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Top investment options for your teen kids

Image source: bestfinance-blog.com
Image source: bestfinance-blog.com

 

While parents are always willing to go an extra mile just to provide their children a bright and secure future, most of them fail to teach their young some of the most valuable lessons in managing and handling their finances. Experts agree that one of the best things that you can do for your teenager is to start them young – especially when it comes to saving and investing. However, according to a recent study, parents are reluctant to make the first step.

If you’re a parent, it’s not yet too late to do the right thing. Consider these top investment tips for your teen kids:

  1. Let them have their own savings and checking accounts.

This is an ideal option for teenagers who have part-time jobs and who regularly earn an income. Although most banks don’t offer high interest rates, the entire point of taking this step is not really about earning interest but teaching your kid the most basic financial skills that they need to be able aim higher.

  1. Encourage them to start a Roth IRA.

Investing in a Roth IRA is a practical option for teenagers for its low marginal tax rate, considering how much they earn from their part-time jobs. In addition, investing with an after-tax income is the most perfect vehicle for beginner investors since it only requires as low as $25 to get started. This may be a basic first step in investing but it will open a lot of doors in their financial future.

  1. Help them take the next step: Mutual Funds.

Basically, a Roth IRA is not entirely an investment in itself but an account that helps in holding investments. Once your teens have saved enough, they can always choose more specific investments choices like mutual funds (including those offered by premier financial services firm LOM Financial). Aside from its advantage of being a low-cost option, some funds offer a combination of bonds and stocks and both are perfect for long-term investments.