Should I Open an Investment Account for My Children?
Yes, you can open an investment account for your kid. One of the main advantages is that they have a lot of time before withdrawing and get to learn key lessons.
Published May 24, 2021.
It's never too early to start investing. For your children, you can open a custodial brokerage account and help them select investments. If you want to teach them some valuable lessons about money and the power of investment growth, allowing them to open a custodial brokerage account can be a great start. The benefit of starting at a younger age is that the account has more time to grow.
A Lesson of Patience
Notably, one of the biggest keys to successful investing is looking in the long-term, and children might have a hard time accepting that. If they're willing to let the invested money remain in the account for several years, they're pretty likely to see an excellent return on the initial deposit.
If they're having a hard time, help them pick one or two individual stocks. Focus on household names they're familiar with owning even one share of popular brands like Netflix or Disney can get them quite excited about investing. In fact, kids usually find it a lot easier to relate to brands they know and love.
Learn to Build
To build up the rest of the portfolio, add ETFs and low-cost index funds. These funds bring much-needed diversification to the investors' portfolio, effectively pooling many stocks together into one. That way, your child can learn to invest in many different companies in a single transaction.
If you can, then yes you should. If you don't try, you won't know if it will work for your child. Run a trial and see if you can catch their interest.