Family fortunes: how to get your children into investing

Important information - investment values and income from investments can go down as well as up, so you may get back less than you invest.

This is just an example. But running your own sums (the Bank of England has a useful calculator to help) could combat the age-old fear that money saved for a child will immediately be squandered. That risk never goes away entirely. When you gift money, or when a JISA matures, you surrender control. But talking children through the options and trade-offs could change the outcome.

Plus, teenagers might be more sensible than you think. Fidelity analysed more than 6,000 customers whose Junior ISAs converted into adult ISAs after 2021. 83% still hold assets in their ISA, and almost a third have actually topped up their accounts.

Wrangle with risk

So far, so patient. But not every young investor is content to wait years or decades for their money to grow.

A recent poll by the World Economic Forum found that nearly a third of Gen Zs have started investing by the time they reach early adulthood - but regulators are worried they are putting their money in the wrong place. The Financial Conduct Authority warned that several million under-35s choose cryptocurrencies as their first ever investment, despite the fact it is “very high risk, and you could potentially lose all your money”.¹ Social media is filled with “crypto bros” and “finfluencers” touting ways to get rich quick.

So, it has never been more important to talk about risk, and to challenge the belief that investing is akin to gambling. Chatting about your own portfolio - or your approach to building their JISA or Junior SIPP - can help get the message across. Explain how to spread money across different assets, countries and companies to ensure you don’t have too many eggs in one basket. And warn that anything promising spectacular rewards usually comes with huge risks.

Extremely risky behaviour is just one side of the coin, though. Being overly cautious can also damage your wealth. £1,000 in a bank account is still £1,000 ten years later, but its spending power may have fallen significantly. Inflation means you need your money to grow in order to stand still.

And yet the UK is devoted to cash. For every £1 invested in a stocks and shares ISA in 2024-2025, almost £2.60 went into a cash ISA. Meanwhile, Fidelity research shows that parents are far more likely to open cash JISAs for their children than investment ones, even though many think investing would yield better results.

The aim isn't to teach children to fear risk, or to embrace it blindly. It is to help them balance risk and reward and understand different saving goals require different strategies. There is a big difference between taking a punt on the latest crypto craze and accepting the ups and downs that come with long-term investing - and learning that distinction early could prove invaluable.

Make it real

So that’s the theory. But how do you get your children or grandchildren interested in the mechanics of investing?

It might be best to start with what they know. The stock market can sound abstract and dry, but behind it are thousands of real businesses children encounter every day. The likes of Disney, Hollywood Bowl, Netflix and Tesco are all listed companies.

Ask them a simple question: if they could own a piece of one of these businesses, which would they choose? The answer matters less than the conversation that follows. Why did they pick it? Who are its customers? How does it make money? Will people still want what it sells in ten years’ time?

The UK’s first ISA millionaire, Sir John Lee, has written about building small portfolios for his grandchildren along these lines, with any dividends paid out as extra pocket money.

You can always approach it in a more low key way. Buy one share in a famous company and track how it performs. Talk about why its share price is doing well or badly, and you might soon have a hobbyist investor on your hands. The stock might fall in value, but that can be a useful lesson in itself.

Of course, this does not mean they eventually need to build a portfolio of individual shares. The exercise is about helping them understand what investing is and why it can be so interesting. Once that clicks, it is much easier to explain why many investors choose funds, which spread their money across lots of companies at once.

Introduce them to the pros

So far, we have tackled the basics. But once your children or grandchildren are a bit older, you might want to introduce them to the world’s most famous investors.

Warren Buffett's annual letters to Berkshire Hathaway shareholders and Terry Smith's yearly updates to investors are packed with lessons about stock-picking, markets and different investment styles. The letters are free to read and can be enjoyed by beginners and experts alike.

Bring them into conversations

At this point, you can also start involving them in knottier financial conversations. This becomes particularly important once they reach adulthood, especially if you are thinking about gifting money, handing over responsibility for investments, or making plans for your estate.

Don't wait until a decision needs to be made. If you use a financial adviser, for example, consider bringing adult children along to some meetings. This will give them an opportunity to understand your plans, ask questions and build a relationship with an adviser before they may need help themselves.There can be practical perks too. At Fidelity, for example, all the benefits Wealth Management customers enjoy automatically extend to the wider household.

The common thread here is talking. You don't need to turn your children into champion stock-pickers, or expect your grandchildren to hang on your every investing insight. But if you start the conversation early enough, the lessons might last longer than any inheritance could.

This article was originally published in Investors’ Chronicle.

• Read: How ISAs will change in 2027
• Read: ISA ideas: low-cost index tracker fund options
• Read: Expert tips for choosing an investment fund

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¹ House of Commons Treasury Committee, 25 March 2025