Some parents would argue that it's never too early to teach your child responsible money management. From the time they start receiving an allowance, earned income or other money, parents can help their children save and grow their modest nest egg through simple financial investments. Even though your child likely won't have large sums of money to place in various investments, there are still several ways you can diversify your children's investments and give them a head start on their finances.
Savings Account
One of the simplest--and easiest--forms of investing for children is opening a savings account. Many banks offer modest savings account programs for children, with some requiring as little as $25 to open an account. Your child will be able to make frequent deposits in this account and see the interest earned on his money. Savings accounts also allow for the funds to be withdrawn at any point, which offers great flexibility for the child slowly saving for a big purchase. The key with these accounts is to make sure your child doesn't get charged with hidden fees--some banks implement fees as a way of turning a profit on these low-money accounts, which could leave your child burned.
Savings Bond
Most children get savings bonds from relatives on or shortly after their birth. These bonds don't offer the flexibility of savings accounts, but they offer a long-term approach to saving that can result in high earnings from your child's modest funds. Savings bonds are also secure investments and inexpensive to set up. They are also tax-exempt and can be purchased in denominations as low as $50, which are purchased at $25 and held until maturity. According to CNN Money, maturity is typically reached in 17 years or less.
Individual Stock
Stock analysts praise the long-term investment opportunities provided by companies with widely recognized global brands, according to CNN Money. The benefit to children is that they are often exposed to advertising by these companies at an early age. Soda pop companies PepsiCo and Coca-Cola, as well as pizza and fast food companies Domino's and McDonald's all offer long-term stability and are relatively safe as investments. Your child can take pride in these companies and get a better understanding of how their investments work.
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