Good Investments for Kids

The questions that harass every individual with surplus money are, to be or not to be an investor and what are the good investments. For kids, it is highly recommended that they should learn how to invest at a young age. The saying, 'Early to start is early to finish' is not applicable to the financial investments. A kid can start early only for the purpose of staying longer in the investment market as can be seen from the example of investment guru, Warren Buffett.

Basic Principle of Investments

Everyday, one has to make decisions about investments. It may be the time, efforts or money one is dealing with. The principles that go into each decision of investment are the same. Whether the investment becomes fruitful or not depends on how extensively it was weighed on the scale of its pros and cons. Whether it was the first opportunity that came to the investor or he decided deliberately to invest after considering the well researched information also counts a lot. The latter option indicates that the investor delayed his self gratification and deliberately picked his opportunity. This is the most basic principle of these investments is for your kid to learn while they are considering the value of an opportunity. It is important to learn that the money invested in a project is not available to invest in the next, however profitable it is. This is called the 'Cost of Opportunity' in the language of commerce. That is why it becomes important to invest wisely in the first place. It is a fact which must be kept in mind by an investor searching for best investments for 2010 or best investments for 2011.

Investment Ideas for Kids

Similar to every other good habit, the habit of taking care of available money needs to be cultivated and so is the habit of making best investments. It is the responsibility of parents to see to it that their children acquire it. From the point of use of money, it is said that there are two types of people: one who uses their credit card indiscriminately and those who use their credit cards as the last resort to get out of a tough situation. The fact underlines the importance and the benefits one can draw out of the principle of delaying the self gratification.

Saving Account
Next to the piggy bank, opening a saving account for your kid is the most economical way of encouraging him to learn the value of money and good investment. What matters most is not how much he saves up and earns interest on his saving, but how consistently he deposits with the bank. How much mental space the kid allows for his saving account to occupy his tiny world is of importance and will be apparent from his transactions. A keen eyed parent can learn a lot from the pattern of the transactions.

Shares and Stocks
Encouraging a child to investigate the stocks and shares of the companies that appeals to him is a way of teaching him to look for investment opportunities. Owning a couple of shares of companies like Disney will constantly remind him about the investment and may encourage him to keep on searching for other investments.

Treasury Bonds
Treasury bonds are one of the good ideas as their value is not influenced by the market forces. These bonds which represents best investments for young people are issued by the Treasury Department and are backed by the U.S. Government. After they are issued, treasury bonds take years to mature to their face value. They represent long term investment and highlight the fact which any young investor would like remember for later use. These bonds, once bought, can be handled, counted and looked after by the kid as if they are real money which is a lesson itself. These bonds represent low risk investments.

College Investment Account
These are also called 529 account and are established to provide for a child's education. Each of the 50 states provide at least one such investment plan. This is one of the investments which comes with benefits such as tax deductions and deferments. Setting up your kid's 529 account with the idea of keeping an eye on the future is a too good an opportunity for you and your child to waste.

Certificate of Deposit
These are issued by banks and are promissory notes that can be purchased. Unlike treasury bonds, they can be cashed on as and when required to realize its value and the interest accumulated. If the date of withdrawal of money is before the date of the maturity of the certificate, then it may invite penalty.

In today's ever expanding financial world, there is no lack of opportunities to invest. The important thing is to find good investments. For kids, as it is for every investor worth his salt, it is important to learn to differentiate between a high paying risky investment and a safe investment.