Kids have a great advantage when it comes to investing - TIME.
When It Comes To Building Wealth TIME Is A Most Important Ingredient
Kids have a great advantage when it comes to investing - TIME.
A child who invests a total of just $3600 by investing $50 a month from the time he or she is 8 years old until he or she reaches age 13 (six years)—and then never invests another cent—will end up with more at age 65 ($723,325.59) than someone who starts investing at age 30 and invests $2000 every year until he or she retires 35 years later ($658,078.97).
In this illustration, we assumed a 10% return on investments, the stock market’s historical return since 1926. To earn a consistent 10% per year, you’ll need to invest in stocks. Thus, a DRIP portfolio would be an ideal way to help the kids in your life get started. The stocks we choose may even help them improve on the results we cite.
Now is a perfect time to begin educating your children (or grandchildren) about the power of compounding! In the Starter Portfolio, the editors of The Moneypaper suggest companies that are appropriate for young investors.