How To Teach Investing To A 3 Year Old

We tend to make investing more difficult than it really is. The goal of any investment is to make money.

Here’s a simple way to teach investing to a 3 year old.

1. Select their favorite cereal
2. Ask them, “Do you like this cereal?”
3. Desired Response: “Yes!”
4. Then ask, “Do you think other little boys and girls like this cereal?”
5. Desired Response: “Yes!”
6. Do you think there will be MORE little boys and girls in the future or LESS?
7. Desired Response: “MORE!”
8. Then maybe we should own part of the company that makes this cereal. Would you like to own part of the cereal company?
9. Desired Response: “Yes!”
10. Purchase stock (using your favorite stock trading company) – Maybe General Mills (GIS) or Post Holdings (NYSE: POST)
11. Better yet, purchase a mutual fund that owns cereal companies within it

I’ve done this with my daughter when she was 3. I’ve continued the conversation. As a teenager, she is an informed investor who I’m proud to say is becoming a financially confident leader.