The Future

Teaching Children About Investing

What are four concepts that will help older kids increase their financial literacy?

Experts at Kiplinger’s distill four important concepts that older kids need to understand in order to increase their financial literacy: Even small amounts of money when saved in a bank account earning only 2% interest will continually grow, because of compounding interest; when you obtain a 30-year loan to buy a house, you may have to pay less each month for principal and interest payments, while a 15-year loan will require higher monthly payments, but you pay less in interest; there is generally more risk associated with buying an individual stock than in buying a mutual fund, because the fund may be properly diversified; and when interest rates increase, bond prices decrease, because newer bonds may be issued with higher rates and will be more attractive to investors.


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