1. Investing is a better option compared with placing their earnings in a savings account. Normally, savings accounts earn interests of less than one percent. This will yield a very little return of your teen’s money. These low interest rates devalue the spending power of the money. In the long run, this might de-motivate your teens from being financially responsible.
2. Based on the stock market performance over the last few years, there is a clear indication that investing on stocks is smart and safe. It provides a better opportunity to grow your teen’s money compared with putting his money in a savings account.
3. When your teen earns his college degree, most likely he will be flooded with a lot of investment options including 401K. Allowing your teens to explore investment opportunities makes them become familiar with investing and the stock market that will make them more prepared for the future.
4. Investment firms charge huge fees. So instead of hiring an investment firm to manage their investments, you can try free or low cost investment platforms. At least, the money you save for doing these types of platforms may be channeled to other earning opportunities. Should the stock market show instability while your teens’ money is invested there, this should offer valuable lessons, especially on managing diverse portfolio. Investing in several companies broadens the scope of learning.
While your teens are young, it is worthwhile to teach how to make their money work for them. When they get a good return for their money, its influence can span time that only the future can appreciate.