What Does it Mean to Invest in Your Children Holistically?
While you ask this question, what does it mean to invest in your children? You probably already have an idea of what it entails. You want a more holistic view of the investments you can make in your child. An in-depth look at the myriad of options out there outside the norm.
Investing in your child holistically means to take a comprehensive look at your child’s future. Each aspect of their lives could be improved to produce future dividends. Especially in the area of finance, the sooner you start them of investing in equities, the law of compounding will work exceptionally in their favor.
Investment Objectives
The very first thing to do to begin is set goals. Write down goals and objectives that are meaningful yet simple. With regard to financial investments in the stock market, use this to chart your child’s future. Determine the purpose for the investment account.
So, what does it mean to invest in your children with investment objectives? I’d say becoming clear on your motives wins half the race. Are you saving and investing for their financial freedom later when they’re adults? Or you intend to use the funds to pay their college tuition instead. Perhaps you have a two pronged approach to do both at the same time. The more clarity you have concerning this the better.
Investment Time Horizon
You should take into account the element of time. The sooner you get started, the better your chances are with the use of the power of compound interest. Your time horizon should look at the child’s age. If your child is a teen who wants to go to college to study law, you’ll factor how many years you’ll need to invest for. You will calculate the main cost of a law degree, and other associated and hidden costs along the way. Get the timing right to create the best long-term investment for a child.
Areas to Cover
There are a few cluster areas to look at. No need to be fancy if you’re getting started. You could start with the financial bit; then work your way to build a more holistic circle of important things. As much as depends on you, take things slow. Figure out the best long-term investment for a child by prioritizing. Pick a core focus such as financial freedom. Then slowly add on more areas to avoid burnout.
We’ll be addressing some of your Frequently Asked Questions (FAQs) here. These areas include:
1) Financial Freedom Nest Egg
FAQ: What does it mean to invest in your children for financial freedom?
This entails the use of investments and financial assets to ensure your children get a solid financial back bone. This is by far one of the best long-term investment for a child today. The power of compound interest loves time. Equity investments such as Stocks and ETFs have the propensity to grow larger. This is because a child’s investment horizon is far longer that their parents’.
2) Investment in Your Child’s Education
FAQ: What does it mean to invest in your children through education?
Education is the ultimate ground-floor in investing into your child’s future. This covers both formal and informal ways. The standard school system does not teach children about money. They may excel in grooming them for a future placement in the job market. For your children to build financial literacy will depend on you. Give them home schooling teaching supplements. Turn this into a game and let it be an extension to the school system.
3) Health & Fitness Investments
FAQ: What does it mean to invest in your children through health & fitness?
Get the best health strategies in place for a steady growth for their bodies, minds, and emotions. Kids require a healthy balance of nutrition and exercise. When you establish healthy diets, they’re seldom discarded. The discipline of eating right and staying fit will spillover unto other areas of their lives. You will garner a holistic development of your child’s physical well-being.
4) Fun & Games Can Be An Investment
FAQ: What does it mean to invest in your children with fun & games?
Quite an unusual inclusion but this brings a balance to the entire equation. This leisure plan with cause your kids to be able to reboot when life gets overwhelming. Do kids not already have play times? Yes they do. But this time you get to choose the games and select the fun activities. This is where you include basic financial literacy, investment games and challenges. Set up rewards and make it fun – including a circle of like-minded friends and neighbors.
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5) Investments into Sports Participation
FAQ: What does it mean to invest in your children through sports?
This is another important factor in the growth of your children. The school system seems to be working hard at it. But what if you had your own agenda? Remember the Williams family produced Venus & Serena in the tennis world. As you kids explore the various sports options, take notice of their passion. Double down on any sports activity they love the most. Yes! Paying premium fees for private piano lessons could be one of the best long-term investment for a child who has fallen in love with music.
6) Investments into Spirituality
FAQ: What does it mean to invest in your children regarding spirituality?
This goes beyond doing some yoga or other meditation. Put God into their lives and they will keep this fire burning. They will receive guidance for all the heights they want to achieve in life. Why is this important – as an investment? The growth of your precious children should be guided by a higher purpose. Place your child on a path of self discovery – so that a greater light somewhere would lead them in their journey of life and prosperity.
7) Investing towards their Vocation of Love
FAQ: What does it mean to invest in your children by pre-selecting their vocation?
Maybe your children like to dream different. They may have interest in ballet, music, martial arts, painting, chess and gaming. Don’t ignore their thirst for what they want to try out. The world today is changing rapidly. We have seen multi-millionaire gamers and social media content creators. Teach your children to believe in themselves. Become their biggest cheerleader and go with their vocation of choice. Their career path may not look rosy or promising, but it’s the love and passion that truly counts.
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Asset Classes to Invest In
If you’re still stuck up to this point – asking what does it mean to invest in your children using these asset classes? Then stay open minded to consider the suggestions below. You can invest in Stocks, ETFs, T-Bills, CDs, and derivatives on behalf of your kids.
You could typically do this through your own Brokerage Account, a Custodial Roth IRA, a 529 Education Savings Plan, a Cordell Education Savings, and a UGMA/UTMA account. Once again your objectives could be for your child’s long-term financial freedom. Alternatively, they are a great way to finance their education aspirations – and even yours.
1) Stocks & Exchange Traded Funds (ETFs)
These financial assets are traded on the stock market – typically through an online broker. Open an online discount brokerage account. After funding it with seed money or birthday cash gift to your child. Make your selection based on these parameters: Growth Stocks, Dividend Stocks, Value Stocks, and ETFs that track the broad index – such as the S&P 500. These equity investments are the best long-term investment for a child.
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2) Treasury Bills & Certificates of Deposits (CDs)
They’re money market investments that are term or time based. They pay interests that are slightly higher than your average savings account. There may be equivalents of these in your own country (depending on where you’re reading from). This is ideal for a short-term to medium-term investing strategy. The money has good liquidity and can be deployed with short notice.
3) Covered Calls on Stock Options
This derivative investment uses the stocks that you already have to earn you a little more money at regular intervals. You will be collecting option premiums – which you can reinvest into more stocks. Basically, if the stock you’re holding goes up to the strike price (target price), the stock is transferred (sold) to the new owner who paid you the premium. You’d have to look further into this instrument with much due diligence and the risks associated with it.
4) Other Assets
There are an unlimited mass of investments you could initiate for your children. But for the sake of brevity, we’ll limit our asset class discussion to just the few above. But other ideas include: Real Estate, Gold (and other metals), Crypto Currency, and Forexs. Be sure to perform your own due diligence to ascertain the associated risks. When you know exactly what you’re doing, they make the best long-term investment for a child.
Your Current Financial Condition
When all is said and done you need to look at your own personal financial health. To put things into perspective, investing in your children may also carry some costs. It is better to position your own retirement and financial freedom plans on solid grounds. Build your emergency fund.
What does it mean to invest in your children while covering your back? If you setup your personal financial system, you can use a budget to set aside for contributions for each child. You may even consider a consolidation fund for the benefit of all your children when you’re starting out. Then thereafter, you’ll perform an annual review and separate the funds for each child. You can learn how to do this by yourself or seek help from a professional.
Your Child’s Age and Needs
The age of your child, or age range of all your kids should be considered. You might be investing into the future of a new born baby. Or perhaps you have toddlers or teens. A lot of families have a mixed bag of ages. It doesn’t really matter how you start – just start. Are you investing for a wealthier future for your kids? Or are you investing to pay for their college tuition? Do both or start with one. It’s your choice.
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A Few Parting Words
It is remarkable how humans make easy things more difficult. We over complicate things through over analysis. By just starting a simple napkin math (or a more formal approach), you should get the ball rolling. Start from where you are, and with what you have. You could set aside some time to do this with your spouse or partner to get a comprehensive foundational start.
There’s always room to grow. If you have an infant, it will take more than 60 years for them to hit the age of retirement. Each option you choose would certainly go through a series of optimizations over time. This is all part of the process as long as you don’t lose the motivation. Keep learning to discover the numerous options out there to invest in your child’s future with the best ideas and tools available.
Comment below with your personal thoughts and goals for investing in your children. Have you started yet? Or you’re about to take the plunge?
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