When is the right time to start introducing a child to their first investments, and how do you do it so the child understands principles they will use in the future? Every child naturally needs a different approach depending on age, however there are clearly defined points you can follow when making your decision.
How to approach investing with children?
Investing with children affects their future ability to manage their money well. A child who gains first experiences with the value of money and its appreciation realizes at a fairly early age that financial resources are not just a matter of consumption. Instead of ordinary saving in an account, investing offers the potential for higher returns thanks to compound interest and growth in asset values.
Many parents rely only on traditional savings products with low interest. In the long term this strategy does not make much sense due to inflation, which can significantly reduce the value of savings. Investing in well‑chosen assets can lead to better protection of savings and reasonable appreciation over a horizon of several years.
Worldwide, it is common for children to learn about investing already at school. Scandinavian countries, as well as for example Canada and Australia, have included financial education in elementary school curricula. The result of this approach is statistically proven better financial habits among adults.
Practical experience with investing teaches children to think rationally about money and to acquire the basic skills needed for responsible financial decision‑making. Children who start investing with their parents demonstrably have a better chance of becoming financially independent and economically stable adults.
When is the best time to start?
Preschoolers are able to understand the basic principles of saving and to discover that delayed consumption can bring them something extra over time. Around the ages of five to eight you can very easily put several investing principles into practice through games, simple saving, or realistic examples.
The age of 9 to 13 is an ideal period, when a child already understands the value of money and the difference between spending, consumption, and setting money aside. During this period you can easily show a child how the incentive behind investing works — what growth in the value of investments means and how profit is created.
For teenagers (13–18) a more advanced form of financial education is appropriate. During this period you can introduce the basic principles of stocks, funds, and ETFs. Older children are able to understand real‑world examples, assess risks, and realize that investing does not mean immediate returns, but consistent long‑term work with finances.
For a child to be able to make independent decisions about their investments, they should be roughly 16 years old. Until then, parents should talk to children about investing, explain individual steps, and gradually guide the child toward independence.
How to explain the principles of investing to kids, simply?
For small children it is sufficient to understand investing as postponed consumption: instead of spending money immediately, we keep it so that over time it brings appreciation. School‑age children can already start deciding independently about a small part of their money — a pocket‑money wallet is an ideal start. Show the child an example of investing in small assets such as collectibles or valuables that have a higher value after a certain period. In this way you present the difference between "consumption" and "investment".
With teenagers, it is appropriate to introduce real investment instruments. Simulations of investing are sufficient too, letting the adolescent gain insight into the world of stocks, funds, and ETFs. We recommend offering a practical demonstration of portfolios and tracking their movement, and talking about regular contributions and compound interest.
When explaining, stay factually accurate and do not oversimplify investment risks, so that children understand that everything has its rules and that investing is always about balancing risk and potential reward.
Which mistakes to avoid when investing with children?
Common mistakes include a late start. The earlier you begin explaining financial basics to children, the easier their path to financial independence will be.
Avoid overly complex financial products. There is no point in a child investing in instruments they do not understand. Every investment must match the age group and the child’s ability to understand the principle.
Another mistake is inconsistent communication. A parent should explain investment activities clearly and unambiguously.
Do not limit yourself to only one type of asset — proper diversification is necessary even with smaller children’s investments.
Which products to choose?
There are several types of products on the market suitable for investing money for children.
Savings accounts and building savings schemes — traditional products
Savings accounts remain the most popular choice among parents thanks to their simplicity, liquidity, near‑zero risk, and easy accessibility. Children’s savings accounts are typically fee‑free and usually allow parents easy online access. The downside of savings accounts, however, is very low returns that will hardly cover inflation.
Mutual funds — an easy path to diversification
Mutual funds pool money from many clients and then invest it into various assets such as stocks, bonds, or real estate. The advantage of these funds is straightforward access and easy management — experienced portfolio managers actively invest for you.
ETFs — a modern low‑cost tool
ETFs (Exchange‑Traded Funds — funds traded on an exchange) are a modern investment instrument that is gaining popularity thanks to lower fees and greater transparency compared to regular mutual funds. ETFs usually track a particular index (e.g., S&P 500 or MSCI World). Investing via ETFs means the child owns a small share in hundreds to thousands of companies around the world, which lowers investment risk.
Stocks and bonds
Direct investments in stocks or bonds require deeper knowledge and experience. Stocks mean ownership of a direct share in a company; their advantage is the possibility of very high returns, but there is also a higher risk of pronounced fluctuations in the value of the investment. Bonds work by lending money to a company or the state in exchange for a set annual interest (yield). They are therefore more conservative products that serve primarily to preserve the value of money.
How much should parents invest regularly?
A generally recommended minimum amount for regular investing for children is approximately 500 to 1,000 CZK per month. Regularly investing smaller amounts has a key advantage — it eliminates the risk of poor market timing and, over the long term, allows you to benefit from cost averaging. Higher monthly contributions will of course accelerate overall growth, but every family should primarily follow its own financial possibilities and avoid placing too much strain on the household budget.
An ideal solution is a portfolio combining multiple products, thanks to which the child gains not only financial resources but also real experience with investing.
If you are thinking about investing together with your child, start as soon as possible. Choose simple, transparent products and use various activities and games so that investing is both fun and educational.