5 Simple Ways to Make Investing Cool for Kids

Ask a child about a video game or cellphone they’ve had their eye on, and they might launch into their most convincing case for why they need it now. Ask them about compound interest and you’ll likely be met with a blank stare.

Getting kids interested in money often isn’t a problem, at least when it comes to spending. But teaching young people more complex ideas like saving for long-term goals and investing might feel like an uphill battle.

After all, investing can have a reputation for being boring, complicated and intimidating. But it doesn’t have to be. “I think most parents think it’s harder than it is,” says Scott Zack, an investment advisor with RBC Dominion Securities.

With a little creativity, investing can feel less like a dull classroom lecture (especially as more and more school boards mandate financial literacy courses) and instead like a skill they can get excited about.

Here are five simple ways to spark an interest in investing with the kids in your life.

1. Start early

As the saying goes, there’s no time like the present, and that’s true when it comes to investing. You don’t have to wait until your kids are teenagers to introduce the idea.

“Kids start becoming very aware of money matters at a very young age – they are targeted by advertisers through shows they may be watching or on their tablets,” explains Gary Rabbior, president of the Canadian Foundation for Economic Education (CFEE), who says discussions around saving and investing can begin as early as at three or four years old.  

Zack agrees about introducing money concepts early on and recommends doing so as soon as your child starts to show interest. In his experience, kids often start getting curious about investing when they reach their preteen years.

“What we usually tell the kids, which they like and think is funny, is they have a huge advantage over their parents in that they have a lot more time,” he explains. “And so, the earlier they start saving and investing, the more money they’re going to have later.”

What Zack is describing is the power of compounding: you don’t just earn money on the initial amount you invest but also on the gains you make over time. Seeing how a relatively small amount can grow simply by giving it time can make investing feel less like a chore and more like getting a head start on building wealth. “That’s usually what gets them most excited,” he says.

2. Make it fun

If the power of compound interest doesn’t excite your child, there are other ways to make investing fun.

“Experience it with them. Read a book that touches on topics that you can elaborate on, or a movie that triggers a discussion you might have, and respond to their questions,” Rabbior suggests. “To participate with your kids in learning is one of the best ways to do it.”

For older kids, there are even stock market games you can play. like Stock Shock, a board game designed to teach money management and market trends through buying and selling shares in different industries. There’s also Build Your Stax, a free online game that give the player a mission to grow their wealth as much as possible in 20 years through savings and investing decisions. 

3. Let them experiment

While kids can’t open a brokerage account until they reach the age of majority where they live, there's nothing stopping kids from playing around with a practice account.

Unlike the toy cash registers you might have given your kids at some point, a practice account starts them off with a virtual amount they can use to make trades with real securities. Organizations like RBC Direct Investing and financial-education websites offer practice accounts or free stock market simulators that can give them a glimpse into investing without using real money.

While it can be a somewhat complicated process, typically involving some paperwork, parents could open an investment account that’s held in trust for a child, and could discuss the investment selection process with them. Parents might also choose to open an investment account in their own name and transfer the funds to their child when they are able to open one themselves. It’s important to note that both of these options come with their own set of considerations and tax consequences. Consult with a qualified tax advisor, or other advisor if you’re considering this option.

“Those can be good tools to generate interest,” Zack says. At the same time, he cautions parents that these tools can sometimes encourage risky investing behaviour like picking a stock based on speculation in pursuit of the highest possible gains.

Parents can help their kids understand those risks, especially amid the rising popularity of prediction markets and online betting sites, where the line between investing and gambling can become blurry.

“The worst thing I think parents can do is avoid talking to their kids about it,” Rabbior says. “They’ve got to talk about the level of risk.”

4. Teach them using companies they know

Whether you’re 15 or 50, it’s often easier to get excited about a company you’re already familiar with. Teaching kids about the financial aspects of companies they know can get them engaged.

Zack suggests getting kids to go through their day and make a list of some of the products they’re using or consuming, like the cereal they ate for breakfast or the computer they use for school, so they can research the companies behind them. “We would then tell them to put a star beside the ones they like,” he says.

From there, depending on the child’s age, you can start introducing some of the financial metrics used to evaluate companies, such as looking at earnings reports or P/E ratios. Parents can show kids how to research companies online. “For an eight, nine or 10-year-old to get into these metrics, it's a little more complicated than for someone who's 14 or 15,” Zack notes.  

5. Involve kids in investment decisions

When kids can see the real-world effects of money decisions, they’re more likely to show continued interest and want to keep learning, Rabbior says.

“Investing just for the sake of investing may not be particularly engaging for a child,” he says. “But if they actually have something they're wanting to get or achieve, it’s often a motivator for them.”

It can even be something further off that will ultimately benefit them, like their education. If you have a Registered Education Savings Plan (RESP) set up for your child, for example, you could discuss the investment selection process with the child, or even get their input on investments for the account, Zack says.

And if you don’t feel confident in your own financial knowledge, there are plenty of resources online through RBC or the CFEE to help parents brush up on the basics.

“It’s something that is easy to get up to speed on,” Rabbior says, while noting you don’t need to be an expert to guide your kids. “You want to help your kids learn – not teach your kids. Get engaged with them. Have fun with them.”