custodians, to be in charge.