Teen years: Investing

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Top things to know Making allowances Saving and spending Teen years: Credit Teen years: Investing

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Once your teenagers get a grip on credit, introduce them to the flip side: investing. After all, that's when they extend the credit and collect the interest.

Since your teens may have too much money collecting no interest in a checking account, the best way to start is with a money-market account on which they can write a few checks.

From there, introduce them to simple, set-term investments like savings bonds and certificates of deposit. Though returns from these will be meager given the current financial downturn, they serve an important lesson and will build their confidence about investing.

From there, introduce them to the stock market, but not as a prelude to picking stocks. Instead, advise them to get into some diversified mutual funds or a solid index fund.

Some of the stock investing games available on the Internet are a fun and educational way to introduce a teenager to stocks.

Once you get your child to understand the ups and downs of the stock market, you've probably accomplished all that you can reasonably hope for. Then, if he or she wants to put some money into individual stocks, set up a trust account for him or her with a discount broker.

Minors cannot legally trade on their own, but you can do it for them. Make sure you don't give up that password, though. This will ensure that the child consults with you before any trade is made. 

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