Teaching your child about investing early can help them develop good financial habits that will last a lifetime.
There are many ways to do this, such as:
- Talking to them about finances and investing in general.
- Reading books and articles about investing.
- Opening an investment account for them.
When opening a minor investment account for your child through EasyEquities, it's crucial to understand the process and the importance of safeguarding their login credentials.
Here's a step-by-step guide to opening an investment account for your child:
- Log in to your EasyEquities account.
- Navigate to the top-right menu and click on the profile icon.
- Choose the option "Add an account for your kid."
Even though you initiate the setup of this account through your own EasyEquities account, your child's account will operate independently. They will have their unique set of login credentials, including a username and password, just like any other regular user.
Opening a minor account for your child and introducing them to investing at an early age can offer several significant benefits:
- Financial education: Teaching your child about investing from a young age helps them develop essential financial literacy skills, such as budgeting, saving, and understanding how investments work.
- Long-term wealth accumulation: Investing for a child early allows their investments to compound over time, potentially resulting in substantial wealth by the time they reach adulthood.
- Tax benefits: Utilizing a Tax-Free Savings Account (TFSA) can help your child grow their investments without incurring taxes on capital gains or dividends, enhancing their overall returns.
- Financial responsibility: Managing investments fosters a sense of responsibility in children as they learn to monitor their accounts, make investment decisions, and track their progress.
- Future financial security: Building a nest egg during childhood can provide financial security as they approach major life milestones, such as college education or homeownership.
Here are some other benefits of opening a minor account for your child:
- Compound interest: The longer the money is invested, the more time it has to benefit from compound interest, which can significantly boost the overall return on investments.
- Diversification: Investing in local stocks and exchange-traded funds (ETFs) allows for diversification, reducing the risk associated with a concentrated portfolio.
- Teaching patience: Investing teaches patience, as children learn that it takes time for investments to grow and that market fluctuations are normal.
- Empowerment: Giving children a sense of ownership over their finances empowers them to take control of their financial future and make informed decisions.
- Potential for higher returns: Historically, investing in stocks and ETFs has offered the potential for higher returns compared to traditional savings accounts, helping your child's money grow faster.
- Gift of financial independence: By starting early, you provide your child with a head start on their financial journey, increasing the likelihood that they will be financially independent and secure in adulthood.