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The Short Answer

Getting Kids Started in Investing

Here are some tips for introducing your kids to mutual funds.

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At Morningstar, we've often emphasized how important it is to start investing early in life. Not only does it give you a big head start in building a nest egg for a first home, a college education, or retirement, but learning good investing habits early on can have a big positive impact for years. That's why it's an excellent idea for parents to teach their kids about money and investing. And with the market way down over the past year, it's arguably a very good time for kids to get started.

Ultimately, there's no better way for kids to learn about investing than by doing it themselves, whether it's with money they've saved on their own or money given to them by a parent or other relative. One of the best ways to learn is by selecting individual stocks, and our  equity analysts' reports do a great job of helping young people make sense of what can be an overwhelming amount of confusing data. Mutual funds, because they offer one-stop diversification, can also be an excellent way for older kids and teenagers to learn the value of a buck. Not all mutual funds are right for young investors, but with a little thoughtful research it's possible to find some that kids can feel at home in.

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David Kathman does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.