Instilling sound financial knowledge in children can change the course of their lives.
With many families living paycheck to paycheck and debt at record-level highs, it’s more important than ever for kids to learn good financial planning habits. As the holidays quickly approach, some will consider gifts this year that teach children to manage money just like wise investors.
Some of the options available can help build a college fund for children. As of 2019, the average student loan balance is $35,359, with monthly payments in the hundreds of dollars. And many borrowers are committed to a repayment plan decades long. A debt burden that high can crimp the financial future for many.
Grandparents, parents, relatives and friends have the option to provide gifts such as bonds, stocks, exchange traded funds and indexed universal life insurance that could prepare young people for a brighter future.
Quite often an adults’ eyelids tend to droop when it comes to lectures about finances. We can’t expect children to endure long discussions about companies that are abstractions to them. Instead, some may consider investments kids can relate to like companies that make their favorite toys, foods, clothing or entertainment.
Children understand these products, maybe even more than you, and could benefit from the excitement of watching their investments in them multiply. Kids look up to their favorite characters and get excited at hearing the name of their favorite brands. Once you identify their favorite character, video game, clothing brand, etc., it will become easier for you to narrow down your stock options.
While stocks have the potential to produce great returns over time, investors are encouraged to guard against the possibility of a bear market. Many people might consider adding zero-coupon bonds or indexed universal life insurance to their education-funding portfolio.
Most bonds distribute interest every six months in payments known as coupons. In contrast, zero-coupon bonds distribute no coupon payments. Instead, all the interest is paid upon maturity. This makes them an appealing investment for some because the bondholder knows exactly how much the bond is worth at maturity.
For the full article click here: https://www.cnbc.com/2019/11/26/these-gifts-can-lower-college-debt-teach-money-skills-to-young-adults.html
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