Young Investors – Do they have financial knowledge?

We try to teach our kids to be resilient, to know right from wrong, to stand up for themselves, to be polite and to work hard. Some of us teach our kids about money and finances. How can we ensure that once they are on their own that they will have all the advice that they need to live independently and be financially responsible?

I often get asked by clients if I can work with their children. Sometimes because the parents don’t have the knowledge, but more often because much of what kids need to know isn’t taught in schools today. Often, advice from a third party is generally better accepted by youth. 

I enjoy collaborating with young clients. I have two children who are just starting out in life, and I see how important it is that they have a good financial foundation. There are many types of accounts today that historically did not exist, and each one has its own set of contribution and withdrawal rules. Navigating these accounts, along with the tax implications of these accounts, shows how vital financial advice is at all stages in life. Financial Advisors can give the right advice and help you plan to ensure your money is working effectively for you as a young person.

Aside from the types of accounts and investments, here is a little advice I give all young people on what I call “Money Skills for Youth”.

• Save Regularly - getting into a habit of saving regularly early on in life will ensure that you have the things you want now, as well as later.

• Start a Budget – understand your cash flow – income and expenses.

• The Power of Compound Interest and the Rule of 72! If you start saving at 15 and you earn 8% you need to invest approximately $125 a month to have $1Million at age 65. 72 divided by the interest rate is the number of years it will take you to double your money.

• Debt – never borrow to buy what you cannot pay off or you cannot resell.

• Diversification - when you are getting started with investing understand your risk tolerance, time horizon, and choose a diversified portfolio to reduce risk.

If you are young and looking for advice or have children getting started with a savings plan, reach out to your Financial Advisor who can help to produce the right plan. A good plan always starts with good advice.

Cynthia Batchelor is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613-935-6254 or visit ofarrellwealth.com to discuss your particular circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. Insurance products and services are provided through Assante Estate and Insurance Services Inc.