You might not realize it, but one of the most important lessons you could teach to your children is how to invest. Aren’t we all having money problems? Believe me, teaching your children early on the importance of investing, whether it’s self-managed super fund (SMSF) or stocks, can have a huge impact in their future. But how can you do it?
Okay, let’s face it, children are children. For now, all they want to think and do is to play and enjoy. After all, how would they be able to understand dividend, market capitalization, and equity? Well, sure teaching your kids about investing can be difficult. But there’s one easy way to be able to help them at least learn some basics about investing. How? It’s through gardening.
Investing has four basic principles – planning, accepting risks, diversifying, and consistent monitoring – all of these can be found in gardening. After all, gardening is a fun activity; it can make a great bonding time for your family.
This is the first and most important thing in investing, gardening, and any other kind of activity. To help your children learn about it, give them small amount of money and order them to go to the store near your place and buy some small plants or seeds. Of course, let them decide what kinds of plant they will pick out. Encourage them to talk with the sales person and learn about which plants produce more fruits in your climate, etc. By doing this, you’re helping them to improve their “planning ability.” Then, explain to them how you would plan to use each crop the same way you would plan to invest.
Of course, no one knows if the crop that you’re going to plant will grow and produce fruits. Same with investing, you can never know if the money you’ll invest will reap benefits at the end. But as we know, the higher risk you accept, the higher returns you earn. Let your children plant as many plants as they can. Because the more they sow, the more they reap.
Spreading your money across a number of different investments is what they called diversification. Investors diversify in order to reduce risk. Of course, who would want to lose his all assets? You can teach your children this kind of investment strategy by encouraging them to plant more than one kind of plant. As we know, plants flower and bear fruits at different time of the year. And not all plants grow and live. By letting your children plant two or more plants, you can all ensure that you still have gains even the other plants die or don’t produce something.
In terms of investing, it’s very crucial to always keep track of your investment to know what’s happening – whether you’re losing or gaining money. Same with gardening, you need to teach your kids the importance of monitoring their crops to find out if they’re dying off or if weeds are already propagating the garden. It’s also crucial to encourage them to water their plants regularly to keep them healthy. They must also watch out for any upcoming storms or droughts as these can adversely affect their plants.
So there you have it! If your kids master the basics of gardening, it’s like you’ve prepared them to invest properly.
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