Investing for kids: A guide to building financial independence Teaching your children about money is like giving them a superpower. While many parents start with a piggy bank or a savings account, it’s important to take this education to the next level as your kids get older. Introducing them to the world of investing when they’re in their tweens and teens, both key principles and how to invest—is an important step toward their eventual financial independence. Why teach your kids about investing Understanding how and why to invest is a key part of financial literacy, extending beyond just earning and saving money. It introduces concepts like goal setting, patience, and discipline, all while offering your child the potential to grow their money. Whether they’re saving for college, buying their first car, or have dreams of starting a business, the earlier you have the conversation, the more time they have to invest and work toward their financial goals. Investing introduces concepts like goal setting, patience, and discipline, all while offering your child the potential to grow their money. 3 investing principles to teach your kids 1. Compound growth is your best friend. Compound interest makes money grow exponentially over time by reinvesting earnings. A quick and fun way to demonstrate the power of compounding — especially to younger children — is to ask if they’d rather have a $100 bill today or a penny that doubles every day for 30 days. They might be surprised to hear that in 30 days, that penny would be worth about $5.4 million. Unfortunately, there’s no such thing as a penny that doubles each day, but this example can help them begin to understand that through investing, they can use their money to grow more money. 2. Start early, add often. Investing wisely takes discipline and patience. The graph below illustrates this lesson in two scenarios.

• Invest once: The blue line shows a lump sum of $15,000 invested at a compounding annual return of 7%. After 40 years, they’ll have over $200,00. • Invest regularly: The red line shows the same $15,000 invested in year one, plus $10,000 invested each year thereafter. Using the same rate of return and time horizon, they would end up with over $2,000,000.

Returns shown are not from actual investments and are shown for ILLUSTRATIVE PURPOSES ONLY. 3. Think long-term. Investing is about working toward long-term goals, not funding short-term needs and desires. For example: • If your child wants to buy a new video game when it comes out in a few months, they should focus on accumulating money in their savings account. • If they aspire to buy a car in 5 years, it would probably be smarter to invest in stocks, bonds or mutual funds that pay dividends and income and will grow over time. That said, it’s important to talk about risk and its relationship to reward. Money in a savings account has little to no risk, but it also delivers small returns. Investing in stocks or mutual funds might provide higher returns, but it comes with higher risks as markets can fluctuate. By helping them understand these trade-offs, you’ll prepare them to make smarter financial decisions. Once your child understands the basic investment principles, show them how it works in real life