Regardless of the profession your child chooses after growing up, they will need financial security and a regular flow of money to not only earn their livelihood but also to meet a host of financial goals.
A significant part of money management entails investment across asset classes in the right proportion and at the right time. This optimises the chances to meet financial goals well in time. Be it the purchase of an asset or paying for your child’s education – investors need a money management skills and some fundamental knowledge of investments.
So, this Children’s Day, you should act responsibly and apprise your child about the rope of investment. It is vital because of the these reasons:
1. Key to meeting financial goals: Notwithstanding the career your child opts for, they will have to meet a set of financial goals as the time rolls on. From buying a car and a house to saving money for exigencies – accumulated money will be too important to ignore. So, it is indispensable to learn the ropes of finance at the ripe age of adolescence so that one does not have to depend on others for taking money-related decisions in the remainder of life.
2. Right time to learn: After venturing into another field, not only will it hard but unfeasible to grasp the nuances of investment. For instance, if s/he happens to become a doctor or scientist or engineer, it would not be easy to learn the basics of investment at that stage. So, the right time to learn about investment is the young age when the kids can be taught this as a life skill.
3. Inflation is a reality: No matter how much you earn and save, inflation hits everyone. So, the most effective alternative to fight with inflation is ‘investment’. The basic understanding of investments is indispensable to save enough to invest in investments.
4. Old habits die hard: Learning something at a young age is sure fire way to make that a part of life. As they say old habits die hard – so whatever you learn at a young age is likely to stay with you as you grow older.
5. Helping the mainstream career: Investments are important to complement the main career. By having an add-on income via investments in financial markets, one can not only earn more but also use the income to support the main profession. For instance, some additional income can help a lawyer to open a new office or an artist can rely on his regular income from investments while pursuing his passion for art.
6. Power of compounding: There is enough evidence that suggests that the sooner you start to invest, the bigger would be the investment. In other words, this is also known as the magic of compounding. Upon learning the significance of investment, the young child would most likely start their investment journey at a young age. This way, a large amount can be accumulated to meet future financial goals.