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.”
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.
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