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Keep it simple when getting your kids to invest

Just get invested and allow compounding to do the work
Keep it simple when getting your kids to invest

Many experienced investors struggle to pass on their wisdom to loved ones who don't take such an interest in growing their money. But this is not necessary as your nearest and dearest don’t need to pick through company reports to grow their wealth. Rather, the key thing is just to get started – get them invested so that they can ride on the magic carpet of compounding.

Renowned US investor Warren Buffett provides a great example. He doesn’t try to teach his wife everything he knows but rather arranges for trustees to put 90 per cent of her inheritance into an S&P 500 tracker fund and 10 per cent in short-dated government bonds.

These underlying principles apply even more when it comes to getting young people to use their individual savings accounts (Isas). Not being knowledgeable on or interested in investing is no handicap as the more you take emotion out of investing, the better. If a novice, or indeed any investor, has a rules-based system and a strategic asset allocation – the proportions assigned to broad categories such as shares, bonds and other assets – they can just let compounding and reinvestment do the rest of the work for them.

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