Is your 8-year-old wondering why they have to learn about “old person stuff” like money? Have they retired on modding and influencer proceeds? Fine. Time to hook them with stocks, growth, and risk. Start with stocks. A stock represents a piece of a company that they can own. Starbucks (SBUX), Spinmaster (TOY), Disney (DIS), are all companies that your kid can own a piece of now.
We prefer diversification, but maybe you and your 8-year-old have your eye on a stock you’d like to buy? Okay. But first, a protip: Boundaries. Have them.
Checking your stock price every day is a surefire way to lose money unless you have the willpower of a Jedi. Investing works best with long horizons. Like, 20 year long horizons. It’s why we started Wealthie! But don’t listen to us, listen to history…
Start here.
A University of Arizona study found that:
- Of the 26,000 stocks traded on US exchanges since 1926, 1000 account for ALL profits.
- 86 stocks (⅓ of 1%) account for half of all gains.
- The average stock has traded for seven years and LOST money. The most common return for an individual stock over its lifetime? -100%. Minusssss.
Get this.
So, why invest at all? Because consistently, over a 20-year period, stock markets have gone up. They remain one of the most consistent long-term drivers of wealth. But history shows diversification is key, to boost the odds of your portfolio holding at least one (or part of one) of those 1000 winning stocks. Exchange-Traded Funds — ETFs — are one way to get instant market exposure and diversification. They give you a slice of each stock in the market they represent. It’s like an all-you-can-eat buffet with limited portion sizes. Want to learn more about ETFs? Check out our Glossary, or visit your Wealthie portfolio!
