This Teachers’ Day 2024, let's introduce our younger friends to some fundamental investing principles, especially those who are curious or eager to learn about the world of investing.
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Here are some money lessons to teach kids:
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Unspent Income Becomes Wealth
Income that is saved and invested, rather than spent, builds wealth over time. Savings become investments when used to buy financial or physical assets.
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Equity is for the Long Term
Investing in equities is best for the long term, ignoring short-term market volatility. For short-term goals and lower risk, consider debt instruments.
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Debt Instruments
Debt investments like fixed deposits, sovereign bonds, and corporate debt offer assured returns and are ideal for shorter investment horizons, typically under three years.
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Precious Metals
Gold and silver serve as a hedge against inflation and market volatility. They are suitable for investors not seeking exceptionally high returns.
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Asset Allocation
Diversify investments across asset classes—equity (60%), debt instruments (30%), and precious metals (10%)—to create a balanced portfolio.
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Asset Rebalancing
Regularly adjust your portfolio to maintain the original allocation by buying or selling assets as needed, especially during market fluctuations.
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Financial Goals
Investments should align with financial goals, whether short-term (buying a car), medium-term (children’s education), or long-term (retirement).
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Risky Assets
While cryptocurrencies and other high-risk assets may offer high returns, they carry significant risk. Limit their proportion in your portfolio to manage potential losses.