1. Why might parents want to get their kids investing ASAP?
Investing as early as possible is a great idea for children because of the rule of 72 and the time value of money. The rule of 72 tells us how many years it takes for a person’s investment to double based on the rate of return. It is a rule of thumb measure and not precise. However, it does explain how investing works long-term. For-example a 10% return means the money could double every 7.2 years. The result for the child would be as follows: $1000 invested upfront, with $200 a month added until they reach the age of 60 would result in. $4,285,000. Compound interest is a beautiful thing.
2. Is it ever “too early" to start? If so, what age do you recommend starting?
It is never too early to start, and in fact, because of the rule of 72 and the time value of money, it is important to get the child started early. There are many vehicles available such as 529 plans for education, UTMA, and UGMA accounts, and after July 4 of 2026, the Trump accounts will be available for eligible children. The $1000 from the government won’t be available to all, but most children between birth and age 18 will be allowed to put away $5000 a year into the account. There are more details to come, but it is worth keeping in mind.
3. What tips do you have for parents who want to get their kid started investing?
I recommend my clients use “Financial Peace for Kids” from Ramsey Solutions. It is for parents to use with their elementary-age children. Ramsey solutions also offer “Foundations in Personal Finance” through schools. It is reported that more than 7 million students have been through their educational program.
My recommendation would be that parents educate themselves first and then share what they learn with their children. I recommend parents work with a financial advisor who has the heart of a teacher and is willing to work with small accounts.
I have several clients investing in Roth IRAs who are still in school, and I have visited classes teaching “Foundations in Personal Finance” and have gladly taken on the teenagers as clients. We provide education and the help they need to start investing, and I cherish the opportunity. I recognize the impact they can have on their future.
Good foundational financial education for both the parent and the child can be life-changing and can create legacies