Español
Financial Health
June 24, 2021

Investment club helps teens get an ‘A’ in financial readiness

Most teens and parents give themselves a failing grade for their investment knowledge, according to a Wells Fargo survey. But programs such as Junior Investment Club are helping kids hone their investment acumen.

A man wearing headphones and a denim shirt looks at a laptop.
Financial Health
June 24, 2021

Investment club helps teens get an ‘A’ in financial readiness

Most teens and parents give themselves a failing grade for their investment knowledge, according to a Wells Fargo survey. But programs such as Junior Investment Club are helping kids hone their investment acumen.

Mackenzie Smith, 17, plans to invest the graduation money she was gifted from friends and family — a decision she would not have made several months ago. “I probably would have just spent it,” she admits. Smith is atypical of most young people, ages 13-17, according to a recent Wells Fargo survey of parents and teenagers on investing. Where most give themselves — and their parents — failing grades for their investment knowledge, Smith, having recently completed the Junior Investment Club program, gives herself an A.

The Junior Investment Club was developed between The SIFMA Foundation, which provides financial education, programs, and tools, to strengthen economic opportunity, and the 100 Black Men of America, an African American led mentoring organization, with support from the Wells Fargo Foundation.

Mentors from 100 Black Men of America such as Moses Harris, Black/African American Segment leader within Wells Fargo & Company’s Diverse Segments, Representation and Inclusion team, led students from underrepresented backgrounds through the program.

“We talk about how saving is fundamental to financial success, but students also engage easily in learning about investing,” Harris said. “Just as the survey indicated, they see it as a key element in their future financial success.”

Participants in the program, like Smith, gain a better understanding of capital markets, addressing the gaps in investment knowledge identified by Wells Fargo’s recent Parent-Teen investing survey. Among the findings, almost all teens and parents (93% teens, 92% parents) agree that teens who learn about investing will be better off financially later in life. However, nearly half of the teens (49%) and nearly one in three parents (32%) give themselves a D or F grade in investment knowledge.

“Financial literacy is important, and so is a deeper understanding of how Wall Street works,” said Kathleen Malone, financial advisor with Wells Fargo Advisors in Charlotte, North Carolina. “There are many great resources for families to learn and understand together how to manage their money.”

Parents get ‘A’ for effort in sharing their investment knowledge

While three in five (61%) parents reported in the survey that they have had conversations with teens about handling finances, only 32% say they have talked much about investing. Additionally, only one in five teens (20%) say their parents have invested on their behalf, or encouraged their teen to play a simulated stock market game.

Smith gives her parents an “A” for their effort to share investment knowledge because they encouraged her to participate in Junior Investment Club last fall.

Soon after joining, her interest in the stock market was stoked by watching a movie on the rise and fall of Enron. The Junior Investment Club used SIFMA’s Stock Market game, an acclaimed online market simulation designed to engage young people and prepare them for financially independent futures.

“I used to be super confused by this type of thing. But after this program, I feel ready — and am excited to invest,” Smith said. “I have already chosen my top stocks, and I am doing research on cryptocurrency.”

A headline says “Knowledge gap: Although both parents and teens believe they lack investing knowledge, they agree that it will better them financially in life.” An illustration on the left shows a parent handing money to a child, with text that says: “Agree that teens who learn more about investing will be better off financially later in life. 92% Parents. 93% Teens.” An illustration on the right shows a parent standing with arms crossed next to a teen who is pointing at a chart that says ‘F’. The text says: “Would self-assign a D or F in investing knowledge. 32% Parents. 49% Teens.”
A headline says “Social Currency: GameStop short squeeze social media frenzy a catalyst for sparking teen interest in investing.” An illustration on the left shows a parent standing next to a teen with a laptop, with text that says, “Report social media as a source for teen’s financial education. 12% Parents. 35% Teens.” An illustration on the right shows two students sitting at a desk with textbooks open. The text says: “Report increased interest in investing following GameStop social media situation. Teens overall 45%. 53% Teen boys. 40% Teen girls.”
A headline says “Money Talks: Time is now to teach your teen about investing.” An illustration on the left shows an oversized money jar and a parent with a child sitting on his shoulders holding a large coin. The text says: “Parents who report talking to kids about handling finances – 61%. Investing – 32%.” An illustration on the right shows an oversized purse, money, and clipboard, with two people holding up a magnifying glass to the clipboard and pointing. The text says: “Parents who have also encouraged learning by gifting stocks to their teen - 7%. Encouraged stock market games or similar involving simulated money - 13%. Investing on their teens’ behalf - 17%”

The buzz about Bitcoin has driven interest in investments among teens, the survey discovered. Half of the parents surveyed (50%) say their teen knows more about Bitcoin than they do — and their teens agree. Almost half (45%) of teens feel they know more than their parents about Bitcoin.

Many young people — about 45%, according to the parent teen survey — also became more interested in the stock market by following the surge of GameStop and other meme stocks this year. They turned to sources such as schools (47%), social media (35%), online websites such as YouTube, and articles (34%) to learn more.

“The good news here is that three out of four (75%) teens say they are ready to learn about investing and nearly nine in 10 (87%) parents believe their teenaged children are ready for it, too,” said Malone.

The peril of missing the opportunity to talk about investing with kids is not lost on parents: Nearly nine in 10 parents surveyed (89%) said they wish their parents had taught them more about investments growing up.

“It’s very important for families to discuss money — and for our next generation to understand how to handle their finances,” Malone said.


Investment and Insurance Products Are:

▸ Not Insured by the FDIC or any Federal Government Agency

▸ Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or any Bank Affiliate

▸ Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company.

Topics:
outbrain