Investments are fast becoming an important part of financial planning. As you teach your children about financial goals, saving and other aspects of financial health, you also need to remember investing. Children need to learn about how to manage their money, and investments are part of that. Personally, I feel that any child who is at least ten years old can begin learning about investing.

Teaching children about risks and rewards

Children need to learn about the correlation between risk and reward. They also need to understand that risk can also lead to large losses. It is important to speak to your children about investing risk tolerance, and careful assessment of the risk. They should also gain an understanding of managing risk, as well the important concept of not risking more than they can afford to lose.

Giving your child an investing test run

You don't want to put real money on the line before your child has an idea of investments, how they work, and making good investing decisions. You can help your child get a good idea of how investing works by showing him or her how company stocks and mutual funds change in value. Show your child how to track investments in the newspaper. Show him or her how to research investments and come to decisions about them. You can put this into practice by choosing two or three investments and following them. Some good choices would be companies that your child is familiar with, such as Disney, or a favorite restruant. Point out stories on the chosen investments and discuss impacts on the performance of the investments.

Actually purchasing investments

Minors cannot actually purchase investments. However, it is possible for you to let your children trade certain investments in your name. Additionally, you can set up custodial investment accounts that are designated as theirs. The Uniform Gifts to Minors Act and the Uniform Transfer to Minors Act are both vehicles that allow for your child to have an investment account in his or her own name, with you as the custodian.

Also, you want to make sure that you are getting a good value for your children's investments. Teach him or her the importance of finding good brokers. An online discount broker can be a good choice. Also, you can look for good companies on the National Association of Investors Corp. Web site. And be sure to explain the importance of getting into the habit of investing, as well as the benefits that come with dollar cost averaging.