How to Teach Teens About the Stock Market
The best way to get kids interested is to show them the graph of a share price for a company they use a lot.
For example, most teenagers today are on Instagram. They may not know that Meta owns that company (even if they’re Meta or FaceBook users themselves). It can be interesting for them to see how the share price has changed over the timeframe that they have been using it.
Often, when Susan gives this scenario to a group of teenagers, they wonder how Instagram makes money since its a free app! That leads to a whole other conversation around the business models behind social media. You can lead them further then by comparing how much it has changed relative to others, i.e. Twitter or Snapchat.
Rather than try to pick the “right stock” or focus on short periods of volatility, at the beginning it’s a good idea to consider how the stock market has performed over time.
The Blackrock Asset Return Map is an interactive visual that points out exactly how all the things you can invest in (stocks, bonds, commodities, cash, etc) have performed over the past decade.
You can compare US stocks to European stocks when you click ‘Relative to Zero’ on the display button. This is a good way for them to test out ideas and compare what would have happened to money invested in different parts of the world.
How to Build a Watchlist
There is no greater education in the stock market than when you buy your first stock. Susan says she remembers it vividly, it feels like you have some “skin in the game”. The next best thing is to have a watchlist and to monitor it prior to investing.
Sit down together and create a watchlist on Google Sheets with the stocks that they’re familiar with, as mentioned in the point above. Agree on a time that you will check in regularly on this and have a chat about what might have happened to cause those changes.
Doing this consistently will cultivate a space your child associates with financial education or, even just that special time to talk about what’s important to them.
Help Them with Their Wishlist
Ask your teen to pick out the characteristics of a stock that they would ideally like to have. Some might say that it gives lots of income each year. Another suggestion might be one that “makes a load of profit”.
Next, help them build their on screen dream portfolio. The first wish could be translated into a dividend yield greater than 3%. The third might be that the earnings grow by 20% per year.
Have fun with this search and show them that it can be a very efficient process to find what they’re looking for… when they know what they want.