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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

March/April 2024

Introduce Your Teen to Investing

Portrait of happy European teen girl with smartphone standing near blackboard with blurry financial graphs drawn on it. Concept of business education and stock market.

A surprising number of teens are fascinated with the world of investing. Why not? It’s an exciting and engaging way to earn money. And who better than you to help your kids to learn about finance?


It Starts With a Brokerage Account
Assuming you’re working with a teen under age 18, you’ll need to open a custodial account for the teen that can transfer to them when they reach legal age. Your financial advisor can help you and provide educational materials.


Next Comes Education
Investment markets can be confusing. By starting with the terminology and investing fundamentals, you can give your teen a solid knowledge base that will enable them to make wise financial decisions.


Some Ground to Cover:


Company financials—Have them research the revenue, earnings, and profit margins of a couple of companies they’ve chosen.


Management—Look at the company’s vision. Is it strong? Who’s in charge, and what’s their track record?


Rivals—Stake out the competition. How does the company compare?


Trends—Stress the importance of checking trends in the company’s industry and weigh how the company is positioned to take advantage.


Risk—Your child needs to understand that all investments have some risk. They need to know there is always a chance of losing money and that market volatility in response to events outside an investor’s control may lead to substantial losses.


Reassure your teen that investments remain a smart financial avenue for teens despite the risks. Your teen may reduce risk and increase potential returns by consciously choosing investments with growth potential and using sound techniques such as asset allocation and diversification. Be sure to explain these important strategies to your teen and that using them cannot guarantee against an investment loss.


Time to Strategize
Stress that investing isn’t a game. It’s a serious endeavor that has to be planned if your teen is going to be successful. Work with them to set an investment strategy and stick to it, even when facing market volatility. You may want to discuss your plan, starting with how you set your investment goals before investing and how your goals will differ. Encourage your teen to brainstorm possible goals with you. They’re probably looking for cash for something more immediate, such as buying a car or generating passive income while still in school. Teach them about compounding and encourage them to invest for long-term wealth. And temper any unrealistic ideas they may have.


The strategy you and your teen work out should start small. When first investing, your teen—or any investor—should invest only what they can afford to lose. Investing small amounts in a few different vehicles can let your teen learn the markets and get comfortable with investing without taking undue risk and potentially suffering significant losses.


Once the strategy is in place, the teen needs to stick with it. As they gain experience and confidence, they can gradually increase stock investments.


Follow Up
Investing isn’t a one-and-done. Explain why your teen should monitor their investments regularly. Tracking investments enables them to view their progress, make informed decisions, and adjust their strategy to stay on track toward their goals.


Finish your investment tutorial with this caveat: Investing is a long-term process that requires patience. Checking investments too often can get an investor caught up in short-term dips. Your teen needs to concentrate on the potential for long-term growth and avoid emotional selling or buying during momentary blips in the markets.


Remember to teach them about the need to work with financial, legal and tax professionals.


Teens on Investing

  • Have Started - 23%

  • Say They Are/Will Invest for the Long Haul - 51%

  • Plan To Invest Before They Graduate from College - 75%

  • Say Investing Is Important - 75%

  • View Investing as Important - 90%

Source: Nasdaq, 2023


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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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