how to invest as a kid
In every business, the very first business idea is raised in the mind of an entrepreneur. Therefore, great imagination can turn a little kid into a successful entrepreneur. Most of the successful entrepreneurs started their ventures as kids. They can come up with good business ideas as they are very creative.
Robert Nay, a citizen of the United States, is 14 years old kid who makes games for mobiles. The game called BubbleBall had more than two million downloads within two weeks of its launch through apple iTunes. It displacedAngry Birds game from its number one spot on the list of free games in the Apple app store.
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It is never too early to train kids in financial literacy. Children can become more financially stable people in the future with their hand on experience in personal finance management. Therefore, as a parent who wants to provide a wealthy financial future for your children, it is your responsibility to incorporate your kids into money management decisions.
Parents will have to jump-start their funds. Here’s how to get started with your investments.
Earn your own money
Yes, you can do it as a kid. There are many part-time jobs are available for the kids. The truth is you need not be an extremely skilled, knowledgeable, or experienced person to make money. There are so many creative works that can be done to make money. Below are
some creative suggestions that you can easily do as a kid.
- Trade your photography
- Trade food waste
- Trade your artworks
- Review and recommend products
- Be a service provider
Ways to Invest
In this 21 century, kids have plenty of opportunities to invest money beneficially.
These options include:
1. Start savings
Parents can train their children to practice good saving habits. Educate your kids about the concepts, strategies, and methods of saving and investing money in beneficiary ways. Discuss success stories of teenage entrepreneurs with your kids and motivate them.
- Open a high yield Custodial Account for your Kid
Most banks offer custodial accounts for kids who are below eighteen and give attractive interest rates. These accounts are co-owned with parents until the kid becomes an adult. Parents have no control over the Account once the child becomes an adult. Custodial accounts have various types of tax benefits when comparing with other accounts. Because of that, it is one of the best ways to invest your money for your
- Start a small business
Kids have unbelievable imagination skills and they recognize some hidden opportunities of society that we did not notice. Before investing the money for trade, parents can discuss kids’ desires first. If your kid doesn’t already have an exact business idea in mind, ask them to make a list of their favorite things to do. Because your child must be enthusiastic
about what he or she is doing.
As an example some kids love to do paintings, they could start a small scale art gallery.
- Open a Roth IRA
IRA stands for an individual retirement account. A Roth IRAallows withdrawals on a tax-free basis. It has to meet certain conditions too. There is no minimum age limit to open Roth IRAs. Hence kids can start a Roth IRA from their eligible earned income. This must-have compensation from work. The contributions to a Roth IRA cannot exceed the annual income of the investor. The amount you may invest has a maximum limit of $ 6,000or your annual income, whichever is lesser. But people who are older than 50 years can invest up to $7,000.
- Investing in Bonds
Bonds are considered less risky than stocks. Either government or companies sell their bond to the general public. Kids can purchase and invest their money in the band with parents’ support. The company or government pays interest on the “loan” over the duration of the bond
- Investing in the Stock Market
The stock market is the most attractive and popular place for an investor to put their money profitably. You can give guidance to your kid to purchase shares from a company. Itis, not rocket science. When your kid buys a stock, they will own a small portion of the company they acquired into. The company will pay a portion of profits dividends based on how
many shares of stock your kid owns. Company shares grow over time and your kid can sell them at a later date for a profit.
Dave Ramsey said that “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you
can give money back and have money to invest. You can’t win until you do this.”