Investing account for teaching 10 years old kid

Hi everyone!

My child is turning 10 and I am thinking of opening a trading account for him to teach him how to think about investing, compounding, trading costs, and so on. Does anyone have practical or conceptual suggestions for this project?

I found many threads about children accounts managed by the parents for their future, but none about actually teaching young kids about investing “the practical way”.

Thanks in advance!


10 is a bit young for these concepts imo.

You can open a paper trading account at ibkr. But Im not sure how much you can teach a 10 year old there.

I think actually setting up a real account and gifting them some money evey x period into VT or whatever, then checking together with them every half year or something to see how it compounds, would be better suited.

Age ten sounds a little eary, but maybe you’re both from a different mold than me (soon 55!) or my son (turning 19).

I started a perhaps similar project with my son at around age twelve or thirteen (roughly soon after I became aware of “investing is the only way, stupid”).

My style of teaching him changed over time.


My journey:

Phase 1 (age 13 to 15): Warm-Up

Initially, I let him know about my investing activities, but only very generally, and motivating it as generating an income stream independent of my main job (which was very well paying at the time which he probably was not aware of).
My son was very interested initially (but likely only due to lucky timing) as this was around the time in grade 8 or so when Swiss schools suggest you start taking a look at what career path you want to take (gymnasium, apprenticeship, which one, etc). He seemed interested in how business and the economy works, but sometimes only from his very own perspective of “how do I make money.”
My initial (really only theoretical) “lessons” to him back then were along Buffett’s line, i.e. just buy all businesses - aka “the market” - and participate from the economy growing.
In hindsight, this was all very abstract (from the perspective of a 14 year old) - the economy, the market. Sure, you can explain it, but can the kid grasp it? Most adults find it difficult to understand “the economy” and “the market” …
I do. :slight_smile:

Phase 2 (age 15): Kick-Off

The pandemic hit in 2020 and there was doom all around, with my son, in his school, amongst his peers and teachers, in the news, everywhere. The world was about to end according to some.

What an opportunity to start investing!*

I told my son that this, too, would pass, and that I would start investing for him. It took me about a month to open up an IBKR account for him (in my name, as he was still underage), moved about 2k USD there. By mid-April 2020 we bought into four asset classes: VOO, VXUS, BND, and BNDX ($1000, $695, $57 and $87, respectively).
My purpose was to illustrate to him over a long time period how the US and non-US companies would perform and how the equivalent of company loans would do.
I also created a Google Sheet shared with him titled “Investing in the middle of the Corona crisis”. He only really became interested after I told him that in a few years, he would become the onwer of this portfolio.

Phase 3 (age 15+ to ~18): Introducing the Dark Side

In early 2020 I had already started looking at stock picking for my own portfolio.** My personal belief has since turned to stock picking being better suitable to my personal needs.

I wasn’t convinced then that stock picking would also be better suited to my son’s needs if looking through the lens of total return a couple of decades down the road. However, I also felt I would not be able to explain to a teenager the advantages of index investing - there are many! - , why the Modern Portfolio Theory (MPT) made sense (well, it doesn’t, except for diversification, IMNSHO), and why he should just buy index XYZ (uh, yeah, picking actively an index?).
Instead, I thought, it would be easier to explain to him why investing in companies, businesses, is actually what investing is about (mainly): profit from the economy and those businesses growing, be interested in what these businesses do (and hence pick them).

There’s more to stock picking, of course, since you don’t only need to believe the narrative: the numbers need to add up as well. I use a couple of tools for evaluating those, discussed in the already footnoted referenced thread, but to cut things short, I came up with suggesting three companies to my son each time an investment tranche was up (from cash flow generated through the portfolio itself or additional payments into it), capped to size X to benefit from the only free lunch from MPT: diversification.
Each of these three companies got their own pitch, limited to two or three sentences, not just highlighting the business but the prospects, history, potential chances, etc.

The lesson for me was that (based on my descriptions) my son would shun Industrials (“dinosaurs”) and favor personal likings (almost Peter Lynch style) like weed REITs (like IIPR).
Not the worst strategy, but not the best strategy, either, if you’re not an experienced stock picker.

Phase 4 (age 18+): Steady State (?)

Stock picking does not make sense for a teenager. They mainly pick on narrative, mostly ignore fundamentals. Glad I limited the options they could choose from (though the portfolio picked by my son still did well).

As long as I will manage his portfolio for him, I’ll pick stocks for him (without consulting him). As soon as he wishes to take over (without having any further stockpicking acumen), I will advise him to just buy VOO and VXUS, ideally value averaging, but at least dollar cost averaging.

Good luck to you, @Matt ! 10 is such a sweet age. Enjoy it!

* Easy to say in hindsight but I managed to test my nerves in my own portfolio (then already for a couple of years evolved from 60/40 to Value Averaging, see this book). According to my value averaging plan I bought me some VOO on March 23 2020 at about $200. I remember rubbing my face and fidgeting on my chair for minutes to reassure myself that sticking to the plan was the right thing, even if I doubted myself heavily given the about 200k I was supposed to put into VOO by according to my plan after the VOO had dropped from about $290 to about $190 in about a month. Anyway …
Looking back, this is one of my cornerstones I mentally hold onto for “sticking to the plan” (of course, this strategy needs a well thought out plan in the first place).

** Which isn’t optimizing for total return, but for generating some income for consumption and some growth and which is kind of custom tailored to my own needs (up-to-date snapshot of my active picks portfolio see here.)


Hi Tony! Thanks for your comment. You are probably right. At 10 maybe the best solution is to invest on his behalf and to show him the results a couple of times a year. Thanks for the suggestion.

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Hi Your_Full_Name!

Wow, thanks for the whole interesting summary of the different phases you lived with your kid. It makes absolute sense, as also suggested by Tony above, to start by “leading” the investing decisions and to gradually give more freedom to the children. The goal of a “steady state” is great!

I will also have a look at the book on Value Averaging. I am quite used to the concept of over-rebalancing based on some metrics, such as CAPE or others, but it looks like something a bit different and I am very interested in understanding more about it.

Thank you very much!

Btw isn’t it a lot more useful to learn budgeting before learning investing (for kids)?


Glasses Why Dont We Have Both GIF by nounish ⌐◨-◨

Budgeting is indeed as important (if not more important, as you indicate).

I feel it’s nice though to give a very young person the opportunity to see up close even over a relatively short period of a few years how you can successfully make your money work for you.

Let them experience first hand with skin in the game their invested money go up and down (but over time generally up), that you don’t need to listen to the financial mumbo jambo used by banks (and other financial institutions) and you instead just invest into companies (via an index most easily, even if the concept is a bit more abstract than purchasing individual companies), etc etc.

I don’t want to jinx things, but I had my investing proud dad moment last year when my son turned 18. I officially handed over legal ownership of the portfolio to him. He could sell it all if he wanted to. He simply said: “It would be stupid to sell.”
Not only did he not sell: for his birthday he got cash from various relatives, a nice sum overall, and he decided to invest half of it into his portfolio based on his just ~three year experience of mostly watching from the sidelines and some active (but guided) picks.

His own key moment was probably a couple of years ago (when we still had negative interest on CHF accounts). He could not believe the meagre interest on his money stashed away on his Jugendsparkonto (ZKB probably lost money over it and only paid interest to attract a future hopefully lifelong customer) … the interest paid is still very low.
At the same time he sees that his money invested in companies makes a bigger return!
(Even with his portfolio tilted towards growth versus income his yield on cost is a multiple of the 1.1% interest ZKB pays on their Jugendsparkonto).


Warren Buffett bought his first stock age 11…

Warren was a late bloomer.

I’ll see myself out, sir.