Why I Started Investing with My Kids?
Investments are often associated with risk, scams, or even the loss of money. So why did I decide to take money from my children's piggy bank and invest it? Why did I choose stocks and even riskier investments that could lose some of their value?
My answer is simple: if you don't take risks, you're almost guaranteed to lose everything. The 200 euros that my children started investing, sitting in a piggy bank, would become nearly worthless after many years. That's how fiat money works – inflation decreases its purchasing power. Investing was a natural decision to protect its value.
Why Start Investing Now?
My children are between 8 and 11 years old. They're definitely not interested in charts, ETFs, or cryptocurrencies. Is it really worth involving them in investing so early? Or would it have been better to wait until they're older and can better understand numbers?
As the saying goes, the effect of compound interest is the eighth wonder of the world, and its best friend is time. The earlier you start, the greater the benefits in the future.
For example, if you invest 1000 euros with a 7% annual return, you'll earn 70 euros in a year. However, if you invest 100,000 euros with the same 7% return, you'll earn 7,000 euros in a year. Compound interest and a larger amount create the difference that time and consistent investing bring.
3 Key Reasons Why I Invest with My Kids
Knowledge
Children who start investing early learn that it’s a long-term strategy. They discover that markets can fluctuate – the value of investments can go up or down, but over the long term, returns are usually positive. I hope this understanding helps them stay calm and act rationally even when it feels like the world is falling apart.
Financial Independence
In school, children are taught to be good employees. However, by starting to actively invest at an early age, they can understand that financial independence is achievable. This means that by consistently investing and putting in effort, they will be able to become masters of their own time in the future.
The Right Environment
"You are the average of the five people you spend the most time with." It is said that a person is the average of the five people they interact with most. Investing people often have a broad worldview, and their perspective on investing isn't just about making money.
By investing, you can learn not only about finance but also about living a meaningful life. It allows you to discover valuable knowledge through podcasts, books, or conversations with like-minded individuals.
For example, the "TIP Richer, Wiser, Happier" shares not only insights on investing but also discusses life goals, self-improvement, and building meaningful relationships.