“It’s important for young investors to understand that historically, the stock market experiences drops of 20% every four to five years, and 30% roughly every 10 years - however, the longer you hold an investment the more likely you are to make a positive return,” Caporal said. He added that The Motley Fool recommends developing and holding a diversified portfolio of at least 25 good quality stocks for at least five years, regardless of market volatility. Only 5% haven’t taught - or don’t plan to teach - their kids any investing strategy, the survey finds.Ĭaporal added that understanding investing goals, and what philosophy is most likely to get you to those goals, is fundamental to becoming a successful investor. Other popular investing philosophies parents teach their kids include diversification (with 50% of parents polled saying as much), the principle of “buy low/sell high” (50%), that it’s risky to try to time the market (29%), and the value of indexing (26%). Common Investing Philosophies Parents Teach Children It raises the likelihood of receiving positive returns and avoids pitfalls associated with trying to time the market,” he said.
“Long-term investing is fundamental to successful investing. The survey finds, however, that while investing for the long term is the most common investing lesson parents teach their children, 42% of parents skip it - a finding Caporal deems “surprising.” “The current market volatility presents an opportunity for parents to lead by example and teach their kids that downturns and economic uncertainty are not reasons to panic,” Caporal said. Jack Caporal, research analyst at The Motley Fool, told GOBankingRates that parents should be mindful to teach their kids that investing is more likely to yield positive returns over longer periods of time.