What is the most effective way to introduce my 16 yr old to stocks & bonds?

Question

I know nothing about this part of the business world. I wish did. I want my daughter to understand investing & investments.

Please steer us in the right direction

Answer 1

Here is a thought.  Buy a copy of "Investing for Dummies". Read a chapter a week each of you, and then discuss it together.  That way both of you will learn something and you get to interact with your daughter in the process.

Answer 2

The way I teach my students is on how money works first.  Then explain the differences on spending, making, and earning money.  The next step is to explain the rule of 72 (how long it will take for your money to double).  Take the number 72 divide it by the interest rate and that will give you the approximate time for money to double.  Next, I would explain about how the savings account works and show how simple interest works.  Then explain the difference on simple and compound interest, and how they both work.

This gives them the basis or foundation about money.  Then I can introduce about the different ways of investing and how each one works.

Now, you can explain how there are different types of investments in the market and the risks for each one.

Here is a good website to start with http://www.fool.com/investing/basics/ind...

Answer 3

Well, stocks and bonds are two different things.

I would suggest you tackle bonds first since they are more limited and easiest to understand. If you live in the United States, a bank can help you by explaining some of the facts about bonds since they sell bonds. You can also go to the link below to find out more about Federal bonds. There are other types of bonds for municipal projects which you can inquiry within your city and lastly corporate bonds which get more complicated.

The last thing to tackle is the stock market. It is fun but full of regulations and risks. You may want to save this for last. Although you can introduce him to virtual stock markets. They are meant for people to get acquainted and play with fake money. I posted a link below also. You can also read financial articles to get a feel of things, such as yahoo financial, or wall street journal, or television programs, or even just the business sections of your local newspaper.

Lastly, take your son or daughter with you if you do any research. It will help your child geta hint also as to how research, where to go, etc...

Good Luck!