What is Investing? A Simple Explanation for Kids and Teens

Introduction to Investing for Kids and Teens

This video explains the concept of investing in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about investing, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Suitable for students from grade levels:

Kindergarten
Elementary School
Middle School
High School

Interactive Learning Experience: The Head Start

A comparison between an early starter and a late starter. Find out the monthly amount a late starter needs to invest to reach the same portfolio size as an early starter.

The Head Start

Two people, one finish line

The early starter begins at age

And puts in every month

The late starter begins at age

Both stop at age

Yearly return

Show amounts in

The late starter needs —

Times the early amount —

Both finish with —

Extra out of pocket —

Show the year by year balances

Age	Early starter	Late starter	Gap

Figures as of January 2026. Money goes in every month and interest is added once a year, which is the same method the compound interest calculator uses on its yearly setting. Returns are assumed steady, and no real market is steady.

{amount} a month {times}x Early starter Late starter Waiting {gap} years means paying {times} times as much every single month, and putting in {extra} more of your own money, to arrive at the same place. Waiting a single year already means paying {times} times as much every month to arrive at the same place. Waiting {gap} years means {needed} a month, every month, for {years} years. The number is absurd, and that is the point: the early starter bought that result with time instead of money. The late starter has to start later than the early starter. The finish age has to come after both start ages. Enter a number. Use a number of zero or more. Keep this at {max} or less. There is no time left to catch up. The late starter would need the whole amount on the last day. Set a finish age at least one year after the early starter begins. Two balances growing to age {finish}. The early starter puts in {early} a month from age {earlyage}. The late starter puts in {late} a month from age {lateage}. Both end at {target}. Age {age}

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What is investing?

Investing is an action you take with your money to make it grow. There are many things you could invest your money in. Some popular options for investing are stocks, bonds, and real estate, all of which help your money grow.

When you put your money in these avenues they become your investments.

Can you give me an example of how my money could grow when I invest it?

Investing explained for kids and beginners

On average, the stock market provides a return of around 11% per year over the long term.

If you invested $5000 in the stock market today, then in 20 years, you would have around $40,000. And in 30 years, you’d have well over a hundred thousand dollars!

All from just the original 5000 dollars. That’s the power of investing. You could turn $5000 into well over $100,000.

How much money do I need to start investing?

There is a common misconception that you need a lot of money to start investing. But that couldn’t be farther from the truth. Even if you set aside just one dollar every day for investment, that money could grow into over seventy thousand dollars in thirty years.

Who should invest? Is it only for adults who have a steady income?

Absolutely not. Everyone can and should invest whatever amount they can.

Doesn’t matter whether you are a kid, teenager, young adult, an employee, an entrepreneur, or a stay-at-home parent – you should invest your money so it can grow into a lot more money over time.

When should I start investing?

The best time to start investing is now! The earlier you start investing, the more time your money has to grow.

Time vs Money in Investing - Defining investment for kids and beginners

Let me give you an example.

If you invested $1000 when you were 40, the money would grow into over $40,000 when you are 60. But if you invested the same $1000 at age 20, you’d have over four hundred thousand dollars when you’re 60. That’s the power of starting early.

But, like we mentioned earlier, you don’t have to wait until you save up $1000. You can start by setting aside as little as one or two dollars a day and invest the savings at the end of each month.

Now you have no excuse to not invest!

Frequently Asked Questions (FAQs)

What is the main goal of investing?

The main goal of investing is to put your money to work so it can grow and increase in value over time.

How does my investment money actually grow?

Your money grows through a process called compounding, where the returns you earn begin to earn their own returns, leading to exponential growth.

Do I need a large amount of money to start investing?

No. That’s a common misconception. You can start investing with very small amounts, like setting aside as little as one dollar a day.

What is the best time to start investing?

The best time to start investing is now. Starting early gives your money the most time possible to benefit from compounding.

Should I wait until I have a large sum saved up to invest?

No. The power of compounding means it’s better to start immediately, even with small, consistent contributions, rather than waiting to save a larger amount.

Video Featured in the Below Financial Literacy Course for Kids & Teens

Course: Basics of Investing

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Download “What is Investing - Transcript” 236-What-is-Investing-Transcript.pdf – Downloaded 616 times – 476.42 KB

Podcast: What is Investing for Kids

Easy Peasy Finance for Kids and Beginners

Fun, informative and concise episodes by a 16-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.

All you need to know about investing: What is Investing, an example of how money could grow when you invest it, how much money do you need to start investing, who should invest, is investing only for adults who have a steady income, when should you start investing, and more.

Show notes and transcript at: https://www.easypeasyfinance.com/what-is-investing-for-kids/

What is Investing – Easy Peasy Finance for Kids and Beginners – Podcast

1 thought on “What is Investing? A Simple Explanation for Kids, Teens & Beginners”

Hola soy alguien de 10 entre 13 años y quiero inventir pero mis padres no me dejan por favor quiero inventir ahora y multiplicar mi dinero, también creo que el banco me roba el dinero, siento que me roba una cuarta parte, también me pregunto que es intereses y porqué la gente pide sin sin intereses o creo que que era con intereses

What is Investing? A Simple Explanation for Kids, Teens & Beginners