DRIPs and Investment Accounts for Kids

From Coins to Dollars - Even Kids Can Create Wealth!

Once your kids understand that they can use money to make even more money, they will be hooked!
Once your kids understand that they can use money to make even more money, they will be hooked! | Source

Teach Your Children to Invest in the Stock Market

Have you ever thought about teaching your children to invest in the stock market? From the time most kids are very young, they love to count their money. Once they own their first piggy bank, some children can spend hours stacking up all the pennies, nickels, dimes and quarters in their bank, and counting how many they have. After they reach school age, and they know how to count money in larger amounts, often children will begin to keep a running total of how much they have.

You may not be aware of it, but these children have already developed a very important milestone in their maturity. They have learned the value of deferred gratification. Rather than rushing to spend every dime that they accumulate, they would rather watch their money grow. These children are ideal candidates for learning about how to invest.

If you begin slowly, allowing them to save or invest some of their money while keeping the rest of their cash at home where they can see it, your children will love having money in more than one form and location!

Your Kids Will Love to Know They Can Make Money From Their Money!

Growing Money: A Complete Investing Guide for Kids
Growing Money: A Complete Investing Guide for Kids

Studies show that children who learned to save their money and defer gratification are happier and more financially secure as adults. This is a skill that parents can teach their children. This is a book that both parents and children will find helpful.

 

Find Savings Plans for Kids

The first step you will want to take in teaching financial literacy to your children is to open a savings account. Add a little money to what they already have. Do you have relatives who give your children money on their birthdays or other holidays? Put that money in the savings account, too. In the United States, you will want to open the account under the Uniform Gifts to Minors Act. This is a joint account held by both a parent and a child. The child gets full control of the money once they turn 18, and the parent have control of it until then. Many banks and credit unions also have special accounts for children that are intended to encourage children to save their money in the bank. Frequently these accounts have either no fees, or very few fees. In order to encourage savings in young children, banks, credit unions and similar financial institutions will sometime even give a small gift to a child who opens an account. In addition, your children will get interest on their money. In this way, you will get the opportunity to explain the benefits of compound interest to your children, and they will have fun watching their money grow.

Whenever your child gets a bank statement, show it to him, and discuss how they might use the money in the future. While the idea of saving for college or a house may not interest some children, the idea of saving towards their first car could motivate them to keep the money in the account until they reach their teens.

Teens Will Love Knowing That They Can Build Money for Their Future

The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of
The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of

This book is geared specifically for teenagers. Once they have their first job, they have the ability to see how they can start building a fortune for the future.

 

Open an Investment Account for Children

Another program that is available under the Uniform Gifts to Minors Act is an investment account. Your children will love the idea of owning stock, especially if you help them invest in a company that interests them. Many major corporations that cater to children, such as Disney and McDonalds, have special investment programs for kids. For example, when children own at least 10 shares of Disney stocks, the company will send out special mailings to the kids, including their own annual report.

Your children will feel very mature and grown-up when they own their own stocks, and it will change their attitude about doing business with those companies. They will begin to understand the benefit of visiting a busy McDonalds or seeing long lines at Disneyland, if they understand that they actually earn money when those companies are successful!

Easy Activities to Help Your Kids Grow Their Money

The Young Investor: Projects and Activities for Making Your Money Grow
The Young Investor: Projects and Activities for Making Your Money Grow

The more you educate your children about investing and financial information, the better off they will be as adults. These are projects that parents and children can work on together!

 

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Look for Stock DRIP Accounts for Kids

Once your children own stock in a company, one way the value of the investment can grow is through a Dividend Reinvestment Plan. A DRIP, as these plans are called, allows the company dividends to be used to purchase more shares of the stock, without having to pay commissions. Over time, this means that the number of shares your child owns will increase.

Gradually, you child will learn that they can earn money several different ways when they invest. They can earn when their dividends are reinvested. They can earn when stock values go up. And, they can build up their accounts even more as they invest more money over the years. Before your know it, your child will be an enthusiastic investor!

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Comments 20 comments

stars439 profile image

stars439 5 years ago from Louisiana, The Magnolia and Pelican State.

A very important hub, and it is wonderful if children can have money saved for their future security. Great hub. God Bless youprecious heart.


souleru profile image

souleru 5 years ago

great ideas! It's amazing how much we don't teach children when it comes to finance


MZHF 5 years ago

Really good one, Ones they become adults they will find it very useful


Phil Plasma profile image

Phil Plasma 5 years ago from Montreal, Quebec

We don't have an equivalent program here in Canada, however, I plan on making use of:

http://www.thedividendguyblog.com/

From here I'll get links to great dividend paying companies and start contributing on my kids' behalf to a few of them. Once they start earning some money that doesn't come from their parents, do a bit of matching to help them get started, and then help them to do it themselves. Hopefully they'll learn the discipline to keep going with it.

Great hub earning you a vote-up and a useful.


Au fait profile image

Au fait 3 years ago from North Texas

Great information for people who want to get their kids started investing but don't know where to start. The younger a person is when they begin investing the more they will have when that day we never think will come does in fact arrive -- retirement.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

Helping kids learn about stocks can make them life-long investors. We bought Disney stock for all our grandkids and that stock has gone up significantly in value over the years. Our grandkids love it!


moonlake profile image

moonlake 3 years ago from America

Useful and interesting hub. I never thought about stocks when our kids were growing up but a good idea. Voted up.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

We are so glad that we have gotten our grandchildren interested in the stock market. Many young people do not realize how much stocks influence their lives, so we love educating them about this way to build assets.


Au fait profile image

Au fait 3 years ago from North Texas

I really think people who understand investment have an advantage over people who don't. I think it's never too early for children to learn how to manage their money. Voted up and useful. Came back to pin this to my 'Financial Issues' board. Will also share with my followers.


Deborah-Diane profile image

Deborah-Diane 3 years ago from Orange County, California Author

I agree that teaching our children about investments is very important if we want them to be capable, self-supporting adults. It is never too early for kids to learn how to handle money. Thanks for sharing this information with others!


Au fait profile image

Au fait 3 years ago from North Texas

Sharing this again for people who want to get started investing in their children's future and teach the children about investing at the same time.


Au fait profile image

Au fait 3 years ago from North Texas

Sharing this again because everyone needs to know about the stock market and learn how to invest and save.


Au fait profile image

Au fait 3 years ago from North Texas

An excellent article for learning about the stock market, and I think an investment account might make a good Christmas gift for a child or grandchild. Pinned to 'Awesome Hubpages,' and will share.


Au fait profile image

Au fait 2 years ago from North Texas

This seems like a something good to start the New Year with. Investing in a child's future and teaching them how to do that at the same time. Voted up and sharing.

Hope you and your family have had a great start on the New Year!


Au fait profile image

Au fait 2 years ago from North Texas

Never too early to get financial security underway. Giving this another share for people interested in learning about investing and in teaching their children about it.


sujaya venkatesh profile image

sujaya venkatesh 2 years ago

tips for toddling tiny tots deb


Deborah-Diane profile image

Deborah-Diane 2 years ago from Orange County, California Author

Kids love the idea that they can make money from their money ... and parents will be glad they taught their children about this.


ezzly profile image

ezzly 21 months ago

Very clever hub, great for parents ! Sharing on twitter and voted up


Deborah-Diane profile image

Deborah-Diane 21 months ago from Orange County, California Author

The sooner you get your children interested in investing, the more likely they are to invest and save for retirement when they get older.


Deborah-Diane profile image

Deborah-Diane 18 months ago from Orange County, California Author

ezzly, thanks for sharing this. I have found it really exciting to see my children and grandchildren become interested in investing.

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