Teach Your Children How To Invest

Teaching your children how to invest is one of the most valuable gifts you can give them — yet most parents never do it.

Not because they don’t care, but because they’re not sure where to start, or they assume their kids will figure it out on their own.

They usually don’t.

Along your journey to financial independence, you have both the privilege and the responsibility to pass on what you’ve learned: how to manage money, how to grow wealth, and — perhaps most importantly — the rookie mistakes that can set someone back by a decade. The sooner you start these conversations, the better.

In this article, you’ll find practical frameworks from some of the best investing minds around — from JL Collins to Arthur Zeikel — plus a timeless set of rules you can walk through with your kids today.

Why Most Parents Drop the Ball on Financial Education

It’s not laziness. Most parents simply weren’t taught themselves, so they have no roadmap to follow. The result? Children reach adulthood knowing how to pass exams but not how to read a balance sheet, diversify a portfolio, or resist the urge to spend every paycheque.

Investment advisor and rabbi Naftali Horowitz put it bluntly:

“If you have a child who is spendthrift, and send them to marriage without proper education, 10 years later guess who is going to end up picking up the pieces? Usually, the parents.”

The financial consequences of inaction fall back on the family. Teaching your children about investing isn’t just good parenting — it’s self-preservation.

Start Simple: The JL Collins Approach

If the idea of teaching investing feels overwhelming, JL Collins offers the clearest antidote. His book, The Simple Path to Wealth, was originally written as a series of letters to his teenage daughter — a daughter who told him:

“I know money is important. I just don’t want to spend my life thinking about it.”

Collins recognised something most financial experts miss: most people have better things to do with their time than obsess over markets. His genius was accepting that reality and working with it, not against it.

His central argument is that benign neglect of financial matters — doing nothing, learning nothing — leaves people unprepared when real decisions arrive: buying a home, starting a family, changing careers, retiring. The goal isn’t to turn your children into finance geeks. It’s to give them enough knowledge to make smart, simple choices and then get on with their lives.

His recommended approach: low-cost index funds, long time horizons, and avoiding the temptation to tinker. Simple. Powerful. Teachable to any teenager.

The 11 Rules: Arthur Zeikel’s Letter to His Daughter

One of the most elegant pieces of investment writing ever addressed to a child came not from a bestselling author, but from a letter. Arthur Zeikel — former president of Merrill Lynch Asset Management and co-author of the Guide to Intelligent Investing — wrote the following directly to his daughter, Jill Anne.

It has never been published as a book. It doesn’t need to be. Read it slowly.

Re: Managing Your Own Portfolio

“It’s what you learn after you know it all that counts.” — Earl Weaver

Personal portfolio management is not a competitive sport. It is an important, individualised effort to achieve a predetermined financial goal by balancing risk tolerance with the desire to grow capital. Good investment practices require discipline, patience, and consistency. Too many investors fail to follow simple, time-tested principles that improve their odds of success.

I hope the following advice will help:

1. A fool and his money are soon parted

Investment capital is perishable if not handled properly. Be serious. Pay attention to your financial affairs. Take an active interest. If you don’t, why should anyone else?

2. There is no free lunch

Risk and return are interrelated. Set reasonable objectives using history as a guide. All returns relate to inflation. Most investors underestimate the stress of a high-risk portfolio on the way down.

3. Don’t put all your eggs in one basket

Diversify. Asset allocation determines the rate of return. Stocks beat bonds over time.

4. Never overreach for yield

Leverage works both ways. As Ray DeVoe observed: more money has been lost searching for yield than at the point of a gun.

5. Spend interest, never principal

If at all possible, take out less than comes in. A portfolio grows in value and lasts forever that way. The other way around, it can be diminished quite rapidly.

6. You cannot eat relative performance

Measure results on a total return basis against your own objectives — not someone else’s.

7. Don’t be afraid to take a loss

Mistakes are part of the game. The cost price of a security is historically irrelevant. When in doubt, get out. The first loss is not only the best, but usually the smallest.

8. Watch out for fads

Every trend creates its own countervailing force. There are no permanent shortages or oversupplies. Expect the unexpected.

9. Act

Make decisions. No amount of information removes all uncertainty. Better to be approximately right than precisely wrong.

10. Take the long view

Don’t panic under short-term developments. Stick to your plan. Market timing generally doesn’t work. Recognise the rhythm of events.

11. Remember the value of common sense

No system works all of the time. History is a guide, not a template.

This is all you really need to know. Love, Dad.

The Balance: How Much Is Enough?

Teaching your children to invest is one thing. But how much should you ultimately leave them? Two of the wealthiest men in modern history have answered this question very differently — and very memorably.

NBA legend Shaquille O’Neal famously told his children:

“I tell them all the time: We ain’t rich. I’m rich.”

His point? Don’t assume inherited wealth. Build your own. Meanwhile, Warren Buffett — who has donated the vast majority of his fortune to charity — explained his own approach to inheritance:

“I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.”

Both men, in their own way, are saying the same thing: financial education matters more than financial inheritance. The goal is to raise children who are capable — not dependent.

What You Can Do This Week

You don’t need a financial planning degree to start these conversations. Here are three things you can do right now:

1. Have one money conversation. Ask your child what they think money is for. Listen. Then share one thing you wish you’d known at their age.
2. Read The Simple Path to Wealth together. It’s short, clear, and written for exactly this purpose.
3. Open a custodial investment account. In many countries, you can open one for a minor with as little as €50–€100. Let them watch it grow. Nothing teaches investing like skin in the game.

The best time to start was yesterday. The second-best time is today.

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