Stephanie Harris, Contributor

Harris

Adults should be aware of the benefits of long-term investing. Quite often we imagine how much more we would have had if we had started investing years ago. Instead of having regrets, why not use this knowledge to give your child a financial edge for the future?

Begin by getting them interested in investing from an early age. Doing so can instil a life-long interest in positive financial habits. But, how do you get children interested in what seems to be an abstract concept? The trick is to get them to participate in the process.

Start Simple

Start by getting them to set a short-term goal such as purchasing a new toy, then have them set aside a portion of their allowance over time to achieve this goal. Once this goal is reached then have them set others. Such a strategy should ignite the habit of putting aside money, setting goals, and managing resources. It will also aid in making the transition to investing and setting long-term goals much easier.

Tracking Investment

Gradually introduce children to investing. Choose investments that you can track together, such as unit trusts, and take the time to explain what this is. Investment houses usually provide very colourful, informative and easy-to-read brochures that can aid with your explanation. Investing in unit trusts will also provide you with the convenience of having a diversified portfolio, which is managed by highly-skilled professionals.

Open an account with your children as joint holders. Now that the summer holidays are over you can still have your child accompany you to an investment firm of your choice. Ensure that some of the funds used to start the account come from your child's personal saving. Regardless of how small their contribution may be, they will feel more involved in the investment process.

The price for fixed-income unit trust products usually changes twice weekly, whereas the price for equity-based unit trust products changes daily. Go through the newspaper with your children regularly. Buy a notebook and have them record both products' current prices, then show them how simple it is to calculate the gains or losses made.

Equity-based unit trust products may not experience any significant growth in the short-term, and in some cases may even record a loss. This will give you the opportunity to explain how the stock market operates, that it is something planned and that exceptional returns can be realised over the long term.

Don't delay for tomorrow what you can do today.

Give children the tools necessary to become responsible young adults capable of making sound financial decisions, and make meaningful contributions to their own development.

Stephanie Harris is a relationship officer at DB&G's Kingston branch. To discuss investing and the many options we have available, contact her at info@mydbg.com, or toll free at 1-888-CALL DBG.