5 smart ways to teach kids about investing (even if you’re not an expert)

The nightly news is on, and your family is gathered around the TV. A reporter chimes in with the stock market updates. The Dow is up, and tech investments are soaring. Your eight-year-old asks, "What's investing? How do stocks work?"

Here's the thing: Even if you're not a financial professional, you can teach kids about investing. You can start with basic concepts and include relatable examples to solidify their understanding. With time, they'll learn the basic building blocks of financial literacy. That's a priceless skill they can take with them through life.

Not sure how to get started teaching your kids about investing? That's okay — use these tips for inspiration.

1. Start with simple investing concepts kids can actually understand

Two financial topics that confuse kids are saving and investing. Both require putting aside money for a later time. When that time arrives, cash from savings or investments can fund purchases. 

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But saving and investing aren't the same thing. When you save money, it stays in one spot — a bank account, piggy bank, or wallet. Nothing happens to it. When you retrieve the money next month or year, it's the same amount. That is, unless your money earns interest.  

Investing is different. When you invest, the value of your money can go up or down. It does that when you purchase an investment, or asset, such as company stock or a bond. Market shifts can change its worth. When you're ready to get cash for an investment, you can sell it. You keep any extra money earned, but it can also lose value.

Those are simple definitions of saving and investing that kids and tweens can grasp. But analogies can drive the meaning home. Here are a few examples to try.

• Saving is like putting your video game away until you finish your homework. It's there when you're done.

• Investing is like waiting for a tomato plant to grow. You put a few seeds in the soil, water them, and give them time to sprout into food.  

• Saving is like waiting to eat ice cream until after dinner. It's delicious, and you want it now. But when you wait, it's an unforgettable treat.

• Investing is like learning a new language. You start out with a few basic words. With time and effort, you can comfortably write, read, and speak.

Saving and investing share a common trait: delayed gratification. They also revolve around goals. For example, a kid who wants to save money for a bike may need to put aside money for several months. It won't happen overnight. But with patience and perseverance, they can realize their goal — and feel proud of their accomplishment.

2. Use real-life examples and hands-on activities to make investing real for kids

To teach kids about stocks and investing, engage in some hands-on practice. You could: 

• Provide a real-life example of an investment that your kid will recognize, such as Coca-Cola. 

• Play around with a free stock market simulation game for kids. Imagine buying a share of stock in Disney today at its current price. Then see how the stock price fluctuates each day. 

• Help kids understand how they can set aside money for investing or saving. For example, they could save 5% and invest 5% of their allowance, rather than spending it all.

These examples show kids the basics of investing. They'll learn how money can grow over the long run, even if they invest small amounts. 

3. Graduate to more complex investing topics with teens

When teaching investing to younger kids, basic concepts work. But teens can handle more advanced topics. They have enough math know-how to understand compound interest and growth. That's when it's time to introduce real tools, accounts, and tracking. Here are some ideas to try:

• Explain how investors diversify their stocks to protect against market risk. To illustrate the concept, invest a small amount of money (like $10) into several stocks in different sectors. Then have your teen track the investments.

• Ask your teen to research two stocks they're interested in. Then, decide which one is the best investment based on factual information, like revenue growth.

• Show teens how investment value can grow over time. For instance, you could calculate a stock's worth after five years with a three percent annual growth rate.

The Greenlight app can build on your teaching examples. It's designed for the whole family, and includes investing features where teens can research and monitor exchange-traded funds (ETFs)‡ and stocks. They can request to buy them, too — with your approval. 

4. Talk openly about risk, patience, and market ups and downs

Investing, for most people, isn't about quick wins. Entering a market involves risk. For example, the value of company stock goes up and down for different reasons — economics, company performance, geopolitical events, and more. Prepare your kids for those ups and downs by explaining them in terms they understand.

Take grades as an example. They're a mix of homework, quizzes, tests, and projects. If one grade isn't perfect, that's okay — other assignments can pull up your teen's average, so they still do well in their class. 

When an investment's value goes down, encourage your teen to remain patient and think long-term. It can go back up again — similar to grades.  

5. Build investing into everyday money habits

Learning to invest is one component of a healthy financial education. It fits right in with knowing how to save, earn, and spend. With these tools, kids and teens have the building blocks to set financial goals and achieve them.

A few habits that can reinforce strong money habits include:

• Saving or investing a portion of allowance or earnings

• Monitoring savings and investment balances

• Creating a budget for everyday spending

• Establishing financial goals for the future

This supports long-term money learning. With Greenlight's investing app, kids and teens can research their favorite companies and invest in stocks of their choice (with parent approval of course). Plus, our financial education resources for kids break down investment concepts into language they understand.  

੠2025 Greenlight Investment Advisors, LLC, an SEC Registered Investment Advisor provides investment advisory services to its clients. Investing involves risk and may include the loss of principal. Investments are not FDIC-insured, are not a deposit, and may lose value.